Healthcare Reimbursement Practice
Exam Questions and Correct Answers
Payer System ✅The United States has a first-party and third-party payment system:
first-party = patient
third-party = other entity
Other Entity:
- Government (Medicare/Medicaid)
- Group/Individual Insurers
- Industrial/Worker's Comp
- Automobile Insurers
- Liability Insurers
- Charitable Organizations
Reimbursement Methodologies ✅The processes used by payers to determine how
much is actually paid for healthcare services. The most common methodologies are:
1. Fee-For-Service
2. Episode-of-Care
Reimbursement Key Reasons ✅There are four key reasons why this payment is
different than other types of consumer purchases:
1. The consumer of healthcare services (patient) is often NOT the person who pays for
healthcare goods/services.
2. Complex contractual relationships exist between patient, government, third-party
payers, and providers.
3. The dollar amount actually collected by the provider for a service may vary widely
depending on who pays for the services.
4. The government is the largest single payer of healthcare services, and the amount
they pay is not governed by the price charged but by reimbursement rules and
regulations based on laws.
Fee-for-Service ✅This system determines reimbursement based on what was done for
the patient rather than what was wrong with the patient.
1. Self-pay
2. Retrospective payment
3. Managed/Traditionsl care
, Episode-of-Care ✅This system determines reimbursement based on the patient's
condition/illness or an amount of time over which the patient is cared for.
1. Managed care - capitation
2. Global payment
3. Prospective payment
Charges ✅Also known as fees: Healthcare providers set fees for their services or their
fees are set by the contract with their payer.
Note: Fees are based on a number of variables, including labor costs, professional
credentials, malpractice insurance, competition, and the cost of office space and
equipment.
Allowable Fee ✅This fee is the average or maximum amount the payer will reimburse
providers for services.
Note: Third-party payers eventually began to manage what services the patient could
access and under what conditions they could access them.
Fee Schedule ✅This schedule is a predetermined list of fees that the third-party payer
will allow for healthcare services.
Note: The difference between what is billed on a claim and what is paid by the third-
party payer (the balance) is sometimes billed to the patient by the provider and
sometime written off by the provider (e.g., Medicare).
Explanation of Benefits ✅Also known as EOB: This is a document or report sent to the
policyholder and to the provider by the insurer. This document describes the healthcare
services, the cost, the applicable cost sharing, and the amount that the particular insurer
will cover.
Note: Any amount not cover by the third-party payer, would be the responsibility of the
patient.
Usual, Customary, Reasonable ✅Also known as UCR: This is the amount paid for a
medical service in a geographic area based on what providers in the area usually
charge for the same or similar medical service. This rate is set by a third-party payer.
This is an extension of the reimbursement methodology system.
UCR ✅Usual: Usual for the provider's practice.
Customary: Customary for the community.
Exam Questions and Correct Answers
Payer System ✅The United States has a first-party and third-party payment system:
first-party = patient
third-party = other entity
Other Entity:
- Government (Medicare/Medicaid)
- Group/Individual Insurers
- Industrial/Worker's Comp
- Automobile Insurers
- Liability Insurers
- Charitable Organizations
Reimbursement Methodologies ✅The processes used by payers to determine how
much is actually paid for healthcare services. The most common methodologies are:
1. Fee-For-Service
2. Episode-of-Care
Reimbursement Key Reasons ✅There are four key reasons why this payment is
different than other types of consumer purchases:
1. The consumer of healthcare services (patient) is often NOT the person who pays for
healthcare goods/services.
2. Complex contractual relationships exist between patient, government, third-party
payers, and providers.
3. The dollar amount actually collected by the provider for a service may vary widely
depending on who pays for the services.
4. The government is the largest single payer of healthcare services, and the amount
they pay is not governed by the price charged but by reimbursement rules and
regulations based on laws.
Fee-for-Service ✅This system determines reimbursement based on what was done for
the patient rather than what was wrong with the patient.
1. Self-pay
2. Retrospective payment
3. Managed/Traditionsl care
, Episode-of-Care ✅This system determines reimbursement based on the patient's
condition/illness or an amount of time over which the patient is cared for.
1. Managed care - capitation
2. Global payment
3. Prospective payment
Charges ✅Also known as fees: Healthcare providers set fees for their services or their
fees are set by the contract with their payer.
Note: Fees are based on a number of variables, including labor costs, professional
credentials, malpractice insurance, competition, and the cost of office space and
equipment.
Allowable Fee ✅This fee is the average or maximum amount the payer will reimburse
providers for services.
Note: Third-party payers eventually began to manage what services the patient could
access and under what conditions they could access them.
Fee Schedule ✅This schedule is a predetermined list of fees that the third-party payer
will allow for healthcare services.
Note: The difference between what is billed on a claim and what is paid by the third-
party payer (the balance) is sometimes billed to the patient by the provider and
sometime written off by the provider (e.g., Medicare).
Explanation of Benefits ✅Also known as EOB: This is a document or report sent to the
policyholder and to the provider by the insurer. This document describes the healthcare
services, the cost, the applicable cost sharing, and the amount that the particular insurer
will cover.
Note: Any amount not cover by the third-party payer, would be the responsibility of the
patient.
Usual, Customary, Reasonable ✅Also known as UCR: This is the amount paid for a
medical service in a geographic area based on what providers in the area usually
charge for the same or similar medical service. This rate is set by a third-party payer.
This is an extension of the reimbursement methodology system.
UCR ✅Usual: Usual for the provider's practice.
Customary: Customary for the community.
