Today’s healthcare industry is undergoing a transition away from traditional pay-for-service payment systems. Under this old model, patients visit a healthcare facility, receive healthcare services ranging from wellness checks to lab tests to medical procedures, and then pay an individual rate for each of those services.
That approach is being replaced by advanced payment models that emphasize quality by eliminating item-by-item payments and instead billing for services in a more comprehensive way. This may seem like a simplified approach to healthcare payment management, but it actually brings much greater complexity to the already complex tasks involved in revenue cycle management.
To leverage advanced payment models for their financial benefits, healthcare organizations need the right software tools to effectively manage these payment systems.
How Advanced Payment Models Work
With advanced payment models, hospitals reach an agreement with an insurance company to provide care to a group of patients diagnosed with a particular condition or disease. The contract will dictate the amount that the insurance company pays to the healthcare provider over a set period of time. Once that payment arrangement is set, it is up to the healthcare organization to figure out how that money is going to be distributed.
Allocating that money across the organization is an additional task that needs to be wisely managed by the organization. When the right approach to payment management is in place, hospitals can improve the efficiency of their care while also improving patient care. Because the money paid by insurance is fixed, for example, a healthcare organization can increase their profit margin by providing exceptional care that reduces the amount of time patients spend on hospital stays and other forms of treatment.
