Summary Financial Recourse Management in Healthcare.docx C428 Financial Recourse Management in Healthcare- C428 Performance Assessment RCP1-Task 1 A1

C428

Financial Recourse Management in Healthcare- C428

Performance Assessment RCP1-Task 1

A1.

As Chief Financial Officer of Seamus Company, the decision to move away from a feefor-service model towards a managed care organization has been reviewed. To support the

company goals, the proposed managed care strategies are as followed: Preferred Provider

Organization, Health Maintenance Organization, and Exclusive Provider Organization.

The first of the three fiscally sustainable strategies are the Preferred Provider

Organization (PPO). Preferred Provider Organization is a combination of cost-saving

strategies like a Health Maintenance Organization, but with some additional features of the

traditional insurance plans. When choosing a PPO plan, the recipient is allowed to select his

or her own providers, however beneficiaries are encouraged to use providers that take part in

the plan. This approach is a cost sharing strategy that encourages members to visit participant

physicians within the PPO plan, although not enforced. This is how an organization has the

ability to cut healthcare costs is by coming to an agreement with assigned providers. A

preferred provider pays an increased cost share for services that are provided within the

network rather than those services provided outside the network, which may result in higher

premiums and employees’ deductibles. That is why a Preferred Provider Organization costs

tend to be more expensive verses other insurance plans.

Another strategy is the Health Maintenance Organization (HMO). Health Maintenance

Organization is one of the most popular insurance plans. It can be organized either as public

or private entities. HMO was developed to encourage healthier lifestyles as well as

preventive medicine, which will consequently reduce the overall healthcare costs and

hospital admission rates. Unlike its Preferred Provider Organization counterpart, an HMO

plan designates the participant with his or her primary care physician. This is just one of

several methods that an employer can do in order to control costs. In a Health Maintenance

Organization, an employer pays a flat rate monthly premium for services and employees pay

smaller co-payments. Since participates are assigned their primary care physician (PCP), the

physician has the responsibility for the overall medical needs of the patient. If beneficiaries

are in need of care, they must first seek his or her PCP first, however if an issue is beyond the

PCP expertise, the PCP will refer the beneficiaries to the appropriate physician within HMO

network. This helps keep costs very low for both the organization and its members.

 The final sustainable strategy is the Exclusive Provider Organization (EPO). Exclusive

Provider Organization can be considered a mixture of the HMO and PPO plans. Within this

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insurance plan are contracted physicians and hospitals to whom the EPO has arranged

discounted rates to offer its beneficiaries. Exclusive Provider Organization offers an array of

health services such as doctors, hospitals, specialists, x-rays, laboratory, pharmacies, and

more. Under an EPO plan, a participant has to seek care exclusively by the network providers

or risk out of pockets expenses. There is however one exception to that rule and that would

be in an emergency situation such as stroke or heart attack. An EPO makes things simpler to

see a specialist; this is because the plan typically does not require members to have a referral

from his or her primary doctor. This unique feature sets itself apart from the Health

Maintenance Organization. Unlike PPO members, EPO members lower costs by negotiating

rates within the network, which results in lower premium and monthly payments. This

concept can be advantageous to an employee’s benefit package and a highly desirable offer

from an employer stand point. This is very enticing for members because of the flexibility

and freedom to see physicians while maintaining a feasible budget.

A1a.

 While discerning which system will succeed the current fee-for-service health plan,

Seamus has to review the cost-saving measures, tax deductions, and fiscal management

improvements of each managed care organization. In reviewing the cost-saving measures of

the managed care organizations, an EPO is the better way to go. However, all MCO plans

exhibit cost-saving characteristics. With all three sustainable strategies comes lower

deductibles and fixed premiums. With the lower deductibles and fixed premiums, Seamus

can create more innovative ways to reduce costs. Keeping costs low can be achieved by

negotiating service rates with the insurance companies, therefore driving costs down.

Accompanying all the suggested insurance plans are some tax advantages. Here we will

discuss those advantages. One of many benefits for businesses include, but not limited to, tax

credit and business expense deductions. What the tax credit companies receive is typically

based on a sliding scale. This means the smaller the company is, the more credit the company

receives; ultimately putting more money back into Seamus pockets. Another benefit that can

aid Seamus in achieving their vision is the business expense deduction. The business expense

deduction is when an employer’s health insurance premiums are exceeding the total credits.

With these deductions, Seamus can have better control over their financial budgets and help

Seamus accomplish and leverage costs.

Another area that needs to be reviewed before selecting an insurance plan is fiscal

management improvements. One of the fiscal improvements that has been noted for Seamus

is the accountability the MCO gives to its employees. By providing a managed care

organization to the company, this offers the staff more flexibility and authority over one’s

health and financial circumstances. The accountability can be accomplished by allowing

members access to the network of services as well as the option to seek care outside those

physicians and services if need be. The last, but not least fiscal management improvement

that should be addressed is how lower deductibles and fixed premiums provides Seamus with

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