Teach Me About Insurance.

[Incis0r]

Hi all!

In my community health class, we learned a lot about HMOs. In other parts of this website (like The Hammer's wonderful "Let's Buy A Dental Practice" thread, many other forms of dental reimbursement are mentioned such as PPOs, FFS, Medicaid, and cash).

While I understand the acronyms, I was just wondering if someone could share why exactly some types of reimbursement are preferred to others. It'd be a very useful learning experience!!!

Thanks in advance!

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[sgv]

Yikes! I'm fairly certain the basic definitions of those terms you listed are easy to find. But I believe they vary for each state and if you're talking about private insurance, they vary between insurance companies and within insurance plans. How much dentists are reimbursed by the insurance varies incredibly but to put in some perspective, the reimbursement rates from medicare and medicaid have not been raised for several decades. I think I remember reading that they haven't even adjusted it for inflation. Also, medicare and medicaid fraud is a very strong disincentive for dentists to accept these plans. They're scared because some dentists have been jailed for "fraud" even if they argued that they had terrible managers or poor business bookkeeping.

There's one term you listed that is not like the others. FFS is fee for service. Basically, providers are paid by what they deliver. For example, I do 20 procedures and am paid $100 for each procedure, so that equals $2,000 total. FFS is often compared to capitation payments. Capitation payments is when the provider is not paid for each individual service provided. Instead they're given a predetermined lump sum and are always paid that sum regardless of how many services are provided. For example, I am contracted to be paid $2,000/month no matter what. So in one month, I do 20 procedures and am paid $2,000. In another month, I do 80 procedures and am still paid $2,000. Boo! Say in another month, I do 2 procedures but I'm still paid $2,000. Yay! I believe one of the arguments for bundled payments was that it would discourage providers from overtreating.

The middle ground between FFS and capitation is supposedly bundled payments (Obamacare/IPAB).

 

[Incis0r]

Thank you @sgv . This is very helpful!!!!