Advantages and disadvantages of the hospital payment systems


Advantages and disadvantages of the following hospital payment systems on cost containment and provider behavior:

  • Fee-for-service
  • Per diem
  • The DRG-based payment system (i.e., Medicare’s Inpatient Prospective Payment System)
  • Capitation


         A major advantage of the Fee-for-service (FFS) payment model is that services are paid for separately and not together as other plans. Importantly, it is beneficial to both hospital and the provider since through this payment system earnings can be increased because it patients are charged for each intervention. For example, if a patient had a surgery, the surgeon is paid for the operation whereas the hospital stay is recorded separately benefiting from the procedure. Hence, opportunities to provide more care since these are billed individually. In countries such as Japan fee –for-Service Payment methods are connected to national pricing to contain cost within health care organization

      A notable disadvantage of this method, however, is that patients tend to be offered treatment, which unnecessary, but are added because the physician can derive a fee for the service. In this case the emphasis flows away from quality care towards quantity care critics argue that it is not cost effective because the focus in on quality and not quality. As such, whether patients are heard regarding their complaints is unimportant to both hospital and physician. Subsequently, efficiently is greatly compromised since the goal is more towards improving the censuses and not quality of care (Fuchs, 2009).           

            Per diem:-

         Per diem is a limited model of the prospective payment technique whereby patients pay a daily price or rate for their health care services when hospitalized. Reimbursement is through a third party payer. An example of this system and its advantages for healthcare organizations, especially, hospitals is one practiced by the Indian Health Service whereby they found it useful to combine these payment strategies with supplemental health insurance plans. It has been executed with such dexterity that the payment system has been a tradition in that society regarding fairness of reimbursing physicians for services rendered to patients who are being hospitalized for extended periods of time (Casto & Layman, 2006).

        Critics argue that the method can be exploitive to patients because providers do take advantage of the opportunity to increase the days patients remain hospitalized or hospitalize patients unnecessarily. While all of this may be true the system is cost effective because calculations of daily rates are far less complicated than coding charges per service. Therefore, cost is contained and the health care facility makes a greater profit than in many other payment methods (Casto & Layman, 2006).


     A great advantage of capitation payment method in health care relates to the third party payer reimbursement strategy. This is calculated based on providers being afixed a certain amount per given period, per capita amount for a period’ (Casto & Layman, 2006, p 4). The terminology per capita pertains to per head or on per person per month (PMPM). Usually, this is the amount of money paid to the provider or hospital on a monthly basis one the client/patient is enrolled in the health insurance plan. It means that providers receive payment for services of all group members regardless of whether the patient is seen or not. Therefore, this is a tremendous advantage for maintenance organizations (Hughes, 2004).

      Consequently, the amount of services has no effect on payment as it relates to increase because there is a set amount of money allotted to the organization or provider for that period. As such, if the entered into an agreement to offer a certain amount of services within a given period of a set of employees this is the payment that will be received. This a notable disadvantage, but it can still contain cost to patients in long term care facilities (Casto & Layman, 2006).

The DRG-based payment system (i.e., Medicare’s Inpatient Prospective Payment System)

         An advantage of DRG-based payment system is the assignment of a specific DRG weight by Centers of Medicare Services to each patient’s accessibility of care profile. This weight gives an estimate regarding the services that are available to that Medicare recipient in the DRG program. It also helps the medical record department to align these resources to those received by other recipients. The purpose of all these weights is mainly for accurately giving account of cost differences among various treatments administered by care providers during hospitalization. Conditions that cost more are ascribed a higher DRG weight for accountability. Examples of weight ranges are ‘the fiscal year 2001 the DRG weights ranges were .5422 for a concussion (DRG 32) to 1.4966 for viral meningitis (DRG 21) to 19.0098 for a heart transplant (DRG 103).29’ (Blount & Waters 2001, p 12).

          However, while the weight assignment is a great advantage of cost containment to hospitals and providers non – physician services provided by hospitals cannot be reimbursed though this system. The organization or provider has to access another resource for submitting such costs directly for reimbursement through PPS (Blount & Waters 2001).


 Blount, L. L., & Waters, J.( 2001). Managing the Reimbursement Process. 3rd ed. Chicago:

                  AMA Press

Casto, B., & Layman, E. (2006). Principles of Healthcare Reimbursement. American Health

                  Information Management Association

Fuchs, V. (2009). Eliminating waste’ in health care. Journal of the American Medical

              Association, 302 (22), 2481–2482

 Hughes, J. Averill, F.  Eisenhandler, J. Goldfield, N.Muldoon, J.  Neff, M., & Gay. J. (2004).

           Clinical risk groups (CRGs): A classification system for risk-adjusted

            capitation-based payment and health care management.

            Medical Care 42 (1): 81




             The case study for this lesson encompasses hospitalization costs of a 70 year old woman who underwent kidney transplant at a general hospital. She accumulated a total of $150,000 in Medicare-approved charges associated with the procedure. This report outlines individual cost pertaining to the DRG Description Case Weight; 115; Permanent Cardiac Pacemaker; 3.5513; 302 Kidney Transplant 4.1370 and 441 Hand Procedure/Surgery 0.8785. Related to the surgery itself cost will be calculated for operating; capital payment for the hospital. Considerations regarding whether the hospital will be eligible for Medicare outlier payments and the total payment the hospital can receive form the entire procedure.

Case study Application

          The DRG Description Case weight refers to the diagnostic related group (DRG), which classifies hospital inpatient cases for Medicare services. Specifically, DRGs classify all human diseases based on the ‘affected organ system, surgical, procedures performed on patients, morbidity, and sex of the patient’ (Gottlober, 2001, p 2). This classification taken in to consideration an additional eight primary diagnoses along with six procedures performed during Mr. Smith’s hospitalizations. Consequently when a weight is assigned to Mrs. Smith’s procedures it shows the Medicare resources available to her when compared to other recipients with the same condition/ disease. The more intense the disease condition the greater is the weight (Gottlober, 2001).  

         Precisely, 115; Permanent Cardiac Pacemaker; 3.5513; 302 Kidney Transplant 4.1370 and 441 Hand Procedure/Surgery 0.8785 has a less weight than Kidney Transplant and they both have a stronger weight than Hand Procedure/ Surgery.115,302 and 441 are codes provided to each procedure, which indicate the cost ascription of each service. Calculations for each DRG are modified from time to time. However, in the standard methods charge for individual DRG is calculated by adding up all charges for cases within that particular DRG (Gapenski, 2009).

       After arriving at this figure that amount is divided by the number of classified cases contained in the DRG. Prior to this process, though, patient charges are standardized and the effects of regional area wage differences along with indirect medical education costs if the institution is a training hospital are removed. In this case The San Francisco General Hospital is not a teaching facility, but is located in a large urban geographic location. Also, additional payments to hospitals that treat a large percentage of low income patients are removed. (Gapenski, 2008).

      In applying the wage criteria to hospital costs, this accounts for the greatest care expenditure. Center for Medicare Service usually adjusts this cost according to the patient’s income level. Teaching institutions carry a higher cost which could escalate prices for patients even when bring more profit to the institution. There are three other conditions which can affect Mrs. Smith’s the overall cost. They include whether San Francisco General Hospital is located more than 35 miles in proximity to another hospital. Secondly, whether San Francisco General Hospital the only so inpatient hospital servicing that geographic location or if San Francisco General Hospital was designated “critical access hospital’’ by the Secretary (Blount & Waters, 2001).

           In relation to the Kidney Transplant the operating payment to be paid to the hospital requires a six step calculation. Step 1 is calculating the Standard rate; Step 2 Adjusting for the Wage Index Factor; Step 3. Adjusting for the DRG Weight; Step 4 Disproportionate Share Payment ; Step 5 Indirect Medical Education Payment and Step 6 Outlier Payments

Step 1 Calculating the Standard rate

A large Urban area is used because San Francisco General Hospital is located there

Labor related $22,809.18 Non-labor related $10,141.85

Step 2 Adjusting for the Wage Index Factor

$22,809.18 x 1.4193 = $3987.07 (adjusted labor rate for San Francisco) $34,987.07 + $21,141.85= $55,128.92 — Generic Hospital’s Adjusted Base Rate

Step 3 Adjusting for the DRG Weight

Based on the codes

($33,987.07 + $21,141.85) x (1.8128) = $91,297.71

Step 4 Disproportionate Share Payment

This rate is 0.1413. Generic’s base payment rate is multiplied by this rate. ($91,297.71) x (1+ 0.1413) = $100,611.47

Step 5 Indirect Medical Education Payment

The adjustment factor for Indirect Medical Education is 0.0744. This rate is added to the DSH factor plus 1 to give the Hospital an adjustment rate of: 1 + 0.1413 + 0.0744 = 1.2157. The payment the hospital can expect to receive for this case is: $9,297.71 x 1.2157 = $11,303.23

Step 6 Outlier Payments

$150,000 If  Mrs. Smith/’s cost of care exceeded the payment rate by $14,050, the hospital can apply for Outlier Payments

(Blount & Waters, 2001).


What is the operating payment to be paid to the hospital?

This is calculated applying the following formula

DRG Relative Weight x ((Labor Related Large Urban Standardized Amount x Core-Based Statistical Area [CBSA] wage index) + (Nonlabor Related National Large Urban Standardized Amount x Cost of Living Adjustment)) x (1+ Indirect Medical Education + Disproportionate Share Hospital).

What is the capital payment to be paid to the hospital?

This is calculated using the following formula:-

(DRG Relative Rate x Federal Capital Rate x Large Urban Add-On x Geographic Cost Adjustment Factor x Cost of Living Adjustment) x (1+ Indirect Medical Education + Disproportionate Share Hospital)

Will the hospital be eligible for the Medicare outlier payment?  

No because Mrs. Smith’s care does not exceed the pay rate by $14,050,

What is the total payment to the hospital?



Blount, L. L., & Waters, J. ( 2001). Managing the Reimbursement Process. 3rd ed. Chicago:

                  AMA Press

Gapenski, L. (2009). Cases in Healthcare Finance (4th edition). Boston: McGraw Hill-Irwin

                               McGraw-Hill Irwin

Gapenski, L.C. (2008). Healthcare finance: an introduction to accounting and financial

                  management (4th ed.). Chicago, IL: Health Administration Press.

 Gottlober, P. (2001) Medicare Hospital Prospective Payment System: How DRG Rates Are

                       Calculated and Updated. Office of Inspector General Office of Evaluation and                         Inspections Region IX


Medicaid and Medicare for the Organization

Currently, the responsibilities as the CEO of the healthcare facility to provide essential information on the critical importance of Medicaid and Medicare for our healthcare facility. In providing this information to the new board members, they will be able to fully access the significance that these programs provides for the patients, the public, and more importantly to the organization. In absorbing this information, the board members will be more effective in handling the roles and responsibilities of their duties to the organization and to the patients.

Medicare and Medicaid

            Healthcare in the United States has gone through dramatic changes that have left millions without proper healthcare, and organizations without the proper technology, tools, and funding to care for these patients. Only in the last 60 years has there been readily available healthcare insurance for a majority of Americans that were for non-profit. However, once private insurers saw the tax incentives that were available from the government, many private insurance flooded the market, only insuring young, employed, and health individuals, which cause premiums to rise and millions were excluded. Although a national healthcare system has always been a favorable option it has not yet come into fruition. Up until President Kennedy’s presidency was congress mobilizing in that direction, after Lyndon B. Johnson step into the presidency, millions were without healthcare coverage include the poor, the old, and more importantly the children. The best way to go about the process to national healthcare was to step the first steps in insuring the old, low income, and children.

President Lyndon B. Johnson signed the Social Security Act on July 30, 1965 that created the Medicaid and Medicare federal enacted programs. (Medical News Today, n.d)  Medicare is an entitlement program that was created in order to provide insurance for citizens that are over the age of 65 or who are disabled in any capacity regardless of their level of income. Medicare is a social insurance program that serves more than 48 million enrollees (as of 2011). The program costs over $549 billion. (Gov, n.d) The services they provide include, Part A, hospital insurance, Part B, supplementary insurance that covers home health and outpatient services, Part C that gives seniors the option to enroll in private plans like, Medicare Advantage, and Part D, that covers prescription costs. Medicare is essential in providing insurance for the growing number of seniors who are left without insurance, healthcare bills, and no money to pay for prescriptions or services. The current issues are however that the price of healthcare is increasing, and it is estimated the number of people enrolled will continue to increase. Fraud, waste, and mismanagement are rampant issues with this program. According to Forbes fraud in both programs cost taxpayers billions of dollars. (Matthews, 2012) “Original Medicare isn’t designed to achieve outcomes beyond paying beneficiaries’ claims and guarding against fraud and abuse in the program. Lawmakers built the Medicare program on this limited model in 1965 – and little has changed.” (Humana, 2013)

 Medicaid is another entitlement program that is generally referred as a social welfare program that provides healthcare insurance services for low income individuals, children and families, elderly, and people with disabilities. “This entitlement program is means-tested which means that eligibility for benefits requires the beneficiary to be at or near the Federal poverty level.” (Concord Coalition, 2013)  This program covers over 55 million citizens and costs over $350 billion. (Gov, n.d) There services include providing insurance for children to cover all healthcare expenses, pre-natal care, physician services, family planning services, ambulance services, lab and x-rays, clinic services, and other healthcare services. These services provide a great strength in ensuring that children and their families, along with other groups have access to premium healthcare services for their medical needs.  Issues with Medicaid are similar to Medicare, fraud and the increase in costs are essential in deciding the longevity of the program. “Medicaid is a particular burden on states, consuming on average 22 percent of state budgets… states will be forced to spend another $60 billion on Medicaid through 2021, while another tally estimates the costs to state could reach at least $118 billion through 2023.” (Senate, 2012)

Both government programs are managed by the Centers for Medicare and Medicaid Services, which is a division held by the U.S Department of Health and Human Services. Medicare is funded by Federal payroll taxes paid by most employees and employers, beneficiary premiums, and general tax revenues paid on Social Security benefits.  The funds are authorized by Congress which are set aside in trust funds to be used as reimbursements for hospitals, private clinics and insurance companies, and doctors. Medicaid is a joint initiative of the State and Federal governments that are delegated at the state-level. Medicaid is funded by both levels of governments from general tax revenues, where the Federal government matches Medicaid spending dollar for dollar of State spending. Medicaid operates by sending direct payments to the healthcare providers, based on state fee-for-service agreement and pre-arrange payments through HMO’s. States are able to be reimburse from the Federal government of their share of the expenditures, which are dependent on the FMAP or Federal Medical Assistance Percentage and average per capita income level. (Gov, n.d)

Healthcare costs are continuing to rise, and millions are still without healthcare coverage due to lack of affordability and access. Quality care is essential in healthcare organizations, providing the same care to all patients is a significant duty that healthcare officials must make. Quality care is dependent on the share practices and mission of the organization. The way that patients are treated, and the recommend care is a testament of quality care. It is measured in the feedback from patients, the outcome of patients, and the way the staff is treated and treat others. In providing quality care, the organization must remember to put the patients’ needs first in getting to them quickly, accessing the problem, recommending the correct procedures, and ensuring they get the best outcome. Within healthcare organizations quality care needs to consistently monitored, accessed, reevaluated, and drilled into staff on a continual basis in order to ensure that patients receive the best quality care from the organization.


How is Medicare Funded? (2013). Medicare.Gov. Retrieved from

Matthews, Merril. (2012). “Medicare and Medicaid Fraud Is Costing Taxpayers Billions.” Forbes. Retrieved from

Medicare – Humana Government Relations. (2013). Humana.  Retrieved from

Medicaid and Medicare – Tom Coburn. (N.d.). Senate. Gov. Retrieved from

Medicare and Medicaid Funding Challenges | The Concord Coalition. (N.d.). Concord Coalition. Retrieved from

What is Medicaid/Medicare? (2013). MNT. Retrieved from Health Care Quality. (2013). AHRQ.  Retrieved from


What Consists of a Health Care Team?

A health care treatment team must be well diversified, so that the patients of the workers get the best treatment possible. There are several categories of health care careers that constitute a health care team. Primary care physicians, nurses, partners and associates, a rehab team and occupational therapists, a variety of assistants and aides, as well as administrative members. Just like a sports team or any other team, if a health care team does not all work together, they will not succeed. Unfortunately in the health care profession, unlike in sports, peoples lives are on the line on a daily basis relying on the teams ability to communicate effectively and treat the patients properly.


Reflection on Class


The below self-reflection is based on my own experiences within general psychology class. It discusses the methods used when teaching, the topics covered and the value of information from my personal perspective. It is also a report on how attending the class has changed my attitude towards thinking, mental illnesses and human development in the social/cultural context.

Reflections – Personal Essay


Article Review: FT: Defensive (M&A) Deals increase in Pharmaceutical Industry

The pharmaceutical industry has experienced declining fortunes over the past few years.  Indeed, although blue-chip pharmaceutical firms previously drove profits through blockbuster drugs, many of those drugs have lost their patent, leading to increased production by generic drug makers and lower profits. At the same time, the pipeline for new blockbuster drugs is at an all-time low; this is not coincidence.  While there certainly is a cyclical element involved with the process of innovation, many in the industry posit that discovering blockbusters is simply becoming more difficult. This factor, coupled with the excessive capital and human resources  needed to discover new drugs, has led pharmaceutical firms to explore new ways to bolster their lagging pipeline.


Risk Factors, Goals & Objectives, and Educational Interventions for patients with Stroke

Patients at high risk for stroke must consider common risk factors such as hypertension, diabetes, poor circulation, obesity, cholesterol concerns, smoking, and atherosclerosis, amongst other factors (National Stroke Association, 2013).

In order to effectively reduce the risks associated with stroke, it is necessary to develop programmatic goals and objectives that will enable individuals to improve their health and wellbeing. From this perspective, the program goals are as follows:


Medicaid Eligibility Comparison

According to, eligible Medicaid recipients include individuals and families from qualified low-income groups that do not have health insurance coverage. Medicaid is a federal program with strict rules and regulations that each state must follow, although these rules and regulations vary by state and by group. Though varied, each state is monitored and required to cover base mandatory benefits and each state has the option of including optional benefits to offer Medicaid recipients. Applicants must apply at their state Medicaid office to qualify (Eligibility Requirements). In addition, the Affordable Care Act of 2010 includes a Medicaid eligibility expansion slated for 2014; however, states can elect to choose to implement this initiative before 2014. This acts will expand eligibility to Amerians under the age of 65 who fall below 133% of the FPL (federal poverty level). This changes Medicaid eligibility criteria on a federal and state level (Medicaid).

As mentioned, each state has its own set of eligibility criteria, based on compliane with federally regulated guidelines. Following is a Medicaid eligibility comparison between two states: Virginia and Kentucky. This comparison highlights the similiarities and differences between two states regarding Medicaid eligibility.

Virginia Medicaid Eligibility and Covered Services

Virigina’s state Medicaid healthcare services fall under the authority of the Department of Medical Assistance Services. This department aims at offering cost-effective, high-quality services to those in Virginia who qualify for Medicaid.

According to the state’s website, income and resource eligibility requirements for Virginia vary by category. Eligible recipients in the state fiscal year of 2012 included 604,442 children; 216,734 disabled individuals; 195,681 pregnant women, children’s caregivers, or parents; and 79,613 elderly persons (DMAS, 2013).         The Medicaid program in Virginia Medicaid covers services with some minor cost sharing for some beneficiaries.

Federally mandated coverages in Virginia include: hospital, physician, and midwife services; health centers and rural health clinic services; Lab and x-ray services; transportation services, family planning services; nursing facility services; home health services; health screenings, diagnoses, and treatment programs for children; and routine dental care for persons under age 21. Optional services include: certified nurse practitioner services; prescription drugs; rehabilitation services; occupational therapy and speech language pathology services; hospice services; select mental health services; select substance abuse services; and intermediate care facilities services (DMAS, 2013).

Kentucky Medicaid Eligibility and Covered Services

According to the state of Kentucky’s website, the state healthcare program is under the Cabinet for Health and Family services. Currently, the state’s Medicaid eligibility includes individuals and families with dependent children such as pregnant women, dependent children under at 19, parents of dependent children if unemployed or underemployed or if one parent is deceased. Income and resource requirments vary by family size and income, and this is even more varied for pregnant women and children (Programs and Services, 2012).

Covered Medicaid programs in Kentucky include the Early Periodic Screening, Diagnosis and Treatment Services (EPSDT) program; Kentucky Children’s Health Insurance Plan (KCHIP); Kentucky Transitions (for those transitioning from long-term care to the community); Kentucky Women’s Cancer Screening Program; Medicaid Works (work program for the disabled); Medicare Savings Plan Program (financial assistance with Medicare premiums); Presumptive Eligibility (program for pregnant women who do not yet have Medicaid); and Title V (serving children in state custody). Covered services in Kentucky include: nurse practicioner, child advocacy, chiropractor, dental, medical equipment, family planning, hearing, vision, hospice, laboratory, medical transportation, organ transplant, pharmacy, podiatry, preventive, and dialysis services (Programs and Services, 2012).

Virignia vs. Kentucky

In comparison, it appears that both states have similarities in the required federally funded mandated coverages; though, they do have some variations in how they are administrered. For example, Kentucky offers some creative options for Medicaid recipients that do not appear in Viriginia’s offersings, in some areas, such as special programs offered such as Medicaid Works and Kentucky Transitions. However, Virignia’s website shows they are putting in effort to keep abreast of how their Medicaid dollars are allocated with posting their statistics. There is adequate information on Medicaid expenditures and delivery of services options shown in a report from their website.


Recently, Medicaid eligibilty requirements have expanded to include more Americans under the age of 65, thanks to the implementation of the Patient Protection and Affordable Care Act, also known as Obamacare, which was signed into law by President Barack Obama in 2010. This enactment will go into effect in 2014 and help save the lives of many Americans who would otherwise die, due to not having any health insurance. This initiative will also save the United States money from preventing healthcare emergencies and diseases of the indigent and manyh people with low incomes, living below the poverty line. Many who are not eligible under the current Medicaid plan will be eligible under the new plan. Also, as mentioned, each state has the option of putting Medicaid expansion initiatives in place prior to 2014.



Programs and Services. (2012). Retrieved from Kentucky Cabinet for Health and Family Services:

DMAS. (2013). The Virginia Medicaid Program at a Glace. Department of Medical Assistance Services.

Eligibility Requirements for Medicaid Benefits. (n.d.). Retrieved from

Medicaid. (n.d.). Affordable Care Act: Eligiblity. Retrieved from


The Medicaid Program

What is Medicaid?

According to Medical News Today, Medicaid is a government medical and health program that provides health and dental services to eligible low-income groups in the United States, and it is managed by the U.S. Department of Health and Human Services. Medicaid is a federal program; however, it is managed at state levels regarding eligibility standards, scope of services, and payment rates for services (MNT). Medicaid is made available to help low income families, children, the elderly, and the disabled.

How Medicaid is Financed

Each state receives federal funding for there Medicaid programs; however, all states must adhere to mandatory requirements that include required services that must be offered to eligible individuals. These required services under Medicaid include hospital and physician services, prenatal are, vaccinations, home health services, lab and radiological services, diagnostic services, preventive health services, and ambulatory services (MNT). This list is not all inclusive, but it represents a significant part of what Medicaid covers for those who qualify.

Medicaid Eligibility

The federal government oversees state Medicaid programs to ensure compliance with federal requirements and guidelines; however, each state is responsible for its own adherence. States must screen Medicaid applicants to be sure they are in a group that meets eligibility requirements such as low income, having dependent children under 6 in a low income household, pregnant women with low family incomes, and recipients of Supplemental Security Income. This list is not all inclusive but it shows the basic requirements for qualifying for Medicaid, based on need (MNT).


The Patient Protection and Affordable Care Act

This act is also known as Obamacare and was signed into law by President Barack Obama. It is an amendment to the United States healthcare system and is designed to insure all low-income Americans up to age 65 by decreasing healthcare costs and access problems. This act expands Medicaid coverage to more people. The expansion includes a minimum income eligibility level of 133% of FPL (federal poverty level). One significant change about this is adults without children, who fall below the FPL, will qualify for Medicaid insurance. This act also makes provisions for enrollment, an earlly option prior to 2014, maintenance, former foster care children, and family planning (Medicaid).

In addition, those people whose incomes are over the eligiility level may still quality for Medicaid on a medically needy basis. This is an option that allows for the extension of Medicaid eligibility to people in this group. There eligibility is calculated by a spend down option. This spend down amount is incurred by people in this group with medical expenses that exceed their income, as determined by their state’s medically needed income level.

Design of Medicaid Programs

According to the National Conference of State Legislature (NCSL), Medicaid is both a federal and state partnership program. Both entities share authority of the program, as well as financing of the program. On the federal level, the state Medicaid programs are monitored, based on how individual states manage their Medicaid programs. This includes service quality measurements, as well as measurements of delivery methods and eligibility criteria. In addition, with the onset of the Patient Protection and Affordable Care Act, the Medicaid program design has expanded that changes policies at the state level with specific provisions. State policymakers are charged with innovating the Medicaid programs in their states to improve quality and delivery of service (NCSL).


There are millions of uninsured or underinsured people in the United States because they cannot afford health insurance and previously did not qualify for Medicaid. The Patient Protection and Affordable Care Act has changed this dynamic and will allow more people to get the care that they need. Many would argue that healthcare is not just a privilege for those with a certain amount of money or a certain level of income, but it is a right that all Americans should have. Medicaid covers most physician, hospital, and dental services for those who qualify and gives various options for community-based care.

Some people may not understand the difference between Medicaid and Medicare. The difference is Medicare is associated with Social Security and is currently offered to people 65 years of age and over. Medicaid is not tied to Social Security and is for people up to age 65. This is significant because there are many people who are too young for Medicare, but may not qualify for Medicaid, except under the new Affordable Care Act. This will save many lives and help many sick people who suffer needlessly because they have nowhere to turn for healthcare services. Medicaid is there to help even more people with the expansion provided by the Affordable Care Act, and this will help decrease medical care costs throughout the United States, because many health problems can be averted because of prevention options available to those who previously had not option.


Medicaid. (n.d.). Affordable Care Act: Eligiblity. Retrieved from

MNT. (n.d.). What is Medicare / Medicaid? Retrieved from Medical News Today:

NCSL. (n.d.). Medicaid. Retrieved from National Conference of State Legislature:



Medicaid managed care plans

Medicaid is better known as Medi-Cal in the State of California and there are approximately six million people enrolled in various managed care plans, including but not limited to Anthem Blue Cross, Health Net, and LA Care (California Department of Health Care Services, 2013). As of 2011, the national enrollment statistics for Medicaid and managed care include approximately 23.1 million Americans, with a total Medicaid enrollment of 40.1 million people (, 2012). Therefore, almost 58 percent of all Medicaid users are enrolled through managed care plans (, 2012).

There are a number of different types of Medi-Cal managed care plans in the state, including the County Organized Health System, the Two-Plan Model, and the Geographic Managed Care plan ( The County Organized Health System is located in such counties as Monterey, Napa, Santa Barbara, and Ventura; the Two-Plan Model is located in Los Angeles, San Bernardino, Riverside, San Francisco, and other counties; and the Geographic Managed Care Model is located in Sacramento and San Diego (California Department of Health Care Services, 2013). The County Organized Health System is comprised of approximately one million enrollees, the Two-Plan Model has 3.6 million enrollees, and the Geographic Managed Care Plan has 600,000 enrollees (California Department of Health Care Services, 2013).

The manner in which Medi-Cal providers receive payments is important because it supports their revenue streams and continued growth, in spite of an increasingly competitive and regulated industry profile. The managed care organization must pay a capitation payment in order to participate and to accept Medi-Cal patients (Santa Clara County, 2013). In general, “in exchange for a comprehensive array of health care services at a fixed monthly premium, enrollees in managed health care plans typically face the choice of using participating health care professionals and facilities or incurring higher out-of-pocket costs for treatment” (National Council on Disability, 2013). This strategy is important because it demonstrates the need to remain as cost effective as possible when providing care to Medi-Cal patients throughout the State, regardless of the managed plan care plan that is used (National Council on Disability, 2013). In addition, it should be noted that “because Medicaid payment rates are generally lower than commercial rates, provider networks and access to out-of-plan services typically are more tightly controlled under Medicaid managed care plans than they are under employer-sponsored and Medicare Advantage plans” (National Council on Disability, 2013). In this manner, it is likely that there is a continuous push to obtain adequate reimbursements and timely payments for Medi-Cal benefits because they are provided at lower rates than other services (National Council on Disability, 2013).

The Medi-Cal system in the State of California is complex and challenging in many ways and requires expert knowledge and understanding to effectively navigate the system and its mandates. Due to the nature of the Medi-Cal system and its provision of services for lower income individuals and families, it is important to recognize that the necessity of the insured to provide a significant portion of the cost does not generally exist (National Council on Disability, 2013). In this context, it is observed that managed care organizations are required by state and federal laws to require their participants to contribute a very small amount of the costs associated with the provision of care and treatment for specific healthcare services (National Council on Disability, 2013). From this perspective, it is likely that the cost sharing component will remain low and consistent with current figures, there is a greater likelihood that the type of service providers will also be consistent and the willingness to seek out providers that are more expensive will be minimal (National Council on Disability, 2013). These efforts are important because they demonstrate the importance of keeping costs affordable for low income individuals and families who require Medi-Cal to begin with so that they do not face the burden of excessive costs and out-of-pocket spending (National Council on Disability, 2013).

It is believed that the managed care system and its primary subsets under the Medi-Cal system in the State of California are important providers of care and treatment to millions of residents throughout the state. The efforts made with the provision of healthcare access and services for low income individuals and families requires an effective understanding of the elements and opportunities that are available these residents when they require different types of healthcare services to meet their needs. At the same time, the provision of these services varies from one geographic region to the next, with three primary models in place to accommodate California residents who are categorized as low income.

It is expected that the provision of healthcare services will encourage the growth and development of new ideas and strategies to keep costs as low as possible, particularly since the passage of the Affordable Care Act, which places new mandates on insurance providers and managed care organizations of all types to provide affordable options for all individuals and families. These efforts must demonstrate that there are significant factors associated with obtaining adequate and consistent access to healthcare services that will emphasize improved quality of care and treatment for all persons in the State of California. Although Medi-Cal is designed for low income individuals and families, it provides many important benefits that must remain cost effective without compromising the integrity or the quality of care that is provided to patients. In this manner, managed care organizations within the Medi-Cal system must continue to explore their options to remain efficient and cost effective without damaging their reputations and running the risk of providing lower quality care and treatment to patients who require care in different forms.


California Department of Health Care Services (2013). Medi-Cal managed care enrollment

reports. Retrieved from

California Department of Health Care Services (2013). Medi-Cal managed care program fact             sheet. Retrieved from (2012). Medicaid managed care enrollment report. Retrieved from   MCP: An overview of managed care plans. Retrieved from

National Council on Disability (2013). Chapter 1. An overview of Medicaid managed care.             Retrieved from

Santa Clara County (2013). Health care options/managed care. Retrieved from



Medicare Payment Mechanism

What is Medicare?


The Medicare payment mechanism is a national tool used to reimburse hospitals and physicians for Medicare services. According to the official U.S. Government website for Medicare, people 65 and over, or people with certain disabilities are eligible to receive Medicare, which is a federal health insurance program (Medicare). It is estimated that there are over 39 million people in the United States insured by one or both options provided by Medicare. If a person is eligible for the first option, he or she is automatically enrolled in the second option; however, the person has a right to cancel this. The first option is Medicare Part A, which is hospital insurance for people aged 65-years-old or older who are eligible to receive Social Security benefits. The second is Medicare Part B which is medical insurance. Medicare is funded by the payroll taxes of working people and employers, monthly premiums, general federal funds, and deductibles (Scarrow, 2002).


Measuring Healthcare Quality

Maintaining the highest possible quality of care is a vital part of efficient health system operations. Without quality control the services offered by even the most technologically advanced and skilled healthcare providers will be compromised and patients, among others, will suffer the consequences. Quality of care is a variable with multiple dimensions, each of which requires consistent evaluation and subsequent corrective action when appropriate. The measurement of care quality is difficult because the interaction between variable characteristics can vary from setting to setting. Accordingly, it is important to consider the specific environment in which healthcare services are being provided while assessing care value.


Internal Medicine Personal Statement

It is not uncommon to hear that one should learn from his successes and mistakes but as I critically analyze my life, I have tried to learn from every experience no matter how irrelevant it might have seemed at first. In fact, my internal medicine philosophy is nothing but the outcome of the lessons of all these experiences. One of my first interests in life as a young child was reading detective novels. Even back then, I was aware why I loved detective novels despite their predictable endings. What I really loved about detective novels was not the hero or the endings but the thought processes that were involved in solving the cases. The novels helped me realize that things are not always what they seem and facts cannot be unearthed unless one has looked at all aspects of an issue. In other words, detective novels helped me develop a love for critical and independent thinking. While medical science has come a long way, especially over the last few decades, human element is still very important in efficient delivery of healthcare practices and diagnosis often depends upon the skills of the healthcare practitioner rather than state of technology. As a medical practitioner, I will not rule out any possibility no matter how remote it may seem but I realize the cost of any negligence may mean the whole difference in the life of someone.


Governments role in healthcare

Government and Health Care

The United States government has a huge role in the health care of its citizens. Via the International Revenue System, citizens of the United States pay taxes- some of which are allocated each year towards public health care for the people of the U.S. The expectation is that taxpayers will ensure that people are not denied necessary health care. Besides providing the public with affordable health insurance, it is also the responsibility of the U.S. government to ensure the quality of the the public health care institutions across America.The United States, unlike most industrialized nations, uses a non-universal healthcare system. This means that by law, the government is not required to provide healthcare to all of it’s citizens.