Reimbursement Methods in Healthcare: Advantages and Disadvantages | Desklib

Running head: HEALTHCARE ASSIGNMENT
REIMBURSEMENT METHOD IN HEALTHCARE
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1HEALTHCARE ASSIGNMENT
Introduction
Reimbursement method in healthcare is the process through which organizations and
institutes provide or reimburse their employees with benefit so that they can compensated for the
medical expenses (Diaby & Goeree, 2014). This is a method of providing employees with
monetary or service related reimbursements so that their important and reasonable expenses
could be compensated by the organization (Kaplan et al., 2014). On the other hand,
reimbursement also helps people in the form of healthcare insurances where the policy holder’s
healthcare expenses is directly paid by the organization providing the policy (Weernink et al.,
2014). In healthcare services, professionals such as nursing professionals and physicians are also
provided with reimbursement for their healthcare expenses by the insurance companies or the
government. However, the private insurance companies provide reimbursement as per their own
negotiations, the public insurance organizations provide the compensation depending on the rank
of the professional (Porter & Kaplan, 2014).
In the Middle-east region, majority of the countries have complete control over their
healthcare system (Al-Hanawi et al., 2018). Further, due to the free of charge nature of the
service, the governments face tremendous pressure in managing the healthcare costs of the
complete community (Al-Hanawi et al., 2018). In Saudi Arabia, Council for Corporative health
insurance was developed so that the reimbursement related to insurance could be managed by the
public healthcare department. This comprehensive healthcare coverage allowed the population of
the country to compensate for their healthcare needs through governmental funding or the
national health insurance schemes (Al-Hanawi et al., 2018).

2HEALTHCARE ASSIGNMENT
This section is intended to discuss about the reimbursement methods of the healthcare
system and then will discuss about the reimbursement methods such as bundled payments, fee
for service, value based reimbursement, shared savings and discount provided on billed charges.
Through these methods the reimbursement process within the country would be explained and
then the advantages and disadvantages of the process will be provides so that the best method of
reimbursement for the healthcare process could be identified.
Five methods of reimbursement provided in healthcare process
Reimbursement method in healthcare processes are of five types and each of them have
different extent of support that is provided to the healthcare professionals in Saudi Arabia. These
methods are:
 Bundled method
 Fee for service (within which Cost-based Reimbursement/Charge-based
Reimbursement and Prospective Payments is present)
 Discount on billed amount
 Value based reimbursement and
 Shared savings (Weernink et al., 2014)
Bundled payment methods are group of multiple services which are provides to the
healthcare service users or healthcare professionals working in any organization to cover their
multiple ailments or healthcare concerns with one policy or system (Diaby & Goeree, 2014).
Therefore, through this service, unnecessary services could be eliminated and depending on the
need of the services, customers are able to choose the required healthcare services (Kaplan et al.,
2014).

3HEALTHCARE ASSIGNMENT
On the other hand, fee for service is the reimbursement method where the service users
pays for services separately and hence, healthcare facilities are able to put extra cost in the care
process (Thiels et al., 2015). This is because this provisions provide them with the authority to
put extra charges for the quantity of care and hence this reimbursement methods provides benefit
to the healthcare facility, rather than the service users in Saudi Arabia (Porter & Kaplan, 2014).
Within this payment method, three categories are present such as Cost-based Reimbursement
or Charge-based Reimbursement and Prospective Payments. In these, cost based payment
allows the payer (public or private) to pay the amount which has been used to provide care to the
patient. Whereas, the prospective payment method is based on a fixed amount determined by
the payer both government and private for a specific category of ailment and patients covered
with such reimbursement could only use this method of payment if they are diagnosed with those
disorders. Besides these there is a reimbursement method namely the Capitation payment
method, this is a different payment method that is connected to a covered person, regardless of
the services received by them. Thus, if a patient is provided with check-ups, MRI, or other care
method, only a set amount would be paid, not each service provided.
Shared savings is the reimbursement process in which the healthcare facilities are
provided with incentives upon providing cost effective and quality treatment to a specific
community. There are several communities in Saudi Arabia, who are economically backward
and dependent on the free healthcare services provided by the government (Popesko, Papadaki &
Novák, 2015). Hence, providing them with quality care within a specific health cost requires
extra effort and hence, the government or the private reimbursement organization provides a
specific amount to the healthcare facility and the professional for providing the patient an
effective care treatment (Drummond et al., 2014). On the other hand, depending on the values of