Third-Party Payers
Posted on December 9, 2008 - Filed Under Finance
Up to this point in the chapter, basic concepts about the form and ownership of healthcare businesses have been considered. A large proportion of the health services industry receives its revenues not directly from the users of their services—the patients—but from insurers known collectively as third-party payers. Because an organization’s revenues are key to its financial viability, this section contains a brief examination of the sources of most revenues in the health services industry. In the next section, the types of reimbursement methods employed by these payers are reviewed in more detail.
Health insurance originated in Europe in the early 1800s when mutual benefit societies were formed to reduce the financial burden associated with illness or injury. Today, health insurers fall into two broad categories: private insurers and public programs.
Private Insurers
In the United States, the concept of public, or government, health insurance is relatively new, while private health insurance has been in existence since the turn of the century. In this section, the major private insurers are discussed: Blue Cross/Blue Shield, commercial insurers, and self-insurers.
Blue Cross/ Blue Shield
Blue Cross/Blue Shield organizations trace their roots to the Great Depression, when both hospitals and physicians were concerned about their patients’ abilities to pay healthcare bills.
Blue Cross originated as a number of separate insurance programs offered by individual hospitals. At that time, many patients were unable to pay their hospital bills, but most people, except the very poorest, could afford to purchase some type of hospitalization insurance. Thus, the programs were initially designed to benefit hospitals as well as patients. The programs were all similar in structure: Hospitals agreed to provide a certain amount of services to program members who made periodic payments of fixed amounts to the
hospitals whether services were used or not. In a short time, these programs were expanded from single hospital programs to communitywide, multihospital plans that were called hospital service plans. The American Hospital Association (AHA) recognized the benefits of such plans to hospitals, so a close relationship was formed between the AHA and the organizations that offered hospital service plans.
Taken From : HEALTHCARE FINANCE
Comments
Leave a Reply
