MODES OF PAYMENTS

“Modes of payments at Medical Institutions”



“Modes of payments at Medical Institutions”

Fee-for-service

Most clinics and hospitals are paid by the insurers on a fee-for-service basis. This adds to hospitals' incentives to prolong inpatient care. Under the present scheme, healthcare premiums are payable by those aged 40 or older. In 2004, the scheme's rising administrative costs have prompted the government to consider lowering the age at which premiums are payable to include those in their 20s and 30s, while also increasing the individual's contribution to treatment costs. This is best when the average use of the bed is longer than typical cases, so the patient does not have to pay highly for the stay, instead only pays for the services the hospital or medical institute gives them (Acute Care, 2009) (“Acute, 2009).

Per-diem

The payment system of the “Per Diem” can be best understood in the context of the medical company. The medical company can adopt the Per-diem system to handle that excess amount to avoid being "unaccountable." Currently, a medical company can provide workers who are away from home a per-diem allowance for meals and incidental expenses of up to $52 daily without substantiation from the worker on its use. Any amount beyond $52 is an excess allowance the worker must either give back or give a report on his or her W-2 form as wages (Reimbursement, 2008) (“Acute, 2009).

Revenue Ruling 2006-56 provides examples of situations where the IRS would deem a medical company's per-diem program to be an "unaccountable plan," which is to be avoided. It is important to note that the examples given in the ruling are extreme circumstances that demonstrate patterns of abuse. The IRS might determine that a medical company has an exempt plan if there are no processes or mechanisms to establish if the per ...