Healthcare Fraud: Auditing and Detection Guide, 2nd Edition

“Persuasive”

This book also spends time reviewing reimbursement models. The profit incentive for one P-HCC player is often in direct conflict with another player. To fully appreciate the complexities of healthcare reimbursement systems, we need to return to our healthcare reimbursement history timetable.

In 1927, on the eve of the Great Depression, Baylor Hospital in Dallas entered into an agreement with the local teachers’ union. The agreement involved an employee deduction per paycheck paid in advance to the hospital. In turn, the hospital offered hospital-based care for teachers and their families. This deduction was determined using a community-based rating model. Eventually, an organization known as Blue Cross (hospital insurance only) emerged and started to provide the same type of program. Note, however, that a model known as prepaid practice groups (PGPs) already existed. Prior to this time period, private insurance did not exist for healthcare services. Health insurance offerings were avoided because appropriate premium rates were too difficult to predict, unlike rates for life insurance. Private healthcare insurance plans started to appear in the late 1930s and were driven by risk-based models. They focused on the experience of the group. Blue Cross (hospital insurance) now had competition and was losing its customer base due to the new private-payer offerings. Blue Cross shifted toward a modified adjusted community rate plan, before abandoning it completely and joining ...