BHA FPX 4009 Capella Principles of Healthcare Reimbursement Case Memorandum

Develop a two-page memo to help relevant stakeholders at Vila Health’s St. Anthony Medical center better understand traditional and emerging reimbursement models.


Note: This assessment uses the following media piece as the context for developing the reimbursement model memo. Review this media piece before you submit your assessment.

Basic understanding of the reimbursement system requires one to appreciate the size and scope of the system, the complexities associated with the system, and the various subsystems and payment rules associated with health care reimbursement and finance. As a dominant player in the health care sector, the U.S. federal government is the largest single payer for health care services. As a result of its size and dominance within the system, any changes made by the federal government regarding its reimbursement of health services profoundly affect those who are rendering the care, including providers, other payers, and the health system overall. In addition to government-sponsored health insurance, various other forms of health coverage, generally tied to employment as a benefit, were introduced in the United States to help offset the expenses associated with the treatment of illness and injury.

In an effort to address concerns within the U.S. health system regarding cost, access, and quality, Congress passed the Patient Protection and Affordable Care Act (PPACA or ACA) in 2010, with President Barack Obama signing it into law. Components of the PPACA included making health insurance coverage affordable, expanding Medicaid coverage, and improving quality while controlling costs. To this end, the ACA required the Centers for Medicare and Medicaid (CMS) to promote the concept of the accountable care organization (ACO) through a shared savings plan driven by a triple-aim approach. In addition to the ACO, the ACA required CMS to implement value-based purchasing programs that would reward hospitals for the quality of care they provided to enrollees.

As the recipient of the largest share of Medicare funds, the new value-based purchasing approach measures hospital performance using four domains:

  1. Clinical care.
  2. Safety.
  3. Efficiency and cost reduction.
  4. Patient experience of care (Casto & Forrestal, 2019, p. 274).

Each measure scores the hospital performance achievement as well as their performance improvement.

As a health care sector employee, understanding the complex U.S. health care reimbursement system allows one to serve as a reference to internal and external stakeholders, family members, and organizational departments whose needs often require a working knowledge of how the system is financed.

In this assessment, you demonstrate your understanding of traditional and emerging health care reimbursement models by composing a memo that outlines the characteristics and differences between reimbursement models. This memo targets relevant stakeholders from the Vila Health media simulation based in St. Anthony Medical Center.


Casto, A. B. (2019). Principles of healthcare reimbursement (6th ed.). Chicago, IL: AHIMA Press.

Demonstration of Proficiency

By successfully completing this assessment, you will demonstrate your proficiency in the following course competencies and assessment criteria:

  • Competency 1: Compare current trends and traditional methods of payment in the health care industry.
    • Describe traditional payment methods in health care, such as fee-for-service or capitated payment.
    • Describe current trends in health care payment, such as value-based or accountable care organizations.
    • Describe the difference in reimbursement between traditional and newer models of reimbursement in a specific patient scenario.
  • Competency 2: Assess health care reimbursement.
    • Compare and contrast how quality outcomes are rewarded under traditional and current payment methodologies in health care.
    • Explain reasoning for newer models of reimbursement in health care.
    • Identify quality concerns affecting reimbursement given a specific patient scenario.
  • Competency 4: Communicate in a manner that is scholarly, professional, and respectful of the diversity, dignity, and integrity of others and is consistent with health care professionals.
    • Demonstrate effective communication through writing and proper use of APA style with no significant errors, and supports analysis and recommendations with appropriate current literature.


You will use Vila Health: Investigating a Readmission as the context to address Part 4 of this assessment.

Several of the Vila Health’s stakeholders are seeking clarification regarding new reimbursement models they have been hearing about recently. For this assessment, prepare a two-page memorandum outlining the differences between the new reimbursement models and prior, traditional models for stakeholders.

Support your assertions in the memo with at least three academic sources. This may require you to do additional independent research. You may wish to consult the Health Care Administration Undergraduate Library Research Guide before you begin any additional research.

This assessment has four main parts. Before you begin, be sure to review the scoring guide for this assessment.

Part 1: Traditional Reimbursement Models

Describe traditional reimbursement models like fee-for-service or capitated payments. You might want to consider the following when developing this part:

  • What are the key characteristics of these reimbursement models?
  • How was quality monitored under these models?
  • How was quality rewarded under these models?

This part should be at least one paragraph long, but probably no more than half a page.

Part 2: New Reimbursement Models

Describe current trends in reimbursement models like accountable care organizations or value-based payments. You might want to consider the following when developing this part:

  • What are the key characteristics of these reimbursement models?
  • How was quality monitored under these models?
  • How was quality rewarded under these models?

This part should be at least one paragraph long, but probably no more than half a page.

Part 3: Comparison of Models

Develop a concise comparison of the key similarities and differences of the reimbursement process between traditional and current models. Also, include considerations related to the role of quality in reimbursement, and why it might be included in newer models.

This part should likely be between a half and one page long.

Part 4: Quality Concerns

Specifically address the recent problematic patient case from the Vila Health: Investigating a Readmission scenario. Briefly discuss how the care provided would be reimbursed under prior models versus reimbursement under newer models, based on your assertions in Part 3 of your memo. Also, identify quality issues that will likely impact the organization’s reimbursement under new payment models.

This part should be at least one paragraph long, but probably no more than half a page.

Additional Submission Requirements

  • Structure: Structure your submission like a memo, with an additional, APA-style References page. You may wish to refer to the following example when developing your memo:
  • Length: 1–2 pages, plus a References page.
  • References: Cite at least three current scholarly or professional resources.
    • Your textbook can be one of the three.
  • Format: Use APA style for references and citations only. Refer to:
  • Font: Times New Roman, 12 point, double-spaced.

Expert Solution Preview

Part 1: Traditional Reimbursement Models

Fee-for-service and capitated payments are the two traditional reimbursement models in the healthcare industry. Fee-for-service is a payment method where a healthcare provider is reimbursed for every service rendered to the patient. The key characteristics of this reimbursement model are that it provides a higher degree of flexibility to providers and patients as there are no restrictions on the services a provider can offer. Quality was monitored during this reimbursement model by adhering to healthcare policies and regulations. Under this model, quality was rewarded by providing incentives for high patient satisfaction rates.

Capitated payment, on the other hand, is a predefined amount paid to healthcare providers for every patient covered under the plan. The characteristics of this reimbursement model include increased accountability and responsibility to providers for patient outcomes. Quality was monitored under this reimbursement model by analyzing readmission rates, emergency room visits, and other patient population outcomes. Quality was rewarded under this model through bonus payments for providers who maintained or improved their quality outcomes.

Part 2: New Reimbursement Models

Accountable care organizations (ACOs) and value-based payments are the new reimbursement models established in the healthcare industry. ACO is a provider-led organization responsible for quality healthcare delivery. The key characteristic of this reimbursement model is its focus on coordination among healthcare providers and providing value-based care. Quality is monitored under this reimbursement model by implementing performance measures, like patient satisfaction rates, and reducing healthcare costs. Quality is rewarded under this model by shared savings programs and bonus payments for providers who maintain high quality outcomes.

Value-based payments are also a recent model that focuses on improving patient outcomes while reducing healthcare spending. The key characteristics of this reimbursement model include value-based care, preventive measures, and quality outcomes. Quality is monitored under this reimbursement model through performance measures, such as lower readmission rates and higher patient outcomes. Quality is rewarded under this model by providing financial incentives for providers who demonstrate cost-effective quality patient care.

Part 3: Comparison of Models

The traditional and new reimbursement models differ in many aspects. Traditional models focus on providing services that hospitals were reimbursed for rather than quality outcomes, while the new reimbursement models focus on incentivizing quality and cost-effectiveness. In traditional models, providers were reimbursed for services regardless of outcomes, while in new models, providers are reimbursed for value-based services, including preventive care activities that aim to improve patient outcomes. The new models also require more accountability, responsibility, and collaboration among healthcare providers.

Part 4: Quality Concerns

In the problematic patient case from the Vila Health: Investigating a Readmission scenario, the care provided would be reimbursed under prior models through fee-for-service payment for every service rendered to the patient. Under newer models, the reimbursement would be through shared savings programs or value-based payments where quality is rewarded for providing preventive care services to improve patient clinical outcomes and reduce healthcare costs. In general, quality concerns that could impact reimbursement under new payment models include high readmission rates, negative patient outcomes, and high healthcare spending, among others.

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