Research Paper on Medicare Payment Basics

Paper Type:  Research paper
Pages:  4
Wordcount:  944 Words
Date:  2022-05-30


Finance and budgeting of a hospital are unlike that of most businesses or institutions as it involves careful evaluation of the process to ensure there is a balance between appropriate provision of services and the profits the institution makes. Hospitals are funded by the patients who pay directly when receiving services, governments through medical covers or programs to assist subsidize the cost of services and private companies that offer medical insurance services to the public. The cost of constructing the facility, equipping it with the necessary equipment and providing instruments to support the services is not done by the hospital. The government through grants is responsible for the whole process, and this allows the hospital to channel the funds to other areas to develop the hospital.

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Medicare is a federal health care insurance cover for people over 65 years of age, those younger than the mentioned age and have disabilities or those with End Stage Renal Disease (Medicare, 2018). The plan has been grouped into four categories. The first plan is Medicare Part A which is considered hospital insurance covers inpatient hospital stays, hospice care, skilled nursing facility and some home health care. Home health services are also considered in this group of cover (Commission, 2014).

The second group is Medicare Part B which deals with medical insurance covers preventive services, specific doctors' services, outpatient care, and medical supplies. It involves services such as diagnosis and treatment of the medical condition and includes supplies that meet your medical needs and that meet accepted standards of practice. The cover also includes medical research, getting the second opinion before surgery and durable medical equipment (Advisory, 2014).

The third group is the Medicare Part C which is considered as an advantage plan. These plans are offered by private medical insurance companies that contract with Medicare. The advantage plan provides all coverage in both Part A and Part B. The cover includes health maintenance organizations, preferred provider organizations, private fee-for-service plans, special needs plans, and Medicare medical savings account plans (Medicare,2018). Most advantage plans offer prescription drug coverage.

The final group is Medicare part D which deals with prescription drug coverage. This plan adds its services to the original Medicare and other plans that fall into the third category. The services covered allows the patients to go to the hospital and receive services without having to incur expenses they cannot manage. The system is supported through taxes remitted to the program by the government.

The Medicare prospective payment system allows the hospitals to receive payment for services they offer to the patients without the worry of patient s who will not afford the services and default at the expense of the hospital. The service is designed in a way that the payment is predetermined for a specific health service as well as the duration that the service will be offered (Medicaid, 2010). The hospital is aware of the exact amount that will be reimbursed before a procedure is carried out. If the duration paid for is more that the patient will spend the hospital still retains the full payment and gets to save money to allow for profits and running of other departments that depend on hospital finances. However, the expenses that arise out of the predetermined cost are not paid through the program.

Based on data from the table that communicates the amount of money reimbursed for services offered for Medicare members and the frequency of the services offered, the hospital can estimate the amount of money it receives and the amount of money that will pay for expenses and consequently draw a forecast of profits for the hospital. The Medicare prospective payment system supports the hospital finances and allows the institution to save money and keep profits for development and other responsibilities (Steinberg, 2006).

The hospital should develop more services for the patients visiting it for various services. The diagnostic services should be improved to cover more diseases to ensure patients visiting are not referred to other facilities (Larson, 2008). The institution should improve technology in the department to ensure the accuracy of its tests are standard and provide quality care to their patients. The hospital should be equipped with the right human resource that covers a wide range of fields to ensure the facility is a one-stop shop for all matters healthcare. The surgical department should be provided with functional and up to date technology to improve outcomes of surgeries and restore the patients' quality of life. The institution should engage in a routine review of their services and plan improvement to enhance the services offered in an environment that is constantly experiencing modification and innovation.


In conclusion, the hospital is a new facility that offers vital health services to members of a community. The hospital's performance has satisfied expectations for the first year and has managed to provide quality healthcare to the patients. However, certain aspects of the hospital set up need review and improvement to ensure sustained success. The improvement of the sectors increases the chances of success for the institution.


Advisory, M. P. (2014). Medicare Payment Basics: Outpatient Hospital Services Payment System. Retrieved from

Commission, M. P. (2014). Medicare Payment Basics: Hospital Acute Inpatient Services Payment System. Retrieved from

Larson, E. B. (2008). Rising Use Of Diagnostic Medical Imaging In A Large Integrated Health System. PMC.

Medicaid, C. f. (2010). Hospital Outpatient Prospective Payment System. Retrieved from

Medicare. (2018). What Medicare Covers. Retrieved from

Steinberg, s. H. (2006). How Does a Hospital Make Money? Physicians News Digest.

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Research Paper on Medicare Payment Basics. (2022, May 30). Retrieved from

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