What is a contractual allowance or discount in health care

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Reference no: EM133220877 , Length: Word Count: 8 Pages

Assignment - Contractual Allowances & Discounts Research Paper

The contractual allowances/discount paper will require you to research contractual allowances/discounts to determine why reimbursement rates vary for procedures and pharmaceuticals. Contractual allowances/discounts enable the provider of reimbursement (such as managed care) to negotiate a reimbursement that is less than the list price for that given service. An example would be a discount for a knee replacement. The knee replacement is listed at $50,000 (retail price), but the managed care company requests a 10% discount based on volume. The health care organization or provider agrees to the terms and will accept $45,000 for a knee replacement from the managed care company based on the agreed discount. These negotiations are common in managed care plans.

The following topics should be included for your research paper:

What is a contractual allowance or discount in health care?

How are contractual allowances or discount negotiated?

Why does managed care request contractual allowances/discounts?

What factors can influence the amount of contractual allowance or discount?

Can the quality of healthcare service rendered impact the level(s) of a contractual allowance or discount?

How are contractual allowances/discounts calculated?

What are some factors that can influence the amount of the discount?

Why is it important for health care organizations and providers of health care to understand how contractual allowances/discounts function?

Reference no: EM133220877

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