MHA FPX 5006 Assessment 1 Financial Basics

MHA FPX 5006 Assessment 1 Financial Basics


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MHA-FPX 5006 Health Care Finance and Reimbursement

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Financial Basics

Revenue for healthcare providers comes in various forms, each with its own requirements and reimbursement processes. Understanding these intricacies is crucial for reimbursement and overall success. The primary revenue sources for providers include Medicaid, Medicare, and Managed Care coverages. Each has specific rules governing reimbursement, impacting when and how enrollees’ services are paid for. This presentation aims to delve into these revenue models, elucidating their purpose and reimbursement mechanisms.


Medicaid, established in 1965 under the Social Security Act, provides health insurance for low-income individuals, including the disabled, children, and elderly in need of long-term care. Administered jointly by federal and state governments, Medicaid varies across states, leading to coverage disparities. The Affordable Care Act expanded eligibility criteria, enabling broader coverage and standardizing benefit rules. Medicaid’s reimbursement process is tailored to cover medical services for economically disadvantaged individuals, albeit varying by state, posing complexities in understanding and navigating its requirements.

Medicaid offers two main payment models: fee-for-service and managed care. The fee-for-service model reimburses providers for individual services rendered, potentially incentivizing overutilization. Conversely, the managed care model focuses on overall patient care, allocating a fixed payment regardless of services provided, aiming to balance quality and cost-effectiveness.


Medicare, initiated in 1965, ensures healthcare access for individuals aged 65 and above, along with those with specific disabilities. Managed by the Centers for Medicare and Medicaid Services (CMS), Medicare comprises Parts A, B, C, and D, each covering distinct services. Reimbursement under Medicare involves coding services appropriately according to each part’s requirements, with claims processed by Medicare Administrative Contractors (MACs). Reimbursement mechanisms differ among parts, influencing provider reimbursement and patient responsibility.

Managed Care

Managed care plans collaborate with providers to deliver cost-effective care, emphasizing patient wellness and preventive measures. Three common types include Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs), and Point of Service (POS) plans, varying in flexibility and cost-sharing.

Managed care reimbursement hinges on reducing unnecessary services and clear payment mechanisms outlined in contracts. Payment methodologies include risk-based payment, percentage of premium, global fees, capitation, and discounted fee-for-service, each affecting providers’ revenue streams and care delivery.


The revenue models discussed are integral to healthcare organizations’ financial sustainability and patient care quality. Understanding and navigating reimbursement processes ensure providers deliver optimal care while maintaining financial viability, ultimately fostering long-term organizational resilience.


Centers for Medicare and Medicaid Services. (n.d.). Program History. Retrieved from Centers for Medicare and Medicaid Services:

Hurley, R., & Retchin, S. (2006). Medicare and medicaid managed care: a tale of two trajectories. The American Journal of Managed Care.

MHA FPX 5006 Assessment 1 Financial Basics

Mandelbaum, B. (2015, September 30). Understanding medicaid reimbursement. Retrieved from McKnights Long-Term Care News:

Matchinski, J. (2006, September). Managed care contracts and your practice. Retrieved from American Academy of Orthopedic Surgeons:

MHA FPX 5006 Assessment 1 Financial Basics

Shea, K. (2018). Course 6: medical billing for medicaid/medicare. Retrieved from Medical Billing and Coding Online:

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