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Financial Models of Reimbursement

The modern US health industry is market-based, inherently raising the subject of financial incentives and reimbursement for patients. As the fee-for-service traditional delivery of care is experiencing significant challenges, many healthcare providers along with relevant stakeholders are considered lower-costing value-based care. The most well-known programs are Medicare and Medicaid which utilize value-based financial models of reimbursement for specific populations. This report will investigate the components and processes of these systems.

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Both Medicare and Medicaid were founded in 1965 as part of Lyndon B. Johnson’s healthcare reform to offer government-funded health services and insurance to vulnerable populations. Medicare is a program aimed at the elderly, with the minimum age of eligibility at 65. It is meant to aid the health and longevity of elderly populations. However, the years, the program has expanded to include a wider population and coverage for more services and conditions.

For example, in 1972, it was expanded to include individuals with disabilities and end-stage renal disease, no matter the age. In 2003, Medicare underwent a significant reform, introducing the Medicare Prescription Drug Improvement and Modernization Act which began offering Part C Medicare Advantage Plans which are plans offered through private insurance and approved by the program. In 2006, Part D or a Drug Prescription Plan was added which aids in payment of prescription drugs through insurance (Centers for Medicare and Medicaid Services, 2018)

Medicaid was created as part of the Title XIX of the Social Security Act. It is devised to provide insurance coverage to low-income individuals. However, the program strongly depends on state participation, and eligibility requirements may vary. In 1997, the Children’s Health Insurance Program (CHIP) became a law to improve insurance coverage for children in families that are unable to afford private insurance but do not qualify for Medicaid.

The Affordable Care Act (ACA) enacted by President Obama in 2010 generally improved coordination and provision of care for both Medicare and Medicaid. It redesigned the delivery of healthcare model and expanded Medicaid funding for the states attempting to increase insurance coverage nationwide (“Program history,” n.d.). Ever since its implementation Medicaid has had historic public health benefits, as low-income populations are able to gain access to fundamental healthcare.

It has led to improved patient outcomes and reduction of negative national health indicators such as infant mortality (Goodman-Bacon, 2018). The current political and economic realities do not present an opportunity for policy change. There may not be an inherent need for it, but rather an improvement on the delivery of services and funding capabilities, transitioning to such aspects such as managed care which lowers costs and focuses on long-term welfare of citizens.

Florida has not accepted the federal Medicaid expansion as of 2018. Florida has approximately 4.2 million individuals covered under the program and would have seen coverage for almost 1.4 million more had the expansion been accepted with an approximated federal financial package of $65.2 billion. Considering that at least 384,000 people have no realistic access to health insurance or services and 68% of the state supports the expansion, Florida’s Republican policymakers refuse to participate in the program, leaving the state’s health care system ranked one of the worst in the country (Norris, 2018).

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There is a significant insurance gap in the state, with a large number of individuals unable to afford costly services nor qualify under strict guidelines of non-expanded Medicaid. Florida has qualified for the 1.5 billion low-income pool (LIP) funding from the federal government which can be distributed for health-related purposes, but it is unsustainable, and the state is essentially overpaying for the health care system maintenance (Berman, 2018).

As of 2019, 14 states have not adopted the Medicaid expansion provided under the ACA. Despite practical evidence and expert opinion emphasizing both fiscal and public health benefits, it is vehemently opposed by conservative across the country. States that have denied the expansion are Republican-led or traditionally conservative. Therefore, the primary point of rejection is partisan politics, as Obamacare has become a symbol of government intrusion into state rights and is outright rejected by many Republicans and avoiding personal responsibility (Baker & Hunt, 2016).

Critics of Medicaid often regard it as unsustainable and the costs of Medicaid expansion are far outweighing any expectations or benefits for the states. However, that is not accurate either, as the expenses saw a rise sharp initially due to states enrolling more people than planned. In turn, the federal government has undertaken covering any additional expenses, insulating state budgets (Sommers & Gruber, 2017). Other arguments include distrust of the federal government to upkeep financial commitments and the burden of transitioning costs to state budgets in small increments through the next decade.

The health care reform with Medicaid expansion has led to an increase in demand for health services. Nurses, particularly family nurse practitioners, are the group that is a solution for meeting this demand. Nurse practitioners are more likely to work in primary care and it is vital that they accept Medicaid reimbursement practices. Medicaid beneficiaries often struggle with various issues such as health literacy, securing appointments, and access to care.

Therefore, favorable environments and NP practices can significantly benefit new Medicaid patients (Barnes et al., 2016). Nurse practitioners are cost-effective providers of quality healthcare. The level of registered nurse practice on various levels, such as national, state, or local, directly correlates with patient outcomes of Medicare-Medicaid beneficiaries. NPs are able to positively influence hospitalization and readmission rates as well as a range of other quality health indicators in the community (Oliver, Pennington, Revelle, & Rantz, 2014). This suggests that NPs should be given the clearance to fulfill the full scope of practice in providing healthcare delivery without the necessity of direct physician supervision.


Baker, A. M., & Hunt, L. M. (2016). Counterproductive consequences of a conservative ideology: Medicaid expansion and personal responsibility requirements. American Journal of Public Health, 106(7), 1181-1187. Web.

Barnes, H., Maier, C. B., Altares Sarik, D., Germack, H. D., Aiken, L. H., & McHugh, M. D. (2016). Effects of regulation and payment policies on nurse practitioners’ clinical practices. Medical Care Research and Review, 74(4), 431-451. Web.

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Berman, L. (2018). Expand Medicaid: Floridians funding health care that doesn’t work for them. South Florida Sun-Sentinel. Web.

Centers for Medicare and Medicaid Services. (2018). CMS’ program history. Web.

Goodman-Bacon, A. (2018). Public insurance and mortality: Evidence from Medicaid implementation. Journal of Political Economy, 126(1), 216-262. Web.

Norris, L. (2018). Florida and the ACA’s Medicaid expansion. Web.

Oliver, G. M., Pennington, L., Revelle, S. & Rantz, M. (2014). Impact of nurse practitioners on health outcomes of Medicare and Medicaid patients. Nursing Outlook, 62(6), 440-447. Web.

Program history. (n.d.). Web.

Sommers, B. D. & Gruber, J. (2017). Federal funding insulated state budgets from increased spending related to Medicaid expansion. Health Affairs, 36(5), 1-8. Web.

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StudyCorgi. (2020) 'Financial Models of Reimbursement'. 10 December.

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