Final answer:
Insurance reimbursements are determined based on the cost of services provided by medical care providers. Health insurance companies negotiate reimbursement rates with providers, which can impact the amount they receive. Factors such as the complexity of the service and the contracted rates between the provider and the insurance company can affect the reimbursement amount.
Step-by-step explanation:
In a fee-for-service health financing system, medical care providers receive reimbursement based on the cost of services they provide. The cost is determined either through negotiations between the provider and the insurance company, or through a fee schedule set by the insurance company. The reimbursement amount may vary depending on factors such as the complexity of the service provided, geographic location, and the contracted rates between the provider and the insurance company.
Health insurance can have an impact on provider reimbursements. Health insurance companies negotiate reimbursement rates with providers to establish the amount they will pay for specific services. These negotiated rates are typically lower than the actual cost charged by the provider. Providers may accept these lower rates in order to be included in the insurance company's network and have access to a larger pool of patients. The insurance company also sets limits on the amount it will reimburse for certain services, which can impact the total payment received by the provider.
For example, if a provider charges $100 for a service and the insurance company has negotiated a reimbursement rate of $80, the provider will receive $80 as reimbursement. The patient may be responsible for paying the remaining $20 as a co-payment or co-insurance, depending on the terms of their insurance plan.