Final answer:
A case-mix reimbursement system like the SNF PPS is a predetermined method of reimbursement, encouraging cost-effectiveness by providing a set rate based on a patient's condition, challenging insurance markets with the risk of adverse selection.
Step-by-step explanation:
From a health information management perspective, a case-mix reimbursement system such as the SNF PPS (Skilled Nursing Facility Prospective Payment System) is a method of reimbursement where healthcare providers are paid a predetermined amount based on the classification of care needed for the patient's condition. Unlike a fee-for-service system where reimbursement is based on the cost of services provided, the SNF PPS and similar case-mix systems aim to promote cost-effectiveness and efficiency within healthcare facilities by offering a set rate determined by patient demographics, diagnosis, and required treatments. This system presents a challenge to manage the risk of adverse selection in insurance markets, where there is a potential for an imbalance of high-risk and low-risk insured parties that could affect the cost and quality of care.