What is one key difference between inpatient and outpatient contracting?

One key difference between inpatient and outpatient contracting lies in the reimbursement methodology. Inpatient care typically involves a per diem or a diagnosis-related group (DRG) payment system, where the payment is predetermined based on the type of condition treated and the length of stay. This approach simplifies billing and ensures that hospitals are compensated for the full episode of care.

In contrast, outpatient services generally utilize a fee-for-service model, where providers receive payment for each service rendered. This model incentivizes efficiency because the focus is on volume and the specific services provided to patients, rather than the overall cost associated with a lengthy hospital stay.

These fundamental differences in how healthcare providers are reimbursed shape the contract negotiations and terms between insurance companies and healthcare facilities, making reimbursement methodology a critical aspect in distinguishing between inpatient and outpatient healthcare contracts.