Pricing Strategies for Health Care Reimbursement or Factors that Determine APN Reimbursement Rates
The price set for health care sevices is based on:
- Cost of producing the service (including overhead, individual costs, loans, incentives)
- Unit of service (billing is done for each encounter, or by bundling together a package of services)
- Market demands for specific service (such as breastfeeding consultation, nursing home care)
- Structural barriers to practice (such as state laws, availability of collaborating providers)
- Presence of competitive providers (reflected in competitive bidding for service contracts)
- Payment mechanisms & rates (such as in low-income areas or in corporate contracts)
- Advertising strategies & costs
(adapted from Hickey et al., 1996)
Each practice or health system can set its own prices, taking into account the above factors. However, third-party payers will decide who and how much they want to pay for services. Discounting and partial payments are very common.
