Refers to a financial accounting of all services that have been performed but, as a result of a short period of time, have not been invoiced or recorded. Estimates of costs for medical services provided for which a claim has not yet been filed. Refers to claims, which reflect services already delivered, but, for whatever reason, have not yet been reimbursed. These are bills "in the pipeline." This is a crucial concept for proactive providers who are beginning to explore arrangements that put them in the role of adjudicating claims--as the result, perhaps, of operating in a sub-capitated system. Failure to account for these potential claims could lead to some very bad decisions. Good administrative operations have fairly sophisticated mathematical models to estimate this amount at any given time. (Health Plus: Glossary)
IBNR claims IBNR claims can arise when a managed care company pays a healthcare provider a flat monthly fee, or capitation payment, to serve each of its members, and the provider, in turn, contracts with others who actually deliver medical services to plan members. When the provider receives the capitation payment from the managed Care Company before the actual service providers submit payment claims, the provider must estimate its liability for these claims.
Investors need to carefully analyze IBNR liabilities during diligence, as they can represent a significant liability. A solid understanding of the business models and contractual relationships used in these arrangements, along with an actuarial evaluation is essential to assessing this potential liability.(Conti, Elek, 2002)
The ability to record, processes, and interprets a broad range of financial and encounter data is critical to not only the oversight responsibility of the agencies, but also the continued success of the plans. The financial difficulties experienced by some plans in the early years were as a result of........
