Reimbursement

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Reimbursement is an act of compensating someone for an expense.^[1] Often, a person is reimbursed for out-of-pocket expenses when the person incurs those expenses through employment or in an account of carrying out the duties for another party or member.

Common examples are firms compensating individuals who buy supplies for their companies, or firms compensating employees on field or out-of-town assignments who pay for their stay and transportation.

Reimbursement can be of many types like day care, mobile expense, transport, medical expense, study expenditure.

Medical device manufacturers provide their customers (hospitals, physicians e.g.) with sufficient information, how to reimburse the therapies. For example see the German Medtronic Reimbursement homepage^[2]

Use as Cost Reduction Measure

Organizations can reduce their costs by instating reimbursement processes which deter reimbursement seekers. If a reimbursement process is made to be slow, cumbersome, or inconvenient to the seeker, then the probability that a seeker will not successfully obtain the funds increases and, in aggregate, results in fewer paid reimbursement claims.

Elements of cost-reducing reimbursement process:

• Insistence on submission of printed reimbursement forms (instead of email or online forms)
• Forms are lengthy and require detailed explanations
• Process requires dropping-off of paper forms at specific locations in person
• Stringent rejection of forms when there are errors, even if minor or inconsequential
• Requiring original receipts to be attached with form (instead of copies)
• Issuing paper checks (instead of cash or direct deposit)
• Requiring checks to be picked up at specific locations
• Form drop-off and check-pick up locations are distant and have narrow and inconvenient operating hours

These elements are used by many organizations, including: non-profits,^[3] governments,^[4] universities,^[5] and insurance companies.^[6]

Because these elements may consume significant amount of time, the seekers can insist that they be compensated for the time spent on the reimbursement process.

References