Fee-For-Service Reimbursement Methods

Pay-for-performance payment model – healthcare payment systems that offer financial rewards to providers who achieve, improve or excel their performance on specified quality of care and cost measures (HealthCare Incentives Improvement Institute, N.D.)

Retrospective reimbursement method was based on actual cost the providers assumed the previous year. On this method rates were evaluated retrospectively and costs were used to determined the amount paid to the provider and had no incentive to control cost. On the other hand, prospective reimbursement methods can determine in advance how much a provider is going to get compensated. (Shi & Sing, 2017) The way retrospective reimbursement contain perverse financial incentives happened when institutions increased their profits by increasing costs and this system payment method was based on costs. Due to this issue the method was changed to the prospective to avoid abuse of the system.

First implemented in 1985 by Aetna (previously U.S. Healthcare), P4P programs were used to reward top performers and improve outcomes (Bruno, 2012). The incentives were meant to improve the quality of patient care by basing incentives on patient outcomes. Conversely, fee-for-service reimbursements are based on the treatments and set limits on the amount reimbursed for services. Because of these limits, incentives for use of pharmaceuticals and non-invasive procedures can impact how physicians practice.

Over the years there has been a pervasive issue in health care because of the Pay-for-Performance (P4P) Programs. Pay-for-performance is defined as a plan of reimbursement that connects compensation to quality and effectiveness as a motivation to develop the health care quality as well as making a decrease in costs. Hospitals and providers are being encouraged by government agencies and individual health plans to encourage excellence standards. Pay-for-performance methods could cause consequences such as reduction admission to care, add differences care, and weaknesses to improve. There could be an impact of the health care quality and efficiency by providers getting financial rewards if they show better care for patients as well as

It is important to follow payer guidelines when completing a claim form; otherwise, reimbursement will be delayed until the form is corrected.

Fee for service, as the name suggest is a method in which the healthcare provider is paid individually for each and every service provided. In this method the numbers of services determine the amount of reimbursement. This is where the healthcare providers misuse their authority and either provides more services than what is needed or just manipulate the number of services provided. There are specific

Any proposed policy to improve healthcare must address the current payment method, and the rising cost of healthcare. The common reimbursement method for healthcare services is the fee-for-service payment model. It requires providers to figure-out all incurred costs to render services for patients. Additionally, providers need to determine what is the insurer proposing to pay, which thought to reward quantity over quality. An alternative to this model is using a bundle

Corresponding with other facilities as to what kind of reimbursements they are receiving, and which ones provide the highest revenue, would be quite beneficial to a provider. One thing that a provider must also take into account, is the fact that if a proper diagnosis is not tied into a procedure, payment may be lowered or not made at all. That is why hiring an experienced billing clerk is crucial to a facility (Healthcare Management, (2002), IPA clinic coordination by: Ingrid

In comparison to the fee-for-service reimbursement model, bundled payments support, and pay care coordination, while reducing cost among a patient’s provider. A bundled payment compensates all of a patient’s health care suppliers with a sole, fixed, all-inclusive payment that shields suggested clinical services associated to the patient’s treatment, episode, or illness over a well-defined period of time (Association, 2013). These disbursements can be modified and constructed based on the patient’s health status.

• There is usually a deductible (anywhere from $500 to $1500 or more) before the insurance plan starts paying claims. The doctors will be reimbursed 80% for the services provided while the patient pays the remaining 20%.

Design approaches to payment that reduce waste while not diminishing quality, including reducing unwarranted payment variation;

Fee for service is a common healthcare reimbursement method performed among physicians in the United States. In short, fee for service is where a provider is reimbursed for each procedure or service performed by a set reimbursement rate. For example, a physician can perform an office visit, administer a vaccine, can draw and test 3 different labs and they will receive a separate reimbursement for each of these services. “Sometimes, there is little relationship between the actual cost to provide a service and it charge” (Casto & Forrestal, 2013, pp.7). A disadvantage for the patients with a fee for service method according to (Casto & Forrestal, 2013) is that they may have a higher deductible and co-insurance to pay, this is probably

The next payment model is one that offers fiscal incentives to providers. The financial incentives are often received by both the physician and hospital. This is called the pay for performance concept. The initial motivation for this shared risk contracting payment model is to advance compliance with standards of care. This payment model also aims to improve health outcomes and safety of patients (Kongstvedt, 2013).

Research studies on the incentive systems for health care providers, have been suggesting that providers who care for disadvantaged patient populations tend to perform less well on the quality measures that are commonly used in pay-for-performance programs. This leads to the redistribution of the much needed resources away from the providers who need it the most. They may also widen the gap in resources with providers who care for disadvantaged patients and the ones who do not, and also lead to providers altogether avoiding the disadvantaged patients as they may worsen their performance scores, under the current framework of the pay-for performance scheme.

This rewards quantity over quality. Fee for service does nothing to promote low cost, high value services, such as preventive care or patient education even if they could considerably enhance patients’ physical condition and reduce health care costs through the system. 78% of employer sponsored health insurance is was fee for service. Reimbursement is the form of payment for services provided. The most common practice is the insurance company pays to the provider directly. Under the MCO when receiving care the patient is usually required to pay a small amount out of pocket such as 15 or 20 dollars and the rest is picked up by the managed care plan.