Fee For Service Utilization And Reimbursement

1361 Words Jul 13th, 2015 6 Pages
Fee for Service Utilization and Reimbursement
The business goals of modern healthcare include the need to increase patient safety and satisfaction, to eliminate fraud, waste, and abuse, and to maintain employee satisfaction in order to control costs and increase profitability. However, in reviewing the history of healthcare reimbursement, this was not always the case and at a point in time existed where the cost of healthcare was escalating exponentially due to abuses in the way providers were allowed to utilize and bill for services. Due to this, the changes in how healthcare services are reimbursed changed dramatically over the past several decades with those changes designed to create savings for insurers and those entities paying
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The fee for service structure did not require adherence to modern claim submission rules such as payment based on the diagnosis related group (DRG). Therefore, provider billing and utilization management did not exist; this led to the three major areas of failure with fee for service insurance.
Uncontrolled utilization essentially allowed providers to over-utilize various services with little or no consequence for abusive billing practices. Uncontrolled prices and payment led to spiraling increases in the cost of patient care due to a lack of uniform reimbursement rates and policies in place. Fee for service also created an environment where it was profitable for a provider to concentrate on treating illness rather than less profitable wellness programs.
Uncontrolled Utilization
In a fee for service payment arrangement, patients have the ability to obtain services from any provider, without the need to obtain a referral or authorization for services. This led patients in increasing numbers to seek medical care for specialists and from facilities that provided newer technology and equipment, as the public perception was health care provide by specialists in modern facilities would be better quality health care. This skewed ideology led to competition between providers and facilities, creating a highly competitive environment to attract patients.
Because the average health care consumer began to equate
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