What Are the Pros and Cons of Paying Physicians by Fee-for-Service

2000 Words Jul 12th, 2008 8 Pages
Relative to health care financing:
1) What are the pros and cons of paying physicians by fee-for-service?

Pros
• Patient’s own choice of doctors and hospitals, thereby improving accessibility.
• Patients may visit any specialist without a referral from a primary care physician.
• Improves physician autonomy.
• High service volume.

Cons
• 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%.
• Patients may have to pay up front for health care services and then submit a claim or bill for reimbursement.
• Some FFS plans only pay for reasonable and customary medical expenses.
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Physicians are offered generous pay with little apparent downside. This leaves large group practices struggling with recruitment and pay equity issues. However, the production expectations, financial risk, potential for loss of patient base, and academic interests keep many physicians within large multi-specialty groups (http://www.aamc.org). Many group practice and partnership arrangements also offer great compensation package to attract physicians, and then offer partnership or ownership equity as an additional incentive for loyal, productive service. Furthermore, many managed care organizations and other institutions offer clinical opportunities and growth in such areas as utilization management, total quality management, disease management, and population health programs. Teaching and research institutions are offer wide-ranging and often unique opportunities that let physicians expand their professional limits. And lastly, medical staff for federal, state, county, and city agencies, are all some of the major financial and motivational force for physicians.

3) Capitation? Instead of free choice of physicians as under a FFS payment, under capitation, patients receive services from physicians on whose list they are placed; physicians would receive a flat fee for each patient on their lists regardless of how much or how little care is provided (Ferguson, 2001). As with most health schemes, capitation has its advantages as well as the

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