Provider payment is an essential part of the health care industry and although there are a number of payment models throughout the system the most common or talked about methods are the fee-for-service and capitation payment models. As with all payment models, there are a number of advantages and disadvantages to the payer, the provider and the consumer. This paper will primarily act to define each model and explore their advantages and disadvantages. Kongstvedt notes that the distinction between reimbursement and payment is important in the health care industry. He writes “reimbursement is applied to everyone in the same way… payment on the other hand has far less implications of fairness or equity” (2013). Essentially, this means that
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As with all payor systems understanding and acknowledging both advantages and disadvantages help to provide a well-informed decision on which payment method works best for the facility and its primary consumers. Fee-for-service health insurance provides its members with an unlimited amount of choice. In addition to this, this payor system allows for its members to have direct access to care, with little to no wait times to see providers. As with many indemnity plans, consumers are able to pick and choose where they receive care without requiring a referral from a primary care provider, thus avoiding the gatekeeper system. With such a system, both the health care consumer and the provider (physician) benefits from the transaction. Consumers are able to receive the care they need when they need it and are also able to receive said care from whichever facility/provider they prefer. On the provide side, physicians are able to bill based on procedural services, which allows them autonomy over which patients they see and how much they get paid for the services they provide. An additional advantage of the plan is the accuracy of services billed provided by the physician. The disadvantages to this payor model include but are not limited to, the cost of FFS plans, the medical services provided by the plan, and the physicians ability to manipulate the system. According to Alex Drossos 2002 health economics paper, the fee-for-service model gives physicians financial incentives to over treat patients (2002) thus provoking physicians to refer patients back for continued care. This belief is consistent with the theory of churning that Kongstvedt highlights within chapter five of his essentials of managed health care text. In addition to this, FFS systems are typically used for reactive medical care rather than preventative
As with all payor systems understanding and acknowledging both advantages and disadvantages help to provide a well-informed decision on which payment method works best for the facility and its primary consumers. Fee-for-service health insurance provides its members with an unlimited amount of choice. In addition to this, this payor system allows for its members to have direct access to care, with little to no wait times to see providers. As with many indemnity plans, consumers are able to pick and choose where they receive care without requiring a referral from a primary care provider, thus avoiding the gatekeeper system. With such a system, both the health care consumer and the provider (physician) benefits from the transaction. Consumers are able to receive the care they need when they need it and are also able to receive said care from whichever facility/provider they prefer. On the provide side, physicians are able to bill based on procedural services, which allows them autonomy over which patients they see and how much they get paid for the services they provide. An additional advantage of the plan is the accuracy of services billed provided by the physician. The disadvantages to this payor model include but are not limited to, the cost of FFS plans, the medical services provided by the plan, and the physicians ability to manipulate the system. According to Alex Drossos 2002 health economics paper, the fee-for-service model gives physicians financial incentives to over treat patients (2002) thus provoking physicians to refer patients back for continued care. This belief is consistent with the theory of churning that Kongstvedt highlights within chapter five of his essentials of managed health care text. In addition to this, FFS systems are typically used for reactive medical care rather than preventative