BHA FPX 4009 Assessment 1 Reimbursement Models in Healthcare BHA-FPX4009 Health Care Reimbursement Systems Reimbursement Models in Healthcare MEMO
To: Tory Holland, Director of Patient Services
From:
Date: July 31, 2022
Subject: Reimbursement Models in Healthcare (BHA-FPX4009 – Assessment 1)
Traditional reimbursement methods for medical providers include Fee for Service (FFS), Episode-Based Payment (EBP), and the Capitation model, along with some current trends that factor into the cost of healthcare services. Healthcare is transitioning from a payment system focused on the number of services delivered to a payment system based on the service’s value. Traditional and present payment methods reward quality outcomes. Since this patient visited the ER last month with some alarming symptoms yet was released, there appear to be some quality issues influencing payment. When he returned the next day, it was discovered that he had suffered an ischemic stroke. I will provide a deeper grasp of traditional and developing reimbursement approaches.
Traditional Payment Methods
The three primary methods of healthcare reimbursement payment are Fee for Service (FFS), the most popular form of payment that pays a doctor or healthcare provider for the volume and quantity of services supplied regardless of treatment outcome. Services are reimbursed based on codes and a schedule of fees used to regulate payment for services. The fee-for-service model was implemented to increase utilization but also increased cost as benefits are paid for individually. Capitation is when providers are paid a set sum based on the number of patients assigned regardless of the number of services rendered. Episode-based payment (EBP) is a single payment made to healthcare professionals for all services rendered to treat a particular episode of care, also known as a bundled payment model (Casto, 2019; Miller & Mosley, 2016).
Current Trends in Health Care Payment
Prior to recently, the focus in healthcare was on rewarding volume rather than value. When payment structure prioritizes volume-driven therapy above value-driven care, a problem arises. The response to the number of services that hospitals and doctors may offer overshadows the standard of care that is provided. By serving more patients, providers and institutions increase their income and profits, which in turn causes healthcare expenditures to rise without significantly improving patient outcomes. Although a volume-based payment system was put in place to increase the cost of patient services and give doctors compensation for seeing a large number of patients, it financially penalizes providers for simply preserving patients’ health, reducing mistakes, and avoiding unneeded care (Casto, 2019; Miller, 2009; Orszag, 2016). By switching from a volume-based payment system to a value-based payment system, both the patient and the physician benefit. The new payment models encourage patients and clinicians to focus on increasing health variable awareness and maintaining health.
Comparison of Models
In a fee-for-service arrangement, the patient pays a predetermined sum for their care, a traditional form of compensation that implies that the patient will pay a specific price for the services rendered, regardless of the caliber of treatment. Under this model, designated providers are compensated based on the number of treatments and services they ordered and rendered. Because of this, each time a patient visits a doctor for an appointment, consultation, or even if they are admitted to the hospital, they are in charge of covering the costs of the visit and any services provided. The collection of fees may not be specified in half of the procedures, making part of the payments generated superfluously. This compensation plan is regarded as the least effective since it does not factor in the quality of patient care it provides in its payouts (Casto, 2019; Miller, 2009; Orszag, 2016).
Capitation payments refer to a sum of money that a health insurance provider has agreed to pay an organization or physician for patient care. These are set in advance, monthly payments that a doctor, clinic, or hospital receives per person registered in a health plan or per population. Regardless of the frequency, a patient needs treatments, the monthly payment is computed in advance and fixed for that year. Capitation aims to reduce needless spending and the provision of services. On the other hand, it can also imply that patients see the doctor less frequently. By reducing the time patients spend with doctors, providers may attempt to boost profitability under the capitation model. Unlike capitations, which pay providers according to the number of members in the group, FFS compensates providers according to the volume of services rendered. Organizations with a large proportion of members with modest healthcare requirements may find capitation more economical (Casto, 2019; Miller, 2009; Orszag, 2016).
As a means of