To begin, managed care is defined as “A payment model where services are unbundled and paid for separately.” Additionally, health care providers are paid for each service performed. This system incentivizes physicians to provide as many services as possible, as payment is is dependent on the quantity of care. Some examples of these services include office visits or diagnostic tests. To many experts, the FFS model is a broken model that doesn’t take into account the quality of services performed. Fee-for-service is also one of the main reasons for the exponential growth of healthcare expenditures in the US. One link between FFS and growth of healthcare spending is delivery of unnecessary services. This happens because doctors will be reimbursed more if they provide them, regardless of its value to the health of the patients.
Although it does come with many problems, the fee-for-service model should not be eliminated, at least not outright. The fact is, most physicians prefer fee-for-service because it's how they make most of their money. When you take away the money, which is a big driver in health care costs, you also take away a bit of the physician’s incentives. For that reason, the healthcare field needs to think of creative
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MIPS judges provider performance based on 4 categories: Quality, Cost, Advancing care information, and Improvement activities. A score is created and if the given score is above the threshold, a positive payment adjustment is given, and likewise, a score below the threshold returns a negative payment adjustment. We can see how this payment model incentivizes provider performance, whereas fee-for-service does not. The base capitatation model that is built into MIPS also incentivizes lower utilization of unnecessary services, as they are no longer cost