Fee-for-service (FFS) and capitated reimbursement schedules are two distinct models used in healthcare to determine payment for services rendered. With the FFS payment method, services are unbundled and health care providers are paid for separately for each individual service performed. On the other hand, capitation is a quality-based payment model in which health care providers are paid a predetermined, set amount of money to covered the approximated cost of services provided for a specific patient per period of time. There are advantages and disadvantages to either model which I will discuss below.
Fee-for-service (FFS) Pros:
Providers are incentivized to improve their quality of service. In theory, since doctors are paid per procedure
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FFS offers more flexibility and transparency for the patients. The patient is able to choose providers and services based on their preference or need and the patient also has access to the cost of individual services to be rendered.
Fee-for-service (FFS) Cons:
1.On the flipside, with FFS, there is a concern about cost escalation and lack of provider accountability. Since provider revenues are tied in with the number of services performed, FFS may encourage the provider to order unnecessary treatments or procedures to line their own pockets. This translates to increased expense for the patient as well as possible negative health outcomes from exposure to treatments or procedures that would have otherwise been avoided.
2. This focus on maximizing services provides can also lead to gaps in care. With the provider fixated on revenues, there is a risk for suboptimal care coordination rather than on focusing on the overall well-being of their patient. There is also a risk for higher health care disparity. The higher costs associated with FFS leads to barriers for low-income patients.
Capitation
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Capitation Cons:
Although providers are not reimbursed per service, they are reimbursed per patient. Due to this, there may be a decrease in quality of services provided since more patients seen equates to more revenue.
There is a risk of underutilization of services with capitation. Care rationing is an inherent risk of capitation as providers may try to limit services or treatment as way to control costs and this can mean a delay in or lack of access to a service that may in fact be necessary.
Patient enrollment bias is an issue as well which can lead to disparity in health care access. Providers may be inclined to take on healthier patients as to minimize risk and maximize profits. For this reason, patients with chronic or complex concerns may be excluded as there is a fear that the capitation reimbursement may not adequately cover their healthcare