Explain the pros and cons of four provider payment methods: (a) fee-for-service; (b) capitation; (c) global capitation; and (d) bundled payment. The fee for service method the physician is paid for an amount per the average of patients that they have seen and which procedure that are used to treat a patient. Through the fee for service there are no fixed payments based on the providers billing for their services upon being delivered. No insurance companies are involved with the fee for service.
This key element restricted health insurance companies in increasing premiums and an opportunity to renewal. The cons with this element is the increase of health insurance premiums across the board. Healthy people are paying the same premiums of someone
Define, compare and contrast fee-for-service and managed health care plans. What are the similarities and differences? Support your response with one citation and specific examples. Fee for service plans “Fee-for-service plans contain a variety of stipulations designed to control costs and to limit a covered individual’s financial liability” (Martocchio, 2014, p. 147). This agreement is that the consumer pay individually for each aspect of the goods or services receives.
Gruber then goes on to say that this type of payment system would create competition in the Medicare program and help the government set an optimal reimbursement level (472). The benefit of this type of system is that the government is able to find the optimal amount of reimbursement without putting more resources into the program meaning that less will be spent in the future. Another benefit is that the individuals covered by medicare would be able to get the exact coverage they require as opposed to coverage options that are pre-set by the federal government. But this type of system does come with a cost. If a premium support system were created it would redistribute “from the sickest enrollees to the most healthy” (Gruber, 472).
Under capitation, insurers may have a financial incentive to limit both unnecessary and necessary care in order to retain a larger portion of their capitation payment. Pros and cons of traditional FFS: Managed FFS retains the freedom of choice that is hallmark of traditional Medicare and Medicaid. Since FFS model does not shift financial risk onto a third party, the model in general envision a more targeted selection of beneficiaries, which allows concentration of resources on those most at risk of health crises and higher costs. Managed FFS could be an attractive option where establishing HMO-like managed care networks is difficult, like rural
Fee for Service- The fee for service insurance plan doesn’t have any known restrictions however, the plan does allow you to have the flexibility of which doctors you want to see, and where you want to get medical services but in the long run the premiums are very costly which isn’t beneficial for this kind of insurance plan to utilize. (Fee for Service Plan: Restrictions) Managed Care Plans Having a managed care plan has its perks but also has disadvantages associated with it. If you do have a managed care plan, one of the disadvantages of the plan are that you may not be able to see your physician if they are out of network. Most managed care plans place restrictions on their patients to where they can receive care through the providers that are established with the managed care plan.
The physician also risks not getting paid by the insurance company if they do not administer the less expensive treatment. This conflict could also be
It increases the demand for the services and word spreads of the physicians (Peloso,
It's how Medicare and some private insurance companies pay hospitals for the care of patients (Cherry, Jacob, 2014 p. 109). The payment is fixed and predetermined per diagnosis. If the hospital spends less than that set price to treat that patient then they make money, if they spend more they lose money. Prompting hospitals to reduce services as much as possible so they can make a profit. Cherry, B., Jacob, S.R. (2014).
The disadvantage of this contract would be that if the patient requires more treatment for that month, then
Payment mechanism are contracts among patients, providers, and payers to provide health care services. Payment mechanisms attempt to improve management, and quality of care. There are several hospital payment system that have both advantages and disadvantages on cost containment and provider behavior. Four of these payment systems include, fee-for-service, per diem, DRG based payment system, and capitation. Cost containment as a policy issue is related to the question of what the right amount systems should pay for health care (Carrin, 2003).
Depending on which approach is being used the cost for bed/day, medical treatment and nursing care can be higher and lower. With this new
Another efficient advantage is due to the fact that on average primary level health care are less expensive compared to secondary and tertiary health care such as specialists. This means that due to gatekeeping, patients that don’t require specialist (secondary health care) do not get to see them, reducing in cost majorly. For example, a study that was conducted in 2014 found that since Austria is not subjected to gatekeeping, patients in Austria tend to seek specialist 4 times more compared to countries that are subjected to gatekeeping (Laura, 2015). This means that cost is higher due to higher over-utilization of
Davis and Guterman stated, “Performance based programs will likely give health care organizations a financial incentive to focus on implementing models of care that increase the quality of care a reasonable cost” (as cited in Knickman, Jonas & Kovner, 2015, p. 221). More money is being spent towards the facility and less to the
The main drawback is the enormous prices and the exorbitant fees related to healthcare services. The quintessential example of this is surgery. Before a surgery is even considered, patients have to meet with a doctor to see if surgery will be necessary (“The High Cost”). Out of all the expenses, this is probably one of the lowest. In a surgery, there are always two “physicians” present, in addition to the “surgeon’s assistant” (“The High Cost”).
