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.
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'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).
On the contrary, the main argument for privatisation is that private companies have a profit incentive to cut costs and be more efficient. Privatization is argued to reduce waitlists the current system has been taxed with. Healthcare privatization would improve access to medical care for patients who purchase private insurance and, by freeing public resources, for those who remain in the public system (Dirnfeld, 1996). Quality of care is impacted by an underfunded public system which has led to poor health and deaths. In British Columbia Dirnfeld (1996) states the waiting list for elective surgery grew significantly and there are waiting lists of many months for coronary angiography and angioplasty treatments.
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
Fee for service (FFS) basically refers to a payment model where services are unbundled and paid for separately that is doctors and hospitals gets paid for each service they perform. While on the other hand, under the managed healthcare (capitation) the health care providers (physicians) are basically paid a set of amount for each enrolled person assigned to that physician or group of physicians whether that person seeks care per period of time. (Unknown, 2017). It is therefore clear that fee for service and the managed healthcare models have greatly contributed for to the high cost of insurance premiums to employers and individuals in the context that the fee charged by the private insurers and hospitals are too high for the poor through Medicaid thus no treatment was offered at low costs. That’s when managed health care gained its tight grip in 1990s premiums for private health sector crept up.
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
Newer models emerging now are more complex and most health care entities are ill equipped to transition to newer models. The Fee for Service model has positively influenced the health care system in several ways. It has allowed consumers to budget for health care services in that services have predetermined fees. The fee for service model has been critical to the health care system in that it has been a relatively simple system that was easy to follow and easy to understand for consumers.
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”).
