The Affordable Care Act, established in 2010, included a reimagining on how medical practitioners would be paid. This put emphasis on better quality at lower prices. In summary, the goal was to make the value of medical treatment better.
Prior to this, there have already been many different healthcare payment models that practitioners considered to be appropriate for their medical practices, based on a plethora of variables, such as geographical location, the needs of the community, and the regulations set in place by the state and federal government.
With new healthcare reform laws in effect, there have been new payment models designed to work with the three main models in place. All reimbursement models have varying levels of risk attached to them, and all of these risks interrelate with one another.
Fee-For-Service
This payment model reimburses for particular individual services that are given to patients. Every individual service that is provided to a patient gets billed and financially compensated. What’s good about this payment model is that it helps maximize visits from patients and emphasizes delivery of care. It’s a fairly malleable model as well and will be employed no matter how small or large a practice or organizational structure is. It also holds patient care more accountable.
Unfortunately, there isn’t a lot of incentive for providing efficient care or even keeping unnecessary care from happening.
Capitation
This payment model will give prepayments to medical groups and physicians, depending on a few services that are already pre-defined. How much they are compensated will depend on what types of services are provided, how many patients are involved, and how long it takes to provide services.
What’s great about capitation is that it helps physicians directly because patient care is directly related to physicians. Physician payment models have greater flexibility, as well. What’s more is that physicians get improved contract leverage when doing negotiations with their payers. Lastly, information systems become more standardized.
On the flipside, patient health could be put at a greater risk. This is because of deferred care that exceeds the prepayment interval. There is also a greater chance of having patients with higher likelihoods of having higher per capita expenses during their contract intervals get ignored. Finally, there can be a high personal financial risk for physicians if they take on patient care for patients who are chronically sick or have complex conditions.
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