What are the Major Reimbursement Methods used in Health Care?

Many of us must have availed of tax-advantaged health benefits, employer-funded health plans, or health insurance funds at one point in time.  Healthcare reimbursement is the way healthcare providers are being paid for services rendered to patients. And this is one part that has undergone various changes and reforms over the years. It has got many thinking on whether doctors are being overpaid or underpaid and if the incentive being received can make them go overboard with their services or cut down on attention that patients are supposed to receive. The question is why should reimbursement be this complicated? Is it possible if they can be paid based on the quality of care being provided? 

As a renowned founder of Manziel law offices specializing in insurance and health law, this and many more are things Lisa Manziel needs to handles.

Lisa provides the 4 main reimbursement methods used in healthcare:

Fee-for-Service

As the name implies, providers are being paid based on the services patients received. For instance, from the consultation to various tests to injections, each comes with its separate codes and prices attached to them. However, “this model has received a lot of criticisms over the years. Many believed it is what contributed to hikes in medical treatment prices, carrying out unnecessary tests and procedures, and the reason behind service inflation After all, the higher the cost of services rendered, the higher the payments made to healthcare providers, Lisa Manziel explains.  

It still remains the most popular reimbursement model as it is easy to quantify the value of the services, hence, making billing a hassle-free one. 

Value-Based Reimbursement

This model places more emphasis on the value delivered rather than the number of services. It encourages providers to deliver quality services at the lowest price possible. Doctors are even given incentives if they perform better. The goal is simply to ensure doctors are providing the best healthcare services with successful patient outcomes. Although reimbursement is based on a fee for service, providers are rewarded for meeting quality and efficiency standards. 

Bundled Payment

Under this model, providers are paid on the episode of health care provided or a specific illness or all the services provided for a specific period of time. All these are referred to as a bundle in which payment is made accordingly. Lisa Manziel says it facilitates coordination among the team including doctors, hospitals, and any other healthcare team. They agree on the amount they will receive for a particular episode of illness and provide the necessary care. This is a great way to reduce unnecessary services and reduce costs. However, the severity of the illness might differ from one person to another, and health providers might be underpaid if the sickness tends to be more severe than the cost bargained for. 

Capitation

Providers are reimbursed either per patient that receives services or per month or annually. This might entail providers being paid ahead of time and will receive a specified amount per patient or per month. For instance, a doctor having 20 patients might be collecting $20 per patient in a month. Whether a patient didn’t receive any treatment at all or one receives $2000, the payment price still remains the same. 

These are the major types of healthcare reimbursement plans but there are still many other variations of these models. “Whatever the model adopted, it is vital that health providers are being paid as expected so that they will continue to contribute their values to the public”, Lisa Manziel concludes.