The Obamacare healthcare reforms or formally known as the Affordable Care Act(ACA) was ushered in 2010 with the aim of changing the way the medical practitioners were paid so as to focus on higher quality at lower costs- the bottom line was to improve value of medical treatment. Already in existence werehealthcare payment models which health practitioners employed as deemed fit for their practice, based on a variety of factors like community needs, geographical areas, and state and federal regulations. With the new healthcare reforms laws, a few new payment models have been introduced that can or may work in conjunction with the 3 primary models, which could be eased out depending on various pros and cons that can affect one’s practice. Every physician reimbursement model poses different distributions of risks: patient health risk, society's financial risk, and physician financial risk which are all co-related and interrelated to each other
The primarily 3 healthcare payment models are:
Fee-For-service: This payment model is reimbursement for specific, individual services provided to a patient, as each specific service (or procedure or intervention or piece of equipment) provided is billed and paid for.
Capitation: In the Capitation payment model prepayments to physicians or medical groups are given based on per-defined services. The compensation is typically calculated based on the range of services provided, the number of patients involved, and the period of time that the services are provided.
Episode or Bundled Payments: Episode or bundled payments are single payments meted out for a group of services related to a treatment or condition that may involve multiple providers in multiple settings.
Further to the above, there are 4 other payment models that work in conjunction with anyone of the above.
Pay for Performance Model: Pay for performance is seen as a payment or financial incentive that is associated with meeting defined and measurable goals that is related to care processes and outcomes, patient experience, resource use, and other factors. This Pay for Performance model is being encouraged in the new healthcare reforms acts.
Shared Savings Model : In this payment model a group of physicians (and possibly other medical professionals) join together to form an accountable Care organization (ACO). This ACO then contracts with a payer to provide care for a patient population and meet certain quality and cost benchmarks for that population over a set period of time. If the ACO can provide care at a lower cost than the predetermined threshold, the savings are shared with the payer. But, if the care costs exceed the threshold, the ACO absorbs the difference. The ultimate goal is to give the participants a financial incentive for improving patient outcomes and lowering the cost of care.
Retainer Based/Concierge based model: This is sometimes called as “boutique” medicine, whereby patients pay an upfront fee in order to secure theservices of a physician. Many physicians are slowly moving towards this kind of payment model. However, it has its pros and cons depending on factors of the kind of specialty provided and the geographical placement of the practice
With the above pros and cons listed among the various models of payment, each having their own advantages and disadvantages, and depending on operational feasibility, no single payment model is appropriate for all types of care or applicable in all settings, practice types, and/or geographic locations. Each physician or healthcare organization, needs to undertake a study of their present systems and then decide based on present finances, community needs, geographical presence and the various healthcare state and federal regulations as to which of the models either standalone or in conjunction will be an appropriate fit to pursue further. Adaptation and change is needed as socio-economic shifts take place and hence payment models cannot be taken as a constant.
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