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Reimbursement Methodologies in Healthcare

The document discusses different healthcare reimbursement methodologies, specifically fee-for-service and value-based payment models. It notes that while value-based payments aim to incentivize high quality and efficient care, both models have strengths and weaknesses that impact consumers and providers. The Affordable Care Act aimed to shift payments away from fee-for-service towards value-based systems. An effective reimbursement system should balance high quality affordable care for consumers with adequate and fair reimbursement of providers.

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102 views3 pages

Reimbursement Methodologies in Healthcare

The document discusses different healthcare reimbursement methodologies, specifically fee-for-service and value-based payment models. It notes that while value-based payments aim to incentivize high quality and efficient care, both models have strengths and weaknesses that impact consumers and providers. The Affordable Care Act aimed to shift payments away from fee-for-service towards value-based systems. An effective reimbursement system should balance high quality affordable care for consumers with adequate and fair reimbursement of providers.

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amin ross
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Ruth Fuster

July 12, 2020

HTLH-710

The wide agreement that reimbursement systems for hospitals and physicians need to

move away from volume based to value based many times indirectly moves to show well-

defined dividing outlines between the two classifications. The two main reimbursement

methodologies that we have in our health care system are fee-for-service and Valued-based. The

latter being implemented more after the roll out of Obama care in 2010. Though, “most of what

are considered value-based payment reform models are being implemented on top of current,

volume-based payment approaches, or as HHS calls it, “fee-for-service architecture.” (Berenson

et. al., 2016). This demonstrates the importance of comprehending the characteristics of all

mutual reimbursement methodologies—the older ones and more modern developments—to

better review their strengths and also their weaknesses. With knowing these weakness and

strengths of these different systems, we can implement policies that progress the efficacy of

reimbursement models.

Every reimbursement classification has its strengths and its weaknesses and affects the

consumer as well as the provider, and “this highly unusual marketplace for healthcare services

has a profound effect on the supply of, and demand for, such services” (Gapenski & Reiter,

2015). With the integration of ACA, one of their main goal has been to move away from fee for

service and into a value-based payment model. In the latter services are paid based on the level
of service that is provided. This approach is measured in many different ways, either by

readmissions or bad quality of care, or infections due to poor sanitary practices in a hospital.

These reimbursement methodologies have an effect on the providers just as much as the

consumer, when moving into value-based purchasing it is beneficial to the consumer and the

provider, it allows for the consumer to receive high quality care and keep the provider

accountable for services it provides. Of course, like previously noted, there are weaknesses and

strengths to both methodologies. While a value-based payment may motivate the advancement of

cost-reducing services (from the viewpoint of the consumer), but it can also discourage from

innovation to grow on the provider.

When a consumer feels comfortable and can even afford to receive healthcare, being able

to receive high-value care at a reasonable price can keep the consumer coming back to receive

services. In the healthcare setting this is important on many levels, first we have our optimal

health which should be the main reason we go to the hospital, but also it helps the provider get

reimbursed. If the consumer does not come to get a service, the provider would make no money

at all. It is an interchangeable relationship for the consumer and provider in healthcare. With

transparency and readily information and communication available between provider and patient,

both parties can benefit from services provided and received. In all, the healthcare payment

system as introduced by ACA.


References

Berenson, R., Upadhyay, D., Delbanco, S., & Murray, R. (2016). Payment Methods and Benefit

Designs: How They Work and How They Work Together to Improve Health Care.

[Link]. Retrieved 11 July 2020, from

[Link]

[Link].

Gapenski, L., & Reiter, K. (2015). Healthcare Finance (6th ed.). Health Administration Press.

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