Healthcare Payment Types Essay

3267 Words Sep 14th, 2009 14 Pages
Healthcare Reimbursement Models…. Is There a Better Way?

Physician Perspective

Executive Summary

The traditional methods of paying for healthcare services use to involve paying for services out of pocket. The gradual transition from fee- for- service payment to managed healthcare is not a recent phenomenon. With the increasing costs of healthcare services, there was an increased interest in moving payment from fee-for-service into a more organized payment structure. This paper discusses the three payment types in the healthcare industry used by practicing physicians: fee for service, bundled service arrangements, and capitation arrangement. It also addresses the best current method as well as future reimbursement methods. The
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Hospitals are undergoing a major restructuring... doctor groups are forming, breaking up, reforming and restructuring...to meet...demands of insurers...”(Galbick 1996). This flux in the industry has only intensified which has had a pervasive impact on the healthcare industry in terms of payment strategies and systems. Physicians in managed care programs are often tasked to, either directly or indirectly, increase utilization rates of other services that the facility or program offers. These bundled type service arrangements may be convenient for the insurer, the facility, and to some extent the patient; however, it placed undue strain on the physicians who are tasked with meeting utilization minimums or in sustaining bundled service type programs with the requisite foot traffic. Some of these arrangements in the past have been deemed illegal, but they quickly morphed into new, but, similar arrangements with the same result being a shift of quality of care to a secondary or tertiary status after profitability and revenue: ...the most common practice involved the "rental" of small office space in a medical clinic for amounts far exceeding the fair market value of the space. Congressional testimony indicated that these kickbacks were in the neighborhood of 25% of the

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