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Fee for service (FFS) is the most traditional payment model of healthcare. In this model, the healthcare providers and physicians are reimbursed based on the number of services they provide or their procedures. Payments in an FFS model are not bundled. This means that the insurance companies or the government agencies are billed for every test, procedure, and treatment rendered whenever a patient visits the doctor, has a consultation, or is hospitalized. This payment model rewards physicians for the volume and quantity of services provided, regardless of the outcome. Table of ContentsWhat Is The Fee For Service Health Plan?Before the value-based care initiative, the fee-for-service health plan was the customary type of health care insurance. Also identified as indemnity plans, the FFS coverage is most pricey; however, a fee-for-service health plan provides complete independence and flexibility to those who can afford it. FFS allows the clients to freely choose their physicians and hospitals, with very little interference from the insurance provider. A fee for service health plan demands high out-of-pocket expenses as clients may be required to pay their medical fees upfront and submit bills for reimbursement What Is Medicare Fee For Service?Medicare Fee for Service is a program, which offers two-part insurance. This includes hospital insurance along with supplementary medical insurance for eligible citizens. Generally, hospital insurance offers coverage for hospitalization, admission to hospice or a nursing facility, tests, surgical procedures, and provision of health care at home. The supplementary part of the Medicare fee for service program provides coverage for services offered by healthcare providers, including physicians, outpatient care, medical equipment, and certain preventive care. Has Fee For Service Been Phased Out?In the past years, several healthcare policy reports called for a phase-out of the FFS plan. The reports considered FFS one of the causes of uneven care, excessive services, and healthcare inflation. The healthcare providers face challenges in medical billing as the system gradually moves from a traditional model of FFS to a whole new model of value-based care. The FFS measure reimburses according to the number of services and treatment of diseases and injuries as they occur. On the other hand, value-based care reimburses for the value of services and preemptive health management, which calls for inhibition of diseases and injuries and identifying conditions at early stages to reduce the cost of treatment. Sooner or later, the health care system would go for a reimbursement model where monetary benefits are persistently aligned with coordinated and quality care delivery at the best price. The overall revenue of fee-for-service reimbursements in 2016 dropped to 43% compared to 62% during 2015. Fee for service-based medical billing arrangements with a hybrid of value-based care rise to 28% from 15%, and pure value-based care model accounted for 29% as per the statistics issued by the Health Care Payment Learning and Action Network of the Centers for Medicare & Medicaid Services. This represents that federal determination towards unconventional medical billing has started to show its impact. However, the fear of the unknown has been holding several medical practitioners to join Clinically Integrated Networks (CIN) or Accountable Care Organizations (ACO). Despite its persistent failures, FFS is still preferred because it is familiar. Problems with Fee-For-Service HealthcareMany experts have argued that the development in modern medicine, complications of the current healthcare structure, and the healthcare requirements of a population with chronic illnesses have outdated the capability of fee for service in healthcare. Both industry experts and lawmakers believe that the medicinal evolutions have compromised the FFS model. The third-party payers have supported the overutilization of FFS, and FFS has stimulated the least financial responsibility on both patients and providers. Fee for Service Advantages and DisadvantagesAdvantages
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Future of Fee-For-Service in Healthcare Financial Modeling
FFS model has come under intense scrutiny for overutilization of services and overburdened third-party payers involving health insurance companies or government programs (e.g., Medicare and Medicaid). Even though policymakers and government agencies favor a shift away from fee-for-service towards a value-based care model, it is doubtful that the providers will completely move away from the FFS model in the future. The overall effect or acceptance of the FFS model has been diluting. In fact, many organizations accepting bundled payments, or capitated payments, still pay physicians based on productivity or volume, which is the core of FFS. So even though the fee-for-service model is vulnerable to overutilization and fragmentation, many believe it will always have its place in modern healthcare. Infographic- Value-Based Care Positively Impacts ConsumersImage Source - Healthcare Intelligence Network Additional ReadingContact UsWe would like to connect with you. Let us answer any questions you may have without obligation or pressure. Please choose your preferred method of contact. What is value based compensation?What are the value-based programs? Value-based programs reward health care providers with incentive payments for the quality of care they give to people with Medicare. These programs are part of our larger quality strategy to reform how health care is delivered and paid for.
Why is valueIn contrast to fee-for-service, value-based reimbursement models compensate providers not for the quantity of procedures performed, but rather for the quality of the care they provide, measured by patient health outcomes.
Is pay for performance the same as valuePay for Performance in healthcare (P4P), also known as value-based payment, comprises payment models that attach financial incentives/disincentives to provider performance. P4P is part of the overall national strategy to transition healthcare to value-based medicine.
What is a feeA method in which doctors and other health care providers are paid for each service performed.
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