Posts Tagged ‘Harvard University Medical School’

Is It Time to Reform the Fee-for-Service Model?

Tuesday, September 25th, 2012

Despite the healthcare industry’s attempts to alter the way in which physician reimbursements are determined,  fee-for-service is still the accepted basis for payment.  Typically, physicians are reimbursed according to the number of patients they see and how many procedures and tests they order.  Policymakers have concluded that the “do more, earn more” business model is deeply flawed and one reason why Americans pay so much for healthcare.  In 2012, Americans will pay more than $8,000 per individual on healthcare.  That’s more than double the $3,400 average spent for each person in other industrialized nations.  What’s more, all that spending has not made Americans healthier.

The time may have come to find a new reimbursement model that places less of a financial burden on patients while still rewarding physicians.  An August article in the Journal of the American Medical Association notes that the fee-for-service payment is the foundation of even some emerging accountable-care organizations, including Medicare’s popular shared-savings program, say Drs. Allan Goroll of Harvard University Medical School and Stephen Schoenbaum of the Josiah Macy, Jr., Foundation.  The shared-savings program “Promotes accountability for a patient population and coordinates items and services under (Medicare) Part A and B, and encourages investment in infrastructure and redesigned care processes for high quality and efficient service delivery.”

Goroll and Schoenbaum isolate a number of reasons for why fee-for-service endures:  many physicians are risk-averse and so resist change; additionally, skepticism is a “major barrier” to reforming the payment model.  “Transitioning to a new payment system will require new modes of practice, and many physicians feel ill equipped to assume financial or performance risks individually or even collectively,” Goroll and Schoenbaum write.  “The concern is that continued reliance on fee-for-service payment for primary care as well as for specialists, with its emphasis on volume of services, threatens meaningful practice transformation and the very goals of delivery system reform.” The bottom line is that the healthcare industry must develop “robust, scientifically validated risk-adjustment models,” according to Goroll and Schoenbaum.  Payment reform could blend capitation and fee-for-service with a plan to revise the payments over time.

Change must be forced on the medical community, whether or not they are ready for it.  One provision of the Patient Protection and Affordable Care Act (ACA) requires alterations to payment and delivery systems to control costs and enhance the quality of care.  Rather than basing payment solely on the number of patients a physician sees and tests ordered, these methods promote preventive care and maintain open lines of communication between a patient’s multiple physicians.

The potential alternative reimbursement models presently being considered include:

•       Bundled payments or fixed amounts paid to healthcare providers for related services a patient needs within a given timeframe.

•       Patient-centered medical homes.  This model would restructure primary-care practices so that their focus is on preventive medicine, patient education and healthcare coordination.

•       Accountable care organizations, in which physicians and other providers share responsibility for providing cost-effective, quality care for patient groups.