Health ITTransforming Health Systems through the Power of Modern Healthcare Payment Models

The healthcare industry is evolving in every aspect, from rendering care to payments. Today, running a healthcare practice successfully isn’t a piece of cake, and stakeholders need to make significant decisions even before providing actual care. Among many of these decisions, choosing a healthcare payment model is the most complex.

Well, there are various healthcare payment models with unique features and practices need to understand these payment models thoroughly. Further, it’s also important to see which healthcare payment and reimbursement models fit your practice the best.

We’ve curated this article highlighting the different healthcare payment models and their impacts. Also, we’ve focused on the current and most widely recognized payment model in healthcare known as the ‘Value-based care’ to understand its relevancy in today’s healthcare financial landscape.

Let’s take a look at these healthcare reimbursement models-

Fee for Service Model: How this traditional model impacts healthcare systems 

The most prevalent model in healthcare payment and reimbursement, fee-for-Service, typically charges providers for only individual services, such as appointments, tests, prescriptions, etc. With some straightforward benefits, the fee-for-service model is great for a practice that uses a traditional care delivery approach.

The downsides of the FFS model outweigh its positive aspects. From overcharging patients to complications in virtual care services, the FFS model isn’t the perfect model we need in today’s growing digital health landscape. According to Gartner, providers with large fee-for-service reimbursements have seen their revenue per patient visit fall when conducted virtually while still bearing the expenditures of facilities designed for in-person visits. All-in-all, large facilities with a well-designed infrastructure and well-aware patients can consider the FFS healthcare payment model.

Concierge Medicine Model- How it empowers small clinical practices   

Now moving from quantity-based payment to membership-based payment, also known as concierge medicine. This model works on subscription fees, paid annually, and patients receive care much faster. On the other hand, providers get double revenue scope with membership fees and reimbursement from insurance companies for patient visits.

Despite these advantages, the Concierge medicine model can lead to losing patients, more work pressure, constant, hands-on care, and a complicated price structure. So, practices must consider these downsides before choosing this healthcare payment solution. Nevertheless, concierge care is typically beneficial for individuals with chronic illnesses requiring numerous monthly medical visits and would benefit from a better patient experience. Concierge medicine is ideal for clinics that provide services to patients who are often older and have a high-deductible healthcare plan.

Direct Primary Care Model- How this model offers personalized care  

Providers want consistent revenue without exhausting themselves in coding and billing processes. This is possible through a direct primary care model. Like concierge medicine, the DPC model also works on a membership model wherein providers charge patients annually or monthly as they render care services. That means direct primary care doesn’t consider insurance and is perfect for those who don’t have any insurance.

The Affordable Care Act states that direct primary care (DPC) is an appropriate non-insurance option for patients, whereas concierge medicine is not. Hence, patients will not be charged any state-mandated fees for being uninsured as long as they pay into this practice model.

There are limitations, such as being expensive for uninsured patients, as higher-income, uninsured patients are harder to find. In today’s digital health ecosystem, DPC may prove to be a great healthcare reimbursement model.

Value-Based Care Model- How this model supports digital health 

Out of all healthcare payment models, value-based care payment models are the most effective for digital health providers. Considering that patients are consumers now, value-based reimbursement models in healthcare enable providers to leverage quality care to boost customer experience. Moreover, as the focus on better care outcomes and enhanced patient experience increases, providers are keen on adopting value-based reimbursement models in healthcare.

Value-based payment models in healthcare are a strategic approach that unites industry players (payers, providers, pharma/MedTech, and policymakers) around a common goal of improving patient health outcomes by giving providers the autonomy and accountability to pursue the best way to deliver healthcare for the money spent.

Let’s see how different types of Value-based care models catalyzes this goal-

Activity-based with links to quality and value: In healthcare payment solutions, these payment models continue to use some amount of activity-based payment, but they change the payment based on the activity’s link to predetermined quality and value indicators, infrastructure upgrades, and the act of reporting outcomes data. Using this model today can add more value to patients and care due to the predetermined parameters.

Bundled Payments: In contrast to paying for each treatment provided to patients during their care journey for an acute ailment or for a length of time for a chronic condition, a bundled payment model often relates to the effective management of a patient’s condition. As per these agreements, physicians are financially accountable for the outcomes of the particular patient segment with the condition while also providing chances for more autonomy in decision-making and risk and reward participation. This VBC model has a major impact on providers regarding optimum care delivery.

Capitated Payments: Capitated payments give a predetermined rate for an individual’s health requirements within a designated patient group or demographic segment. Risk and risk adjustment are critical for providers that opt for capitated payments. As a result, conventional capitated payment models are adopted across a subset of the population with similar health maintenance and care needs, such as the frail elderly.

With more returns on the money invested, value-based payment models in healthcare are now the most impactful among all. Despite the complicated transition and expensive technological infrastructure, the VBC model assures better patient outcomes.

The most common healthcare reimbursement option currently is unquestionably FFS, but this will only sometimes be the case. Value-based care is almost certainly the future of healthcare. The benefits to your patients can be sufficient incentives. New healthcare rules are being implemented yearly to incentivize the transition to value-based care.

Conclusion

It’s ultimately up to you to decide which healthcare payment model is ideal for your practice. We at OSP are here to help you narrow down your options so that you can make the best decision possible. After you’ve considered all of the benefits and disadvantages of healthcare payment models you think would be good, it’s time to consider which healthcare payment solutions would fit the best. Our team of expert developers can leverage cutting-edge technologies to custom-built healthcare payment solutions per your needs and reimbursement model.

This post has been sponsored by OSP LABS