Question

How does a fee-for-service system transition to a value-based payment model? Offer specific, descriptive detail to support your responce.

Answer 1

These two are different payment models in the healthcare industry.

Under the Fee-for-service system,the medical services provided are un-bundled and paid for separately.This type of payment model is most widely followed across the globe.Under this system,the hospital and/or the physicians are incentivized based on the number of procedures and / or treatments that are provided to the patients.So,they generally end up performing more procedures to the patients which in-turn raises the average cost of treatments to the patients.this is one of the reason why the health-care costs are seeing a tremendously rise in the prices.

In Fact ,since most of the people in the developed countries like the U.S,U.K etc., is already insured,most of the costs are beared by the insurance companies themselves.But sometimes the patients have to bear their out-of-pocket expense in which case the patients feel the pain.

And also due to the rising healthcare costs,the insurance premiums are also becoming high year on year.

So,now the trend has started with the shift to Value-based payment model where the patients are charged based on the value they are offered unlike in the case of the Fee-for-service system.

Ex: If a patient is diagnosed with a heart complaint,he/she is charged based on the quality of treatment / service they are being offered but not individually on each procedure like x-ray,MRI scan,blood test etc.,

So,this Value based payment ensures that the quality of treatment is maintained at the same time the average cost of treatment is reduced.

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