Fee-For-Service Will Remain A Feature Of Major Payment Reforms, Requiring More Changes In Medicare Physician Payment

Abstract

Many health policy analysts envision provider payment reforms currently under development as replacements for the traditional fee-forservice payment system. Reforms include per episode bundled payment and elements of capitation, such as global payments or accountable care organizations. But even if these approaches succeed and are widely adopted, the core method of payment to many physicians for the services they provide is likely to remain fee-for-service. It is therefore critical to address the current shortcomings in the Medicare physician fee schedule, because it will affect physician incentives and will continue to play an important role in determining the payment amounts under payment reform. This article reviews how the current payment system developed and is applied, and it highlights areas that require careful review and modification to ensure the success of broader payment reform.T o many policy analysts, the term provider payment reform means abandoning the fee-for-service approach, which pays clinicians for each service rendered, in favor of broader units of payment-such as global payment or episode bundles-which either cover the whole person regardless of the number of services provided to that person, or cover the whole episode of care for a specific condition. These reforms are intended to replace the incentives inherent in fee-for-service medicine.Fee-for-service payment typically has meant that a provider, usually a physician, receives a set fee for a particular service-such as performing a physical exam or administering an inoculation-either directly from the patient or from an insurer or other payer. Fee-for-service thus generates payments driven by the volume of services produced.In payment reform models such as accountable care organizations, fee-for-service broadly will be replaced by new incentives that will reward appropriate, quality care-for example, a capitated payment made by the payer to the accountable care organization. However, when it comes to how the accountable care organization will pay individual physicians and other practitioners, most of the proposed payment reforms will still have a substantial role for fee-forservice payment. To be sure, physicians' payments will be calculated not only according to volume, but also according to measures of physicians' quality and efficiency. Both measurement and distribution of payment will be done by the organizations, or systems, such as the accountable care organization within which the provider delivers care.As a result, for many physicians, these broad payment reforms, such as accountable care organizations, are more accurately seen as enhancements to fee-for-service, rather than as replacements.What's more, in cases where fee-forservice is fully supplanted by a bundled payment for an episode of care, the structure of fee-forservice payment and the historical experience of payment within the fee-for-service approach will remain the basis for determining the bundled

Emerging Lessons From Regional and State Innovation in Value‐Based Payment Reform: Balancing Collaboration and Disruptive Innovation

“…19 For example, Blue Cross Blue Shield of Michigan has a "fee-for-value" incentive program in which physicians are rewarded for both an efficient use of health care resources and increased buy-in. 20 WellPoint uses "value-based payments" to supplement FFS reimbursements for primary care providers in PCMHs.…”

Developing an Internationally-Applicable Service Specification for Continence Care: Systematic Review, Evidence Synthesis and Expert Consensus

“…For example, in the United States, fee-for-service reimbursement has incentivised specialist provision of non-specialist activities across many common medical conditions [29]. In the case of continence care, this results in a bias towards surgical intervention over more conservative treatment strategies [30], [31], as well as overuse of expensive and often unnecessary investigations such as urodynamic testing [32].…”

Racial Disparities in Outpatient Mental Health Service Use Among Children Hospitalized for Traumatic Brain Injury

“…Majority of racial minority children in this sample had capitated plans and those plans, or some new iteration or combination of fee-for-service and capitated payment models, are a focus of the Affordable Care Act. 41,42 Indeed, 70% of current Medicaid enrollees nationally are served through managed care or capitated plans, and there is variability in Medicaid eligibility requirements by state that impact the demographics of Medicaid enrollees. 43,44 Policy makers should consider the role of race and disparities in service access when monitoring these models.…”