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Hospital administrators must take into consideration the role of reimbursement by health insurance companies when allocating finite resources and in assessing how patients will evaluate different treatment options. One of the most common examples of this is the rise of pay-for-performance incentives. “A pay-for-performance program provides a bonus to health care providers if they meet or exceed agreed-upon quality or performance measures, for example, reductions in hemoglobin A1c in diabetic patients” (“Pay For Performance,” 2012, par. 9). The underlying concept behind pay-for-performance is that rather than encouraging providers to offer more tests and treatments that may be unnecessary, providers are instead rewarded for patient improvement, including making diabetic patients less rather than more dependent upon medications.
Pay-for-performance is used to encourage wellness promotion and to encourage treating chronic conditions before they require expensive tertiary-level interventions. “For example, the Medicare program no longer pays hospitals to treat patients who acquire certain preventable conditions during their hospital stay, such as pressure sores or urinary tract infections associated with use of catheters” (“Pay For Performance,” 2012, par. 10). Hospitals must effectively pay for their own mistakes, under such revenue reimbursement structures, theoretically discouraging errors. While the advantage of pay-for-performance from the patient’s perspective is that more patients do not automatically generate more revenue, thus encouraging a manageable patient load, there are also concerns that certain types of patients, such as the very sickest...
Physicians believe that this straightforward model places the maximum trust in their expertise as providers (“What Payment Models Exist,” 2017). The trouble with such a model is that it encourages more rather than less utilization of services. From a macro level perspective, pay-for-performance might seem to be superior to keep costs down and to maintain high levels of quality. Other common models include episode-of-care payments, in which “bundled payments reimburse healthcare providers for specific episodes of care such as an inpatient hospital stay,” leaving only “a set amount of money to pay for the entire episode of care” (“What Payment Models Exist,” 2017, par. 4). Arguably, this may discourage provision of needed services. However, given that even if the patient might require more services, there are no available funds, concerns arise that rationing must be used by the institution, which can impact quality of care.
Another reimbursement method is partial or full capitation which actually actively discourages providers from offering care, “In this healthcare payment model, patients are assigned a per member per month (PMPM) payment based on their age, race, sex, lifestyle, medical history, and benefit design” (“What Payment Models Exist,” 2017, par.…
References
Pay-for performance. (2012). Health Policy Briefs. Retrieved from:
http://www.healthaffairs.org/healthpolicybriefs/brief.php?brief_id=78
Reardon, S. (2015). What are the challenges of medical bill collection? Revcycle Intelligence.
Retrieved from: https://revcycleintelligence.com/news/what-are-the-challenges-of- medical-bill-collections
Riley, J. (2015). Maximizing reimbursement starts with patient access. HFMA. Retrieved from:
http://www.hfma.org/Content.aspx?id=27386
What payment models exist? (2017). McKesson. Retrieved from:
http://www.mckesson.com/population-health-management/resources/what-payment- models-exist/
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097 United States 0.109 0.093808 0.036112 0.068 Utah 0.1071 0.1401 0.035696 0.073 Vermont 0.1326 0.0988 0.040851 0.114 Virgin Islands NA NA NA Virginia 0.1048 0.0829 0.080009 0.092 Washington 0.1229 0.0669 0.027831 0.068 West Virginia 0.1293 0.0774 0.036499 0.055 Wisconsin 0.0954 0.0357 0.032367 0.097 Wyoming 0.1251 0.1453 0.053867 0.075 Notes All spending includes state and federal expenditures. Growth figures reflect increases in benefit payments and disproportionate share hospital payments; growth figures do not include administrative costs, accounting adjustments, or costs for the U.S. Territories. Definitions Federal Fiscal Year: Unless otherwise noted, years preceded by "FY" on statehealthfacts.org refer to the Federal Fiscal Year, which runs from October 1 through September 30. for example, FY 2009 refers to the period