With all the changes in healthcare that have taken place in recent years, there is one more to add to the list: physician compensation models. That’s right, insurance companies, such as Medicare, are changing the way they compensate medical practices for services provided. Insurance reimbursements for medical practices come from three main sources: Medicaid, Medicare, and commercial companies such as Blue Cross Blue Shield and Aetna. With Medicare changing their compensation model, many of the large private insurance companies are following suit, creating their own models or using the Medicare model already developed. As more insurance companies adopt the new model, the FFS compensation model that physicians have grown to know will begin to dwindle in usage.
FFS Physician Compensation ModelThe former preferred model of reimbursement is known as fee-for-service, or FFS for short, is a form of reimbursement that provides payments based on quantity of care. This model encourages physicians to treat more patients, regardless of the quality of care provided. This means that a physician that treats 20 patients a day but spends only 5 minutes per patient would receive higher payments than a physician that treats 2 patients a day but spends an hour with each one. With the FFS system, the fear was that healthcare was going to turn into an assembly-line style of business and the level of care would suffer.
Value-Based Physician Compensation ModelThe new model that is being adopted by Medicare and other large insurance companies is a value-based model. This model is shifting the focus back to the patient.
Value-based reimbursements are based on:
- Quality of service
- Outcome of treatment
- Improved patient experience
- Reduced costs
Features of the value-based model include:
- Based on metrics
- Not based on volume of services
- Includes efficiency or cost savings goals
- Includes additional payment for achieving set goals or measures