Healthcare Payment Models Are Evolving


The Direction of Healthcare Delivery

Healthcare is continuing to evolve in the way it is delivered to consumers. In the past, providers were paid based on the number of patients that needed their services (fee-for-service), but today, more and more health systems are moving toward value-based care.  What does this translate to? Quality over quantity.

Fee-for-Service vs. Value Based Care Models

The traditional fee-for-service reimbursement model pays healthcare providers based on the number of services that are performed and the number of sick patients that are in their beds. This in part has added to the rising costs of healthcare. 

In order to lower these rising healthcare costs, hospitals and health systems as well as the government are creating value based care models that take many forms. These models focus on quality of care and ease of access to patients. A few of these models include episodic bundling, global payment and capitation as shown in the table below.

Payment Model - FFS to VBC

Accountable Care Organizations

Value based care is offered in a variety of ways, depending on the different levels of risk associated by providers. 

An accountable care organization (ACO) is a group of physicians, hospitals and other healthcare providers who voluntarily come together to make up a network to provide high quality care to medicare patients. This joint collaboration among healthcare professionals greatly benefits the patient as they will more likely receive the care they need while minimizing the chance for error and excessive testing. 

How Do ACO’s Work?

Members that are part of the ACO are encouraged to work together to collectively provide care for a patient. This promotes communication and quality care with checks and balances among providers since they are rewarded for the shared savings, but are at the risk of shared losses as well. 

A patient can receive treatment at a variety of healthcare facilities, including:

  • Hospitals
  • Medical Office Buildings
  • Inpatient clinics 
  • Nursing Homes
  • Rehabilitation
  • Behavioral Health 

When patient care improves, the cost of care goes down, which saves Medicare money, this is then reflected to the healthcare providers in this ACO. 

Accountable Care Changing the Business Model

Patient Outcomes

As our healthcare transitions more into treating the patient as a whole, rather than their symptoms, hopefully we will see more healthy communities. ACO’s promote more wellness and prevention rather than treating patients who are already sick. With a unique plan in place for each patient, ACO’s will provide a coordinated care personnel, such as a social worker or a nurse to ensure they get the recommended care needed for their chronic conditions. 

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Chris White

Business Development Manager

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