Healthcare payment

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How healthcare payment is managed is one of key policies that countries have to drive healthcare system. Payment for healthcare is managed in various ways. The main categories of payment systems are salary, capitation, bundled payment, global budget and fee-for-service. Most countries have mixed systems of physician payment. [1] [2]

Contents

Classification

Capitation

Capitation is a payment arrangement for health care service providers. It pays a set amount for each enrolled person assigned to them, per period of time, whether or not that person seeks care. The amount of remuneration is based on the average expected health care use of that patient, with payment for patients generally varying by age and health status. [3]

Capitation in the United States

Primary capitation is a relation between care organization and primary care physician, where the physician is paid by the organization for those who have chosen the physician as their provider. [4] Secondary capitation is a relation arranged by care organization between a physician and a secondary or specialist provider, i.e. or ancillary facility or an X-ray facility. Global capitation is a relationship based on a provider who provides services and is reimbursed per-member per-month for the entire network population.

Fee-for-service

Fee-for-service is a payment model in which services are unbundled and paid for individually. In health care, it gives an incentive for physicians to give more treatments because payment is depending on the quantity, rather than quality of care. However evidence of the effectiveness of FFS in improving health care quality is mixed, without conclusive proof that these programs either succeed or fail. [5]

It is the dominant healthcare payment method in the United States. In the Japanese health care system, FFS is mixed with a nationwide price setting mechanism (all-payer rate setting) to control costs. [6]

Bundled payment

Bundled payment is the reimbursement of health care providers on the basis of expected costs for episodes of care. It has been portrayed as a middle ground between fee-for-service reimbursement and capitation (in which providers are paid a "lump sum" per patient regardless of how many services the patient receives), given that risk is shared between payer and provider. [7]

Salary

Salary is a fixed payment remuneration method. Payment is not dependent on the number of healthcare cases nor the number of patients. This payment method makes a stable, predictable income for healthcare providers, but also makes the incentive to reduce quantity of care. [8]

Global budget

Global budget is a payment model where healthcare providers are paid a prospectively-set, fixed amount for the total number of services they provide during a given period of time. [9]

Related Research Articles

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<span class="mw-page-title-main">Publicly funded health care</span> Form of health care financing

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<span class="mw-page-title-main">Health care system in Japan</span> Overview of the health care system in Japan

The health care system in Japan provides different types of services, including screening examinations, prenatal care and infectious disease control, with the patient accepting responsibility for 30% of these costs while the government pays the remaining 70%. Payment for personal medical services is offered by a universal health care insurance system that provides relative equality of access, with fees set by a government committee. All residents of Japan are required by the law to have health insurance coverage. People without insurance from employers can participate in a national health insurance program, administered by local governments. Patients are free to select physicians or facilities of their choice and cannot be denied coverage. Hospitals, by law, must be run as non-profits and be managed by physicians.

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<span class="mw-page-title-main">Healthcare in South Korea</span>

Healthcare in South Korea is universal, although a significant portion of healthcare is privately funded. South Korea's healthcare system is based on the National Health Insurance Service, a public health insurance program run by the Ministry of Health and Welfare to which South Koreans of sufficient income must pay contributions in order to insure themselves and their dependants, and the Medical Aid Program, a social welfare program run by the central government and local governments to insure those unable to pay National Health Insurance contributions. In 2015, South Korea ranked first in the OECD for healthcare access. Satisfaction of healthcare has been consistently among the highest in the world – South Korea was rated as the second most efficient healthcare system by Bloomberg. Health insurance in South Korea is single-payer system. The introduction of health insurance resulted in a significant surge in the utilization of healthcare services. Healthcare providers are overburdened by low reimbursement rates.

Capitation is a payment arrangement for health care service providers. It pays a set amount for each enrolled person assigned to them, per period of time, whether or not that person seeks care. The amount of remuneration is based on the average expected health care utilization of that patient, with payment for patients generally varying by age and health status.

<span class="mw-page-title-main">Healthcare in Slovenia</span>

Healthcare in Slovenia is organised primarily through the Health Insurance Institute of Slovenia. In 2015, healthcare expenditures accounted for 8.10% of GDP. The Slovenian healthcare system was ranked 15th in the Euro health consumer index 2015. The country ranked second in the 2012 Euro Hepatitis Index.

Bundled payment is the reimbursement of health care providers "on the basis of expected costs for clinically-defined episodes of care." It has been described as "a middle ground" between fee-for-service reimbursement and capitation, given that risk is shared between payer and provider. Bundled payments have been proposed in the health care reform debate in the United States as a strategy for reducing health care costs, especially during the Obama administration (2009–2016). Commercial payers have shown interest in bundled payments in order to reduce costs. In 2012, it was estimated that approximately one-third of the United States healthcare reimbursement used bundled methodology.

An accountable care organization (ACO) is a healthcare organization that ties provider reimbursements to quality metrics and reductions in the cost of care. ACOs in the United States are formed from a group of coordinated health-care practitioners. They use alternative payment models, normally, capitation. The organization is accountable to patients and third-party payers for the quality, appropriateness and efficiency of the health care provided. According to the Centers for Medicare and Medicaid Services, an ACO is "an organization of health care practitioners that agrees to be accountable for the quality, cost, and overall care of Medicare beneficiaries who are enrolled in the traditional fee-for-service program who are assigned to it".

<span class="mw-page-title-main">Philippine Health Insurance Corporation</span> State-owned health insurance company of the Philippines

The Philippine Health Insurance Corporation (PhilHealth) was created in 1995 to implement universal health coverage in the Philippines. It is a tax-exempt, government-owned and controlled corporation (GOCC) of the Philippines, and is attached to the Department of Health. On August 4, 1969, Republic Act 6111 or the Philippine Medical Care Act of 1969 was signed by President Ferdinand E. Marcos which was eventually implemented in August 1971.

Examples of health care systems of the world, sorted by continent, are as follows.

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A hospital readmission is an episode when a patient who had been discharged from a hospital is admitted again within a specified time interval. Readmission rates have increasingly been used as an outcome measure in health services research and as a quality benchmark for health systems. Generally, higher readmission rate indicates ineffectiveness of treatment during past hospitalizations. Hospital readmission rates were formally included in reimbursement decisions for the Centers for Medicare and Medicaid Services (CMS) as part of the Patient Protection and Affordable Care Act (ACA) of 2010, which penalizes health systems with higher than expected readmission rates through the Hospital Readmission Reduction Program. Since the inception of this penalty, there have been other programs that have been introduced, with the aim to decrease hospital readmission. The Community Based Care Transition Program, Independence At Home Demonstration Program, and Bundled Payments for Care Improvement Initiative are all examples of these programs. While many time frames have been used historically, the most common time frame is within 30 days of discharge, and this is what CMS uses.

The Oncology Care Model (OCM) is an episode-based payment system developed by the Center for Medicare and Medicaid Innovation. The multipayer model is designed for discrete instances of care, especially those involving chemotherapy, which triggers the six-month episode. The program combines fee-for-service (FFS) payments for established services, monthly payments for additional care under a structured guideline, and performance-based payments weighed against quality metrics and benchmarks.

References

  1. OECD, Better Ways to Pay for Health Care (2016)
  2. Gosden, Toby; Forland, Frode; Kristiansen, Ivar; Sutton, Matthew; Leese, Brenda; Giuffrida, Antonio; Sergison, Michelle; Pedersen, Lone (24 July 2000). "Capitation, salary, fee-for-service and mixed systems of payment: effects on the behaviour of primary care physicians". Cochrane Database of Systematic Reviews. 2011 (3): CD002215. doi:10.1002/14651858.CD002215. ISSN   1465-1858. PMC   9879313 . PMID   10908531.
  3. OECD, Better Ways to Pay for Health Care (2016)
  4. Arrow K, Auerbach A, Bertko J, et al. (7 April 2009). "Toward a 21st-century health care system: recommendations for health care reform". Ann Intern Med . 150 (7): 493–5. doi:10.7326/0003-4819-150-7-200904070-00115. hdl: 1765/16087 . PMID   19258550. S2CID   31273672.
  5. Ryan, Andrew M.; Werner, Rachel M. (October 9, 2013). "Doubts About Pay-for-Performance in Health Care". Harvard Business Review via hbr.org.
  6. "Sick around the world". Frontline . April 15, 2008. 17 minutes in. PBS.
  7. RAND Corporation. "Overview of bundled payment" . Retrieved 2022-08-02.
  8. Rudmik, Luke; Wranik, Dominika; Rudisill-Michaelsen, Caroline (3 August 2014). "Physician payment methods: a focus on quality and cost control". Journal of Otolaryngology - Head & Neck Surgery. 43 (1): 34. doi: 10.1186/s40463-014-0034-6 . PMC   6389147 . PMID   25219382.
  9. "Improving Value". Healthcare Value Hub. Retrieved 2 August 2022.