Fee for Service vs Value Based Care in Healthcare Payment Reform

Payments in the medical world have long been a point of debate, especially as the cost of health care continues to rise. Fee-for-service payment structures have historically been the norm, allowing physicians and medical centers to bill for each appointment, test, and procedure performed. However, as quality of service evolves and demands for standards of care increase, so do the possibilities for payment. Lead by CMS, or Centers for Medicare and Medicaid Services, the medical culture in the United States is moving away from its roots and into a new era of value-based pricing.

Deviating from traditional norms is generally a challenge, especially for hospitals whose staff and technology support fee-for-service care. However, with support from the right software platform, it’s possible to bring any medical facility into the new horizon of patient-focused care.

Fee-for-Service

In the wide world of medical payments, fee-for-service has been the standard throughout much of the modern world of medicine. Under this systems, billing and payments are determined based on the procedures performed by a doctor as opposed to the outcome achieved through medical care.

While initially a strong concept, the current climate has shifted. Increasingly, physicians are feeling pressure to perform ancillary testing and optional procedures for the purpose of billing insurance companies rather than generating results.

Value-Based

As the name implies, value-based care is assessed, and rewarded, based upon the value practices and procedures offer patients. Instead of taking a numbers-based look at the services performed, value-based healthcare delves deeper, providing payments based on successful outcomes and healthy patients rather than the number of procedures used to get there.

With a marked emphasis on lower costs of care and reduced time spent in in-patient facilities, this approach attempts to qualify, not quantify, the medical climate in the United States. While value-based systems are still in their infancy, numerous medical bodies, including CMS, are pushing for complete industry reform.

Deciphering the Difference

In an ideal world, fee-for-service and value-based systems will not at odds with one another, but rather working in tandem to provide the best possible patient experience. For example, a standard annual physical cannot necessarily be evaluated in a value-based manner, requiring a fee-for-service approach. These changes are instead intended to provide a uniform standard of care in surgical and procedural cases, such as CMS’s proposed Comprehensive Care for Joint Replacement program and the passage of the Medicare Access and CHIP Reauthorization Act of 2015.

Making the Transition

With countless medical records platforms and billing systems built around a fee-for-service model, incorporating value-based payment bundles into a practice can be exceptionally daunting. Transitioning away from fee-for-service may be beneficial in the big picture, reducing patient stay durations, costs of care, and penalties from payers, but the implementation process can be both time consuming and costly.

Rather than facing extra fees and billing complications, the right software support system can ease the burdens of applying a new approach to billing and payment collection.

View our archived webinar: How Sequence Can Help You Succeed in the Balance of Volume-based and Value-based Outcomes by Measuring these Four Pillars of Care

Sequence Health specializes in meeting and maintaining the needs of medical practices and hospitals of all shapes and sizes, ensuring a simple transition for your needs. By streamlining the changeover, reducing paperwork, and saving time, our proprietary system can assist you in taking your healthcare into the future.

When you’re ready to adopt value-based payments as a part of your practice, Sequence Health can make the process as easy and possible. Contact us today to learn more about our unique approach to medical innovation. 

Sequence Health
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