Payments for Health Services Providers (125 points)
Insurance is based on pooling of losses, payment for random losses, risk transfer, and indemnification. As a result, insurers use several different approaches to mitigate their risk and set premium rates, including:
the fee-for-service method
the cost-plus approach
population health – capitation
For your assignment, evaluate two global payment systems within healthcare and address each of the following items:
Define the structure of the payment systems.
Identify risk to loss of revenue in each system.
Describe advantages and disadvantages of each system.
Identify how pay for performance can be added to each payment system.
Your paper should be four to five pages in length, not including the title and reference pages.
You must include a minimum of four credible sources. Use the Saudi Electronic Digital Library to find your resources.
Your paper must follow Saudi Electronic University academic writing standards and APA 7th edition requirements, as appropriate.
You are strongly encouraged to submit all assignments to the Turnitin Originality Check prior to submitting them to your instructor for grading. If you are unsure how to submit an assignment to the Originality Check tool, review the Turnitin Originality Check Student Guide.
Expert Solution Preview
As a Harvard University Professor, I understand the importance of evaluating different payment systems within healthcare. In this assignment, we will be discussing two global payment systems used by health service providers. We will analyze their structure, advantages and disadvantages, identify the risk to loss of revenue in each system and explore how pay for performance can be integrated into each system.
1. Define the structure of the payment systems:
The two global payment systems used by health service providers are fee-for-service method and population health – capitation. In the fee-for-service method, providers are paid for each service, test or procedure they perform. In contrast, in population health – capitation, providers are remunerated a fixed rate per patient, regardless of the services they provide.
2. Identify risk to loss of revenue in each system:
In the fee-for-service method, the risk of loss of revenue is if providers overutilize healthcare services, leading to higher costs and reduced access to care. In contrast, the risk of loss of revenue in population health – capitation is if providers underutilize healthcare services, leading to suboptimal care and reduced patient outcomes.
3. Describe advantages and disadvantages of each system:
The advantages of the fee-for-service method include that it promotes better access to healthcare services, encourages innovation and provides greater physician autonomy. However, the disadvantages include over-utilization of services, higher healthcare costs and inequality in access to care. On the other hand, the advantages of population health – capitation include a focus on preventive health care, cost containment and equal access to care. However, the disadvantages include the possibility of under-utilization of services, patient dissatisfaction, and reduced physician income.
4. Identify how pay for performance can be added to each payment system:
In the fee-for-service method, pay for performance can be added by tying a percentage of physicians’ remuneration to the quality of care provided, such as patient satisfaction ratings, reduced hospital readmissions and adherence to clinical guidelines. In population health – capitation, pay for performance can be added by integrating virtual care services and enabling patients to participate in self-management of chronic conditions, leading to better health outcomes.
In conclusion, evaluating payment systems within healthcare is essential in promoting high-quality care, reducing healthcare costs, and promoting equal access to care. The fee-for-service and population health – capitation payment systems each have their advantages and disadvantages and carry a risk of loss of revenue. Integrating pay for performance can enhance the quality of care provided in both payment systems.