NUR 621 Topic 6 DQ 2 Differentiate between fee for service, capitation, and episode-based payment

Click here to ORDER an A++ paper from our Verified MASTERS and DOCTORATE WRITERS: NUR 621 Topic 6 DQ 2 Differentiate between fee for service, capitation, and episode-based payment

Topic 6 DQ 2

Jan 20-24, 2022

Differentiate between fee for service, capitation, and episode-based payment. Describe the structure of these payment methodologies along with the benefits and potential risk of each. Keep both the provider and patient in mind when composing your answers.

REPLY TO DISCUSSION

BH

Jan 26, 2022, 5:25 AM

Unread

KNOWLEDGE CHECK

Identify the primary payment mechanism for your organization. Provide discussion with response.

TF

Jan 25, 2022, 12:24 AM

Unread

Replies to Beth Hale

Fee-for-service (FFS) directly pays Medicaid participating physicians, clinics, hospitals, and providers a fee for each service rendered (Kaiser Family Foundation, n.d.). The FFS payment model rewards volume despite a patient’s health outcomes or quality of care (Kaiser Family Foundation, n.d.). Some disadvantages of the FFS payment model are fragmented care due to lack of care coordination, care gaps, duplicate services, and high out-of-pocket costs. Many consumers favor the FFS payment method due to the ability to choose providers without restrictions despite the high costs associated with the same (Penner, 2017). Individuals still widely use FFS, and many providers also favor this payment method.

Capitation is a healthcare payment system that pays a fixed amount per patient for a prescribed period by an insurer or physician association to the provider or hospital rendering services (Torrey, 2020). This financing model is a risk-sharing method for the cost of care from the payer to the provider (Penner, 2017). With capitation, a provider may be penalized for the use of services that value more than the fixed payment obtained or, on the other hand, may make a profit if the patient or consumer uses fewer services. If the patient or consumer does not use services, the provider still gets the fixed fee. One advantage to clients is that duplication of services is usually avoided, but a disadvantage is that providers may decrease time spent with one client.

Episode-based payments, also known as bundled payments, were created by the Center for Medicare and Medicaid Services (CMS) and came about with the Affordable Care Act to improve patient outcomes at a reduced cost to Medicare (Forrest, 2018). With this payment method, “the total allowable remittance for a patient’s sequence of care relating to a single episode of the medical event is predetermined instead of separate compensation for each service and provider along the way” (Forrest, 2018). Unlike FFS service payment, episode-based payments reward value over volume of care, and providers receive incentives when high-quality, cost-effective care is delivered.

References NUR 621 Topic 6 DQ 2 Differentiate between fee for service, capitation, and episode-based payment

Forrest, B. (2018). Episode-based payments explained. https://www.olio.health/blog/episode-basedpayments?hs_amp=true

Kaiser Family Foundation. (n.d.). Medicaid delivery system and payment reform: A guide to key terms and concepts. https://www.kff.org/medicaid/fact-sheet/medicaid-delivery-system-and-payment-reform-a-guide-to-key-terms-and-concepts/

Penner, S. J. (2017). Economics and Financial Management for Nurses and Nurse Leaders (3rd ed.). Springer Publishing Company. ISBN: 978-0-8261-6001-0

Torrey, T. (2020). How healthcare capitation payment systems work, Very Well Health. https://www.verywellhealth.com/capitation-the-definition-of-capitation-2615119

Jan 25, 2022, 11:20 AM

Unread

Hello Tameka

Thank you for your post, I like how you separated out each reimbursement model. Fee for service is what most of us are familiar with and is what a lot of hospital models are based off of as a volume-based system where increased volumes have increase revenues. while some patients may not want to leave the hospital at times and enjoy the extra stay, the flip side is that patient satisfaction typically suffers in a FFS model due to overage or duplication of tests and higher cost of care. The FFS model looks at patients in silos instead to the patient as a whole and has been partnered with decline in overall health of our population. In accountable care organizations where private insurers, hospitals and partitioners begin the establishment of partnerships to follow a patient across the continuum of care, is when other avenues of reimbursement based on quality were viewed. (Penner, 2016) Value based purchasing or care is as you stated putting value back into the care of the patient and placing value on the quality of care. Value based care is has a culture shift necessary to change practice, but it changes it for the better to focus on the whole patient instead of silos

Thanks for the post

Penner, S. J. (2016). Economics and financial management for nurses and nurse leaders, third edition (3rd ed.) [e-book]. Springer Publishing LLC.

CO

Jan 24, 2022, 10:19 PM

Unread

The fee-for-service payment is a payment model that involves services being paid individually. This type of service provides encourages physicians to provide more healthcare treatments because the individual treatment payment is based on the quality treatment provided rather than the quality of care provided to the patient. The healthcare provider bills using an itemized list and is reimbursed based on patients or services (Penner, 2017). The fee-for-service is based on the premise that both provider and patient are conscientious or the healthcare services that are truly needed. Unfortunately, individuals who use the fee for service model payment system seem too careless how many healthcare treatments or services are being used because they know that the claim will be paid when submitted. Sometimes some of the treatments being ordered are unnecessary and a waste of resources and money. This plan also allows the consumer to choose specialists where treatment is accessible without the need to show the need of the specialty care. The same problem with waste can occur with physicians overusing the system by ordering unnecessary treatments. Because the model is based on volume-based payment system the reimbursement will be greater based on the number of patient and services that were provided (Penner, 2017).

The capitation payment model is very different from the fee-for-service payment model. The capitation payment model consists of physicians getting reimbursed on a set amount per patient and not based on the volume of treatments provided or volume of patients. This payment system is dealing with managed care plans. It is considered a financial strategy that is prepaid revenue considered a fixed payment or global budgeting (Penner, 2017). Healthcare providers that belong to managed care plans can negotiate and calculate their capitation reimbursement period which will also include the members for the capitation period that will pay in advance (Penner, 2017). The capitation rate is also based on the members age and sex. The capitation model of financing is a system of risk sharing or exporting risk where the provider is sharing the financial risk (Penner, 2017). The managed care provider must be able to control the expense costs to ensure that the capitation payment received does not exceed the capitation budget. This type of payment system encourages physicians to be conscientious about what treatments or procedures patients are receiving. Those physicians that abuse this system are penalized because managed care providers share the costs of unnecessary treatments.

Episode-based payment model is also called a retrospective payment model. This type of payment model is based on the expected costs for the healthcare services have been provided (Penner, 2017). Retrospective payment is the same as fee-for-service and one of the oldest payment systems in healthcare. The history of the payment system involves physicians charging fees for services that were provided to patients. Change-base reimbursement is a retrospective payment approach where the provider bills the payer for all the services that were provided to the patient. The payor will evaluate the itemized bill submitted and determine if payment will be provided or denied. Generally, providers will be paid for the services rendered. (Penner, 2017).

References NUR 621 Topic 6 DQ 2 Differentiate between fee for service, capitation, and episode-based payment

Penner, S. J. (2017). Economics and financial management for nurses and nurse leaders (3rd ed.). Springer Publishing Company.

Click here to ORDER an A++ paper from our Verified MASTERS and DOCTORATE WRITERS: NUR 621 Topic 6 DQ 2 Differentiate between fee for service, capitation, and episode-based payment