Healthcare reimbursement models are systems by which healthcare organizations can get paid for the services they provide to patients. As none of them are completely perfect, there are many types that have been adopted in the United States, depending on the goals and functions of the healthcare organizations that use them and their relationships with their patients. If your healthcare organization’s reimbursement model isn’t working for your revenue cycle, it may be time to consider switching to another. Here are some of those models explained.
One of the most common reimbursement models in recent years, the fee-for-service system bases patient pricing on the cost of each individual service or product that a physician orders. The bill usually includes these products and services and their individual prices listed out so that the patient can pay for all of it. However, since this means that providers get paid more when they provide more services to their patients, it can lead to service inflation, redundancy and the ordering of unnecessary testing and procedures. Due in part to recent attempts to overhaul healthcare regulations, many organizations have begun shifting away from this model.
Value-based care (VBC), also known as Pay-for-Performance, is a billing system that is becoming much more common in healthcare organizations these days. Government regulations favor this model, so government healthcare programs tend to work more smoothly with this system and its various subtypes.
In this reimbursement model, providers are paid based on the quality of care they provide to their patients, rather than the quantity. This eliminates overcharging and service inflation from fee-for-service models. It also involves incentives and performance metrics that keep track of how well physicians serve their patients. Patient satisfaction and positive outcomes generally become the metrics for success and reimbursement used in this model, but they are not as concrete as the metrics used in fee-for-service models. This model also places the responsibility of quality service on the shoulders of healthcare providers, requiring them to become accountable for how they treat their patients. Many lawmakers believe VBC to be a better reimbursement model than fee-for-service, so this model will likely increase in popularity over time.
The bundled payment reimbursement model is a subtype of value-based care. This model has become especially popular lately because it simplifies patient bills into one set payment that folds in every service provided for a single “episode” of care. When the bills are paid, the payments get split up among the different providers involved in that episode. The providers involved must assume a certain amount of risk in the process, as the bundled payments are based on assumed/historical cost instead of actual cost. But this again provides accountability and an encouragement to the providers involved to find more efficient and effective ways of treating their patients.
Accountable Care Organizations (ACOs) are also a fairly popular form of healthcare reimbursement model, and are yet another subtype of VBC. An ACO is formed when a group of healthcare providers of varying specialties come together to provide comprehensive care services to whatever patients they receive. Their purpose is to provide the right care at the right time. ACOs work together with checks, balances and accountability to help patients get well and ensure minimal overlap and minimized cost. Coordination is key in this model, and the results can be rewarding, assuming communication and accountability amongst the providers involved remains consistent. However, as ACOs are a form of value-based care, providers also assume a certain amount of reimbursement risk in the chance that caring for patients is more challenging than expected. Some critics say that this model and other VBC models eliminate competition in the healthcare field, but nonetheless, ACOs may be part of the future of the healthcare industry in the US.
Patient-Centered Medical Home
Patient-Centered Medical Homes (PCMHs) are similar to ACOs in that they involve a group of providers teaming up to provide complete care services to their patients. PCMHs provide care focused through five main attributes: comprehensiveness, patient-centeredness, care coordination, accessibility and quality/safety. However, while a PCMH might seem similar to an ACO in many ways, the primary difference lies in the fact that ACOs primarily exist as a method of provider reimbursement, whereas as PCMH is a method used by a single practice to provide holistic and personalized care to patients.
Clinical pathways are a care model that charts an individual’s healthcare needs and the treatment options for them over time. Providers of multiple disciplines work together to build this plan. In terms of reimbursement, a pathways model can mean choosing one treatment plan over another based on price if two different kinds of treatments will produce the same result. It’s a model that is especially popular with the oncology field, as there are many options for cancer treatment. This model also requires patients and providers to work together, as well, so that a patient knows his or her options.
Health Maintenance Organizations
A Health Maintenance Organization (HMO) is a provider model in which a patient works with a specific organization for both healthcare and insurance. The HMO generally functions as a network of providers and contracted organizations that work to provide comprehensive care services to the patient. The patient then pays the care network for services provided, and is given lower cost incentives to continue using the HMO rather than going out-of-network for service (though there are, of course, exceptions related to emergency care and urgent care). Some HMOs also adopt a point-of-service (POS) plan in which the patient only has to pay a copay or coinsurance when in-network. HMOs generally provide service to patients through a single primary care physician. If that physician cannot adequately solve the problem, they will refer the patient to a specialty doctor who is in-network.
Preferred Provider Organization
A preferred provider organization (PPO) is a system that is much like an HMO, only the providers in the network are contracted with an outside insurer or third party organization to provide care to patients. This also results in more regulations as to how treatment is given. Patients can go out-of-network if they wish, but it is more beneficial to them economically to stay within the network, as they will pay smaller copays and have full coverage.
DECO Can Help!
Is your healthcare reimbursement model struggling, or are you unsure about what model will work best for your organization? At DECO, we specialize in custom revenue cycle management assistance, helping you get reimbursed for the care you provide for your patients by adapting to make your model work. We offer customized revenue cycle management options, and we would love to help you figure out your reimbursement model. Contact us today!