Why We Need to Make a Shift from Fee-for-Service Payment Model to Pay-for-Performance Model

pay for performance model
April 14, 2016

Posted by MedbillingExperts / 0 Comment

Fee-for-service (FSS) is the most widely used model of health service delivery in the current times wherein physicians charge separately for each of the services they provide to patients. Needless to say, this model has proved to be a jackpot for most physicians as it helps them make fast buck. However, the biggest drawback of this model is that it invariably leads to a fall in the quality of care.

In a bid to arrest the fall in quality of care, the government has taken several steps, including bundled payments and capitation that discourage the exploitation of the loopholes in FFS. However, it now seems that the best way to overcome the flaw is by completely ditching the model and embracing one which links payment to provision of quality care. This is where pay-for-performance (P4P) model can be beneficial.

As the name indicates, pay-for-performance is a model in which physicians receive payments based on the quality of healthcare they provide to patients. The model gives emphasis to coordinated care and also introduces quality and efficiency incentives. The idea behind this is that since physicians get incentivized for quality, they would be more inclined to deliver the best service to patients rather than focus on providing unnecessary services. And experts are of the opinion that this payment model will eradicate the deviation from standard recommended care, which currently stands at 50% for acute and chronic care, and even dismal for others such as a staggering 81.7% for smoking-cessation counseling for instance.

The Bottom-line

Though the government has taken incremental steps to move towards pay-for-performance model, it will take us some more time to reap the benefits of this model. But in spite of the delay, it is still a step in the right direction. Aside from improving quality of healthcare delivery, pay-for-performance method will also serve as a great means to reduce the cost of getting and delivering quality healthcare services, and will benefit all the concerned parties.

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