HEALTHCARE PAYMENT PROGRAMS

HealthCare Payment Programs



Health Care Payments Systems in Untied States

Fee for Service vs. Capitation

There are two major methods employed for the remuneration of physicians in US health care industry: Fee for Service and Capitation.

Fee for Service observes physicians being reimbursed based on a pre set rate for services provided to patient. In this regard, each service provided by the physician is considered separate and accordingly reimbursed. FFS is generally employed method used for the physician's remuneration. The main critic of this approach is that doctors tends to see more patients during same time period since payment is independent of time period and depends on the frequency of services provided during a particular time duration. Therefore, it acts as an incentive which motivates the doctors to attend more patients in short period of time (Gosden et al, 2000).

In contrast, Capitation is a population-based method that have been adopted to reimburse hospitals and physicians for each patient catered. In this system, a amount of compensation is fixed for each patient irrespective of the fact that he/she use one or all services. Therefore, it is in the benefit of the health providing institutes and physicians that patients utilized minimum services. If the patients uses less services, the excess amount of compensation act as a profit for the physicians and hospitals whereas, if patients uses more services so that cost of providing services exceed the funding provided for the purpose, it will become a loss for the physician and hospital. It is also perceived riskier from the viewpoint of physicians because it might be the case that all the patients registered on rosters required extensive health care which increased the cost significantly while remuneration remain constant (Williams & Torrens, 1980).

Both remuneration packages have different cons and pros from the perception ...