The healthcare industry is always changing, and that means reimbursement models are changing, too. Today, value-based reimbursement is beginning to supersede the traditional fee-for-service model as healthcare organizations’ and patients’ preferred billing method.
If you’re thinking of making the switch, here are the pros and cons you need to know.
What Is the Difference Between These Payment Models?
Fee-for-Service: The most common model used in the industry for decades, fee-for-service reimbursement is determined according to the number of services provided, such as appointments, tests, treatments, prescriptions, and more.
Value-Based Care: Under this model, providers are reimbursed according to their performance. Bills are based on patient outcomes and patient satisfaction, rather than the number of services.
Fee-for-Service: The Pros
One of the greatest advantages of fee-for-service models is their simplicity. Bills are simply a list of the different services rendered, which helps make an already confusing, complex process a bit easier on the sides of both the patient and the healthcare organization.
On top of that, service-based care reimbursement has been long established in the healthcare industry. Many organizations already have the operating systems and procedures in place to support, for example, changes and updates to the traditional fee-for-service models, rather than overhauling their entire system.
Value-Based Care: The Pros
Because value-based care models take a qualitative rather than quantitative approach, they ultimately lead to higher-quality care. When an organization’s revenue is determined by positive outcomes, outcomes will naturally improve as providers seek to effectively manage a patient’s care according to the individual’s unique needs.
Value-based care also offers significant cost-saving benefits, a critical deciding factor for many organizations concerned about losing revenue under this model. By focusing on what is strictly aligned with a patient’s needs, providers can cut down on spending where it isn’t necessary. Value-based care also offers more stable cash flows than fee-for-service models, a clear example being the steep drop in in-person visits caused by COVID-19.
Fee-for-Service: The Cons
While value-based care rewards providers for positive results, the fee-for-service model rewards providers for the volume of services. To deliver more services, and therefore receive more reimbursement, providers may cut down one-on-one time with patients, which can mean patients aren’t getting enough care, are getting care that doesn’t align with their needs, or are even experiencing medical errors that could have been avoided with better patient-provider communication.
Additionally, value-based care provides an incentive to prevent readmissions, whereas the emphasis on revenue under fee-for-service models can mean patients receive too much care. Providers may end up suggesting unnecessary tests, appointments, and procedures with the goal of generating more income. This not only drives up patient healthcare costs but can also be outright dangerous.
Value-Based Care: The Cons
When it comes to shifting to value-based care, one of the biggest challenges providers face is determining how to best track outcomes so they can be used as a measurement for billing. What metrics will be used to define your performance? What are the most effective ways of tracking these metrics?
Organizations that decide to make the switch may also run into trouble when trying to integrate new value-based care technologies into their current systems. In many cases, healthcare facilities are working on isolated platforms, and this lack of connectivity can make it difficult to carry out value-based care initiatives. That’s why many organizations choose to embrace new telehealth technologies, which facilitate the connections that are critical to delivering effective value-based care and increasing revenue.
Improve Patient Care Under Any Reimbursement Model With iTether
Whether you stick with fee-for-service care or are ready to make the switch to a value-based approach, we’re here to help you boost your income while improving patient outcomes. Our integrated telehealth platform provides the framework and cutting-edge digital capabilities you need to effectively collect data, communicate with patients, and streamline your workflows according to your unique needs.
Connect with us today to learn more about how we can help you create more positive patient outcomes.