The healthcare industry is known for many things, one of the most notorious being the complexity of its billing processes. We’re making it a bit easier by breaking down two of the most common payment models: fee for service and value-based care.

Here are the basics you need to know.

An Overview of Fee for Service vs Value-Based Models

Fee for Service Value-Based
Prices are based on services provided. Providers are paid per service. Prices and reimbursement are based on value to patient and positive outcomes.
Emphasis on managing symptoms. Emphasis on preventative care.
Simpler billing process. More complex billing process.
May lead to inflated costs and lower patient satisfaction. Can increase satisfaction and bring down the cost of healthcare.

What is Fee for Service Care?

As the name implies, fee for service (FFS) care is a reimbursement model that charges based on quantity over quality. In other words, providers are paid for each procedure, test, treatment, appointment, etc., regardless of the resulting patient outcomes. While more and more organizations are shifting towards other payment models, such as bundled payments and capitation, fee for service models remain the most common forms of reimbursement scheme in the United States.

THE CHALLENGES

FFS care still remains the status quo within United States healthcare systems, but that is beginning to change due to this model’s incentives (or lack thereof). With a focus on volume over quality, providers may be driven to order unnecessary tests and procedures when lower-cost or more effective options are available .Critics of this model also argue that fee for service reimbursement may be a driving factor behind the nation’s inflated healthcare costs.

THE BENEFITS

Fee for service care wouldn’t be the norm if it didn’t have its advantages. One of the biggest benefits of FFS models is their simplicity. If a service was provided, then that individual service is added to the bill. There’s no need to question whether or not a particular service should be included in a provider’s reimbursement. Additionally, healthcare facilities all over the country already have the systems and workflows in place to support this type of payment model.

What is Value-Based Care?

Value-based care (VBC) models are, essentially, the opposite of FFS payment models. Providers are reimbursed according a number of different factors, including patient satisfaction, health outcomes, efficiency, and more, as opposed to just the number of services rendered.

What does this look like in practice? The Hospital Readmissions Reduction Program is one example of this model. With the goal of reducing hospital readmissions, the HRRP compares each hospitals readmission rate to the average of other hospitals and comes up with an excess readmission ratio. This then determines how much the hospital will be penalized.

THE CHALLENGES

They may be considered one of the best methods for improving outcomes, but value-based reimbursement models aren’t infallible. One of the biggest challenges facilities face is determining how to quantify positive outcomes and use them as a metric for billing. In addition, facilities often struggle to adapt their old workflows to this new way of approaching provider reimbursement.

THE BENEFITS

Unlike fee for service models, which concentrate more on symptom management, value-based models focus on preventative care and treating patients faster and more effectively. As a result, patient’s don’t waste time (and money) on unnecessary tests and treatments which translates to higher patient satisfaction rates. A value-based model also equips providers with the incentives and technology they need to better coordinate care and improve patient outcomes.

iTether: Improving Care Delivery No Matter Your Billing Model

Whether you’ve opted for fee for service models or are joining the value-based care movement, we’re here to support you with a fully integrated telehealth platform. Built as a framework, iTether allows you to easily deploy your unique approach to healthcare delivery. Reach out today to learn more about how we facilitate your preferred payment model.