Fee-for-service payment - an evil practice that must be stamped out?

Area of Science:

• Health economics
• Healthcare administration
• Medical policy

Background:

• Fee-for-Service (FFS) payment models present administrative challenges.
• Alternative payment models like capitation, Diagnosis-Related Groups (DRGs), and pay-for-performance have limitations.
• Physician involvement in payment regulation is explored as a potential solution.

Purpose of the Study:

• To evaluate the feasibility and administrative simplicity of co-opting physicians to regulate FFS payment.
• To identify the critical components of an effective FFS payment regulation system.
• To propose a framework for managing healthcare costs and quality through physician-led FFS regulation.

Main Methods:

• Analysis of FFS payment mechanisms and administrative requirements.
• Comparison of FFS with alternative payment models (capitation, DRGs, pay-for-performance).
• Emphasis on the role of fee schedule design, revision, and auditing.

Main Results:

• Co-opting physicians to regulate FFS payment is deemed more feasible and simpler to administer.
• Effective fee schedule design, including billing conditions, is key.
• Strict auditing of adherence to regulations is necessary for cost and volume control, and quality assurance.
• Periodic, item-by-item fee schedule revisions are essential for provider balance, incorporating new items, and reflecting market prices.

Conclusions:

• Physician-led FFS payment regulation through well-designed and audited fee schedules offers a practical approach.
• This model facilitates control over balance billing and extra billing.
• It lays the groundwork for future implementation of more sophisticated payment methods.