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In an effort to improve care quality and lower costs, the healthcare industry has been working on shifting from fee-for-service to value-based care delivery. The two models differ in the way providers are reimbursed for the care they provide by rewarding them service-by-service or based on overall quality and patient outcomes.
In the following article, HealthPayerIntelligence breaks down the inner workings and the key differences between the two delivery systems.
FEE-FOR-SERVICE
In a fee-for-service payment model, health plans reimburse providers for each service they provide to patients, regardless of the outcome.
This is the status quo in healthcare coverage. Providers may enjoy more control over their salaries and schedules in fee-for-service models, according to the American Medical Association (AMA). They also might find that the simplicity of fee-for-service reimbursement gives them more flexibility in styles of medical practice and work effort.
Fee-for-service health plans typically have no provider networks and no referral requirements, but members may face higher costs. Some fee-for-service plans are preferred provider organizations (PPOs). In non-PPO plans, members can receive care by visiting a doctor or hospital of their choice. In PPO plans, out-of-pocket costs may be lower for those who see a listed PPO provider.