Which payment model is right for you?

Document Sample
Which payment model is right for you? Powered By Docstoc
					WhiCh PaymenT model
         is righT for you?
 Type            What it is                  Pros                        Cons                         Tips
 Pay-for-    Uses a base fee-for-ser-    • One of the more               • Payers typically set the • Insist that insurers
 performance vice payment structure and    common models in use            standards.                 share all measures
             pays out what amounts to      today.                        • The definition of suc-     used to evaluate
             a bonus if quality and/or   • Least financially risky         cess                       quality profile and
             cost measures are met.        for physicians com-             necessary for payments     performance.
                                           pared                           can vary.                • Insist that measures
                                           with other models                                          used are nationally
                                           listed.                                                    recognized.
 Capitation  Pays a fee each month on • Monthly payments to              • Of all of the models     • Steer clear of this
             a per-member basis.           PCPs for case manage-           listed here, this one      model if you don’t have
                                           ment in medical homes           requires practices to be   experience managing
                                           can be in addition              as efficient as possible   risk. Consider pay-for-
                                           to fee-for-service and          with their resources.      performance or shared
                                           pay-for-performance                                        savings instead.
                                         • If your patients are
                                           relatively healthy and
                                           visit the office infre-
                                           quently, you can do well.
 Bundled     Provides one bulk payment • If your practice is             • You take a risk on         • Find out how the payer
 payments    to cover the cost of          highly                          your ability to perform      will pay, when you can
             services delivered by more    integrated with a big           services at the rates        expect payment, how
             than one provider for a       infrastructure, you’ll be       being paid.                  episodes of care are
             single episode of care for    better suited to accom-                                      defined, the duration of
             a specific period             modate this model than                                       the bundle, and how the
             of time.                      will other types                                             basic bundled payment
                                           of practices.                                                is calculated.
 Shared      Pays a practice when        • Expected to be very           • This model is relatively   • Understand how the
 savings     patient care is managed at    common as account-              new, so it hasn’t been       payer calculates quality
             a cost that’s less than the   able care organizations         thoroughly analyzed.         and cost benchmarks
             budgeted amount for           grow in popularity.           • Under some arrange-          by which performance
             doing so. The practice is   • Under some arrange-             ments, physicians            will be judged. Ask
             paid a percentage of the      ments, practices share          share risks as well as       how the payer will set
             difference between the        in savings but not risks        savings.                     cost budgets from year
             actual and budgeted costs.    if costs exceed the           • Efficient practices          to year. Find out how
                                           budget.                         may reach a point of         shared savings and
                                         • Recognizes efforts to           diminishing returns at       risks will be appor-
                                           lower costs.                    which shared savings         tioned among partici-
                                                                           decrease.                    pating providers.
 Withholds/      Places a portion of the   • If all of your practice’s   • Many practices didn’t   • As with any model, read
 risk pools      contractual reimbursement   physicians do well, you       see money returned to     the proposed contract
                 rate in a risk pool. Pay-   will move out of the          them under this model     and have a consultant
                 ments are made from the     risk pool.                    when it was prevalent     or attorney review it as
                 pool only if                                              in the 1990s.             well. Analyze the payer,
                 pre-established goals are                               • The American Academy      and try to negotiate
                 met.                                                      of Family Physicians      the best possible terms
                                                                           maintains that doctors    for you.
                                                                           instead should be paid
                                                                           a premium for providing
                                                                           high-quality care.

Copyright Medical Economics, June 10, 2012. For more information on payment models, visit


Description: In the evolving reimbursement landscape, physicians are often faced with the difficult task of sorting out the many varied payment models alone. This chart, created by Medical Economics Editor-in-Chief Lois Bowers, can help you determine what's best for your medical practice as the healthcare industry moves away from fee-for-service to budget-based payment systems. For more information, visit MedEc.com.