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Healthcare Payment Types

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Healthcare Payment Types

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  • September 2009
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Healthcare Reimbursement Models…. Is There a Better Way?

Physician Perspective

Executive Summary

The traditional methods of paying for healthcare services use to involve paying for services out of pocket. The gradual transition from fee- for- service payment to managed healthcare is not a recent phenomenon. With the increasing costs of healthcare services, there was an increased interest in moving payment from fee-for-service into a more organized payment structure. This paper discusses the three payment types in the healthcare industry used by practicing physicians: fee for service, bundled service arrangements, and capitation arrangement. It also addresses the best current method as well as future reimbursement methods. The importance and benefit of each type of payment system is examined in relation to several criteria such as utilization rates and delineation of services.

Healthcare Reimbursement Models…. Is There a Better Way?

Physician Perspective

Initially healthcare reimbursement was a term used in dealing with hospitals, but it has grown to be much bigger than that. Financing methods and organizational patterns have shifted over time and created medical groups, surgery centers, home health firms, large healthcare organizations, and many others in both the private and public sectors. Even though healthcare organizations are businesses just the same as any other business, they have one area that completely sets them apart from any other; that is the way they receive payments. There is not a single industry that has as unique and complex of a revenue system as the healthcare industry. In fact, in 1999 complexity was listed as “one of the five trends threatening the very future of medicine (Washburn 1999, 34). This paper will examine the history of reimbursement in the U.S. health system, the types of healthcare reimbursement methodologies, and also the best option of healthcare reimbursement models.

The history of health...

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