Describe the types of reimbursement in the healthcare market and provide an example of each.
Fee-for-service (FFS) is a type of reimbursement where health care providers are paid a fee for each service provided. Providers are reimbursed for volume and quantity of services and not the quality of service measured by outcome. Example of FFS, cost/charge-based reimbursement.
Capitation type of reimbursement is where healthcare providers are reimbursed based on number of patients the provider have or see. Bundled Payments / Episode-Based type of reimbursement provide single comprehensive payment for all services provider to a patient in an episode of care.
With the Affordable Care Act of 2010, Centers for Medicare & Medicaid Services (CMS) adopted some reforms to the reimbursement of healthcare in the market. Several reforms such as Value Based Purchasing, Quality Based Clinician Reimbursement, Shared Savings Programs, New Bundled Payments models, Readmission Reduction Program, and Hospital Acquired Conditions. The prominent one of these reforms and programs of reimbursement is the Value-Based Purchasing (VBP) Program, which rewards healthcare providers with incentive payments for the quality of care provided to the patients especially Medicare population. The VBP started with the acute care and is now applicable to outpatient care including primary care providers where incentives are given for closing gaps in preventive care and chronic disease management.