Healthcare reform has been a hot topic even before the roll out of The Affordable Care Act in 2014. One of the latest ideas to take hold is Value Based Payment, quite different from the current system – Fee for Service.
Under the Fee for Service model the costs are rising so
quickly, that the average American can no longer keep up. It’s become a choice
of seeking medical care for ongoing health issues or being able to pay rent.
Both the government and healthcare
providers know that the current system is broken and that there is a dire need
to replace or fix the current healthcare models.
It’s important to understand how the Fee for Service method works. There is no
incentive to consider the cost or the outcome of the actual treatment. A
service is provided, and the provider is paid for delivering it. If a physician
is unsure as to the cause of a patient’s issue, they can choose to order more
tests and perform more procedures – costing both the patient and the insurance
company thousands and thousands of dollars. The physician is neither penalized
or incentivized for their actual quality of service and finding the cause of
the problem. They receive payment regardless of the outcome.
However, patients and insurance companies alike can no longer sustain the
rising costs of all the tests, procedures, and office visits. Enter the Value
Based Payment System or Pay for Performance as it’s also known. The idea is
simple, Value Based Payment will provide incentives for providers to deliver
quality care efficiently, instead of solely rewarding quantity, which will
reduce both costs and improve patient outcomes.
With Value Based Payment, providers must meet certain quality thresholds, while containing costs, in order to get paid. This puts far more pressure on physicians to look for root causes of issues, learn more about their patients’ health and family history, and take more notice of signs and symptoms.
From the patient perspective, Value Based Payment healthcare
looks to be a safe and more effective way of receiving care with the value
placed on their wellbeing and not just the service. For physicians and
hospitals, it requires using evidence-based medicine and proven treatments and
techniques. The days of performing test after test may be ending, as more physicians
take a Dr. House approach to patient care. Patient’s wishes and preferences
will also be more of a focal point than in the past.
It’s hard to say for sure if a Value Based Payment system will be the solution
to healthcare reform, but many people see it as taking a step in the right
direction. Providers will no longer be incentivized to earn more money by
performing more services. Providers will instead be rewarded for their quality
and cost containment outcomes and penalized for failing to meet certain quality
and cost benchmarks.
With new physician’s offices and urgent care centers popping up on every corner, healthcare reform won’t be taking a backseat any time soon.

Margret K. Warner
Vice President, Commercial Lender
Director of Business Services
860.393.9151