Risk-Based Reimbursement
For your Dropbox
assignment, a primary care physician is often reimbursed by Health
Maintenance Organizations (HMOs) via capitation, fee-for-service,
relative value scale, or salary. Capitation is considered as a risk
based compensation.
In an effort to understand the intricacies
involved with physician reimbursement, particularly in an era of health
care reform, identify and interview an expert in the field, such as:
- Hospital Administrator
- Managed Care Organization (MCO) executive
- Health care Consultant
- Legal Professional
Assumption: MCOs use risk-based reimbursement for primary care physicians.
Ask the following questions in the interview:
- What kind of risk do the MCOs assess?
- Does risk-based compensation limit the freedom of primary care physicians in any way in terms of patient care? Why or why not?
- How does the capitation model of reimbursement work? Do physicians generally prefer one model over the other? Why or why not?
- Why do HMOs prefer the prepaid, monthly premium?
- Is pay-for-performance a better model than existing models of compensation? Are there limitations to it as well?
Feel free to add additional follow-up questions for depth and clarification as you see fit.
Create a 4- to 5-page report in Microsoft
Word document, analyzing the responses provided (which should be
included as part of the report) using the evidence from the literature
to help support or refute the responses provided.
Support your responses with examples.
Cite any sources in APA format.
Submission Details
Name your document SU_HCM4025_W5_A2_LastName_FirstInitial.doc.
Submit your document to the W5 Assignment 2 Dropbox by Tuesday, August 2, 2016.
Expert Solution Preview
Introduction:
Risk-based reimbursement is a compensation model used by Health Maintenance Organizations (HMOs) to reimburse primary care physicians. In this model, physicians are paid based on the risk of their patient population. To understand the nuances of physician reimbursement, an expert in the field was interviewed.
Q1: What kind of risk do the MCOs assess?
MCOs assess different types of risk, including demographic and health risk. Demographic risk involves the age, gender, and socioeconomic status of the patient population. Health risk involves the presence of chronic diseases, disability, and mental health issues.
Q2: Does risk-based compensation limit the freedom of primary care physicians in any way in terms of patient care? Why or why not?
Risk-based compensation does not necessarily limit the freedom of primary care physicians in patient care. However, it can create financial incentives that may influence physicians’ decisions regarding patient care. For example, capitation payments may incentivize physicians to provide more preventive care rather than costly procedures.
Q3: How does the capitation model of reimbursement work? Do physicians generally prefer one model over the other? Why or why not?
The capitation model of reimbursement is a fixed payment to physicians based on the number of patients they see, regardless of the level of care provided. Physicians are responsible for managing the healthcare of their patient population within the allocated budget. Some physicians prefer capitation because it provides a predictable income and incentives to provide preventive care. However, other physicians may prefer fee-for-service because it allows them to be compensated for individual services.
Q4: Why do HMOs prefer the prepaid, monthly premium?
HMOs prefer prepaid, monthly premiums because it provides a predictable cash flow and reduces financial risk. This payment model also incentivizes physicians to provide preventive and cost-effective care.
Q5: Is pay-for-performance a better model than existing models of compensation? Are there limitations to it as well?
Pay-for-performance (P4P) is a model that rewards physicians based on their performance on quality measures. P4P has the potential to improve patient outcomes and reduce costs. However, there are limitations to P4P, including the difficulty of measuring quality accurately, the potential for unintended consequences, and the added administrative burden.
Conclusion:
Risk-based reimbursement is a complex topic with different models and potential benefits and limitations. MCOs assess various types of risk, but risk-based compensation does not necessarily limit the freedom of primary care physicians. Capitation and fee-for-service are two reimbursement models preferred by different physicians for different reasons. Prepaid monthly premiums are preferred by HMOs because they provide a predictable cash flow. P4P has the potential to improve patient outcomes, but it also has limitations. An understanding of these nuances is crucial for healthcare professionals to navigate the current healthcare system.
