Internal reimbursement system
A fee-for-service payment environment involves the reimbursement of different medical providers based on the volume and intensity of their services. Hence, the billing system will be based on the quantity of services that each healthcare provider will provide. Within the internal hospital environment, all physicians, specialists, and healthcare providers will be reimbursed based on the volume of healthcare services that they provide to patients. In this case, each healthcare provider will be required to detail each service they perform in regards to quantity and quality.
Hence, for each provider, the number of tests and procedures that they conduct on a patient per billing period will be utilized to quantify how reimbursement they should receive (Guo et al., 2016). The provider will bill all patient visits, evaluations, treatments, procedures, and tests to third-party payers for payments. Once these payments are received, the financial department will then divide reimbursements to each healthcare provider on the basis of how many services they provided. A standard number of services will be set for each provider in order to necessitate full reimbursement. Individuals that fall below the set standard will be penalized by a specific amount.
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Financial Rewards and Penalties System
In the financial rewards and penalties systems, rewards, and penalties will be categorized based on the different groups; primary care physicians, specialty physicians, responsiveness to patients, and hospital administrators. For primary care physicians, incentives will be based on the improved outcomes of their patients. Hence, the indicators for payment will include customer satisfaction, longer appointments, and continuity of care. This will vary from the earlier reimbursement system, which is entirely based on the volume of services provided.
For specialty physicians, a base salary will be set. The main focus of performance will be establishing efficiency. Rewards and penalties will then be provided for specialty physicians based on customer satisfaction. Hence, the main metric for specialty physicians will be the value of the services provided (Henkel, 2015). Lastly, hospital administrators will be incentivized by the reduced costs and increased efficiency of the hospital system. Compensation for administrators will be aligned to value-based metrics such as re-admission rates and bed utilization rates. The focus will be on reducing hospital administration costs. Hence, this system mainly differs from the fee-for-service system due to its prioritization of the value of patient care.
Integrated delivery systems
To manage both forms of payment, an Integrated Delivery System model will be used. In particular, the system will focus on horizontal integration through the creation of two hospital systems (Tang et al., 2017). The first hospital system will focus on the provision of services based on the volume and quantity of patients, while the second system will focus on payments based on the value of care. This means that varying levels of care will be provided within one internal system.
The integrated delivery system will work by establishing goals for each system. Within the fee-for-service system, the main objective of incentives will be enhancing the number of services provided. In the second system, the focus on incentives will be on enhancing the value of services that are provided. Each group of providers can effectively perform under these different reimbursement systems by focusing on the increase of efficiency. Moving forward, the internal incentive program will shift its focus to value-based reimbursements. This will not only increase the efficiency of the organization but also increase customer satisfaction. A value-based incentive program will ensure that the best quality of services is provided while also increasing the number of patients that the providers can serve.
References
Guo, P., Tang, C. S., Wang, Y., & Zhao, M. (2016). The impact of reimbursement policy on patient welfare, readmission rate and waiting time in a public healthcare system: Fee-for-service vs. UCLA Anderson School of Management Working Paper .
Henkel, R. J., & Maryland, P. A. (2015). The risks and rewards of value-based reimbursement. Frontiers of health services management , 32 (2), 3-16.
Tang, W., Zhang, Y., & Zhang, L. (2017). Effects of provider incentives in integrated healthcare delivery system reform: a quasi-experiment on patients with chronic diseases in rural China. International Journal of Integrated Care , 17 (3).
