Fee For Service Model

The fee-for-service model of value-based payment models Reimbursement in healthcare pays providers solely on the procedures they perform. After the procedures, claims are filled out and submitted to payers for Reimbursement. If everything checks out, then the insurance reimburses the provider. The procedures performed are considered individually and aren’t bundled into groups of relevant ones. But there is nothing stopping providers from slipping in some extra and unwanted procedures just to claim that additional payment from insurance companies or even the patients as out-of-pocket expenses.  

This model might make sense during emergencies and circumstances where some diseases are difficult to detect. Some examples could include autoimmune diseases, early-stage cancer, and rare conditions. So, physicians are forced to perform a battery of tests or scans to make an accurate diagnosis. However, these are uncommon and require such a protocol since it would be important to recognize the problem before starting the treatment as quickly as possible.  

But in most medical cases, the physicians often know which type of test to perform and zero in on the problem. But the fee-for-service model encourages slipping in a random test that might seem like anything to patients. It is important to know how this model came to be to understand better why it has remained entrenched and if it has any advantages.  

There was a time when medical science was nowhere near as advanced as it is today. Moreover, medicine wasn’t a formalized industry as it is today.  

If there were someone in need of medical attention, a doctor would be called for a house visit. He would then arrive with a bag of some instruments, make a diagnosis, perform what passed for treatment, and go on his way. Some families could pay doctors in cash, while others paid anything of value such as quantities of grain or even cattle. Most of the time, the doctors needed to be paid first since such was the urgency given the infancy of medical science at the time. So, the doctors would be paid for them all, whether it was patching up some injuries, treating the sick, or just telling the patients what they needed to do.  

Later on, medical science improved somewhat as innovations were made. At the turn of the twentieth century and following the First World War, advancement in health sciences began to grow rapidly. Numerous governments began funding research through generous funding, and many breakthroughs were made in our understanding of the working of the human body and mind. Such advancement in medical knowledge that curriculam in medical education struggled to keep up.   

Unsurprisingly, doctors at this time were being taken a lot more seriously than they had been just a couple of generations ago. This was the beginning of when the medical profession was looked at in high regard, and it became a standard of excellence that many people aspired to achieve. This was when the quality of care improved significantly, and the average life expectancy also began to increase. Fewer women died in childbirth, deaths from accidents or battle injuries dropped, diseases like typhoid, whooping cough, or cholera killed far fewer people than they did earlier.  

With advances in medical research and discoveries of new drugs, cures, and treatments, the healthcare industry was a tightly woven fabric of pharmaceutical makers, doctors, hospitals, and pharmacists. Doctors began to charge as per their own perceived value. Care was no longer limited to simple house calls where doctors arrived carrying one bag. Quality medical care involved tests, scans, hospital rooms, admittance, and observation.  

Greater clinical knowledge meant a more accurate diagnosis, which meant specialized tests. Although this eventually led to better healthcare outcomes, it also meant a sharp increase in costs compared to the early twentieth century. These costs were partly because of the sophistication of the testing methods and a market-driven race to produce better drugs by pharma companies. But the costs kept rising, and the fee-for-service model grew more unfeasible with each passing year. At the beginning of the third decade of the twenty-first century, most people have been calling for a better model that makes quality care within reach of all people.   

It makes sense to do away with a model that charges for unbundled services individually. Medical science is advancing at a mind-boggling pace, and things considered impossible two decades ago are being accomplished in hospitals worldwide. This would only mean newer procedures and tests, novel treatments and therapies, and consequently, increasing costs. With increases in the general cost of living, it’s no doubt that the fee-for-service model of Reimbursement in healthcare would only push quality care out of reach for more people.