Discussion: Healthcare Payment Options

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Table of Contents

Summary
Fee-for-Service Insurance
Cost-Plus Insurance
References

Summary

The insurance industry in the US is well-developed and varied. It allows individuals from different occupations, walks of life, and income levels to find a way to pay less for healthcare services. However, it might often be difficult to determine the differences between various insurance plans. The type of plan an individual chooses can affect the kinds of medical procedures their insurance covers, its monthly cost, as well as the types of care available to the individual. For the purposes of this work, two types of insurance options will be compared, focusing on their cost-effectiveness, opportunities for revenue loss, and other pros and cons. In addition, the ability to integrate pay-for-performance approaches into both insurance plans will be considered (NEJM Catalyst, 2018). The main thesis of the work is that each payment plan has its own unique advantages that are available to the person depending on their lifestyle and decisions.

Fee-for-Service Insurance

Fee-for-Service Insurance, or FFS, is a type of insurance that offers individuals a large level of freedom in their healthcare decisions. FFS means that the insurance company pays for any medical procedure an individual receives, regardless of where it is performed or what procedure it is. While this method of insurance does not impose any limits on location or service type, the insurance company can only pay a portion of the cost, while the rest has to be paid upfront by the individual (Miller, 2022). Another considerable benefit of this system is its effect on medical billing and care efficiency. It is shown that in cases where the patient inflow is large, the Fee-for-Service model triumphs over other approaches in speed (Guo et al., 2018). In addition, the insurer has to pay the insurance deductible, which is common with most types of insurance in the US. Before the deductible is paid, any service the individual gets is paid out of their pocket. Afterward, though, any and every type of medical bill can be supported by the Fee-for-Service system. This system has the potential to support the pay for performance model, which has been widely applied in order to encourage better healthcare provider performance and improve outcomes (NEJM Catalys, 2018). Insurance companies that provide Fee-for-Service Insurance can change the amount of revenue individual doctors receive depending on their capabilities and current performance indicators. The ability of doctors to deliver care procedures quickly and correctly will be monitored, and the subsequent data will directly influence provider income.

There are both advantages and disadvantages to the Fee-for-Service model. As mentioned previously, it gives the individual paying for insurance an unprecedented level of control over the time, place and reasoning behind their visit. Other insurance plans cover specific healthcare networks, which may or may not include the practitioners necessary for the individual’s care journey. FFS does not abide by this restriction, allowing a person to receive medical care even if they decide to move or travel within the US (Miller, 2022). Another considerable benefit that the individual may experience is the exclusion of referrals from the healthcare insurance process. Without the dependence on in-network professionals, individuals do not need to get referred to other doctors for their care. This provides additional flexibility. The last benefit of this system is the ability of the insurer to negotiate the pay with their healthcare providers, which has the potential to decrease the final medical fees.

One significant downside of the FFS model is that it is incapable of controlling healthcare provider costs. In order to receive better pay, physicians must retain a high number of patient visits and keep the costs of healthcare services high. The insurance organization connected with a Fee-for-Service plan has no way to tell healthcare providers what the reasonable price for any given service is, meaning that individuals often have to foot higher costs by themselves. Overtreatment is another potential issue. In order to receive more money, doctors may make more appointments than necessary or prescribe unnecessary procedures to the patient (Miller, 2022). The payment providers receive is based on the value of the service provided, not the actual outcomes that patients are faced with. Therefore, healthcare providers do not have a significant incentive to prioritize patient wellness.

Cost-Plus Insurance

Cost-plus healthcare takes the common medical insurance policy, Medicare, as its benchmark and basis. In order to provide individuals with a fairer service rate, and allow them to easily obtain the necessary healthcare, the cost-plus approach improves the payment provided by the Medicare and pays an additional fee on top of it (Cost Efficient Benefit Plan, n.d.). The major benefit of this type of care insurance is that it covers most types of medical expenses, including vision, dental, and other types of healthcare. This method is also beneficial for the quality of healthcare services, as it promotes transparency from doctors and other providers (Babar, 2022). This type of healthcare insurance can be changed to integrate a pay for performance model, which will allow it to function more effectively (NEJM Catalys, 2018). The level of control possessed by insurance companies will increase, and doctors will be more likely to negotiate prices. In addition, this type of care can be used in combination with other care structures, allowing the individual to obtain a full scope of healthcare protections. The detriment of this system, then, is that the individual may need to pay for multiple different types of insurance at the same time. In addition, the coverage rate is dependent only on the initial cost of any procedure, which may still be too much to pay for any individual.