Is the End of Fee-for-Service Care Desirable?

Considering that healthcare prices are still rising rapidly under a primarily fee-for-service system, many healthcare advocates propose pay-for-performance as a solution. But will it actually work?



Is the End of Fee-for-Service Care Desirable?

What are the disadvantages of value-based care models?

Many health policy experts have identified problems with the current fee-for-service (FFS) healthcare system—patients wait until they are sick to visit a doctor, doctors have little time to spend with each patient, etc. Some advocate for a pay-for-performance (P4P) model of healthcare instead.

However, the P4P model also has distinct disadvantages, such as the “ceiling effect” and the “floor effect”: Target outcomes, if too loosely defined, may be achieved by nearly all physicians, thereby increasing their income (and healthcare costs); conversely, if incentives are too low, doctors may not be financially motivated to go “above and beyond.” There is a risk of “tunnel vision” in which specific metrics of care are emphasized at the expense of individual patient needs. Adverse selection is a possibility, and unscrupulous providers might wish to keep their average success rates as high as possible by refusing to take on the sickest patients who are most likely to have unfavorable health outcomes. Measuring outcomes and coordinating care between multiple providers can also be difficult to scale.

Is value-based care replacing the fee-for-service (FFS) model?

Not likely, says Robert Berenson of the Urban Institute. He believes that all the talk of shifting towards value-based care models is “purely aspirational at this point,” and that “even managed care is dependent on fee schedules.” The fee-for-service model remains popular. A 2016 survey by Deloitte Insights found that 86% of U.S. primary care physicians were paid under a fee-for-service model; in 2018, that number was “nearly unchanged” since 2016. If one includes all healthcare services instead of only primary care visits, then only a plurality of 41% of all healthcare payments are for FFS care, according to a 2018 report from the U. S. Department of Health and Human Services. However, the same report claimed that payments for P4P care were at an all-time high of 34% and rising.

The FFS model can be adjusted without being abandoned.

It seems likely that the fee-for-service model will not disappear but will be gradually tweaked over time to include more emphasis on outcomes and “value” to patients. The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) even attempts to incorporate quality metrics into the actual reimbursement amounts that Medicare pays out to proviers for services rendered. Many accountable care organizations (ACOs) exist to coordinate care among various healthcare providers and to measure the quality of services provided to Medicare patients. In other words, doctors with better health outcomes will be entitled to slightly higher payments for the same services, but still on a fee-for-service basis. Perhaps this strategy, by expanding even beyond Medicare, may achieve some of the goals that P4P advocates hope for, without a seismic shift in the healthcare system.

Basic principles of supply and demand suggest that as long as some elements of a free market operate in the healthcare system, doctors who offer higher quality care will generally earn higher incomes due to their reputation and expertise. This may occur through larger volumes of patients or higher average prices per service. For this to work, however, patients must be informed and providers must be transparent.

Telehealth and transparency in pricing are keys to affordable care.

Regardless of what happens in the traditional healthcare system, the world of telehealth is booming. So far, telehealth is largely fee-for-service based. Telehealth makes healthcare far more affordable, because you only need to pay when you actually see the doctor. With SAMI-Aid, one low price of $59.99 covers any type of doctor visit, including primary care, pediatrics, dermatology, psychiatry, and talk therapy. We also have nurses available for advice (no prescriptions) for just $39.99 per visit. One of SAMI-Aid’s foremost goals is to provide everyday people like you with information to make the most informed decisions on where to get your care.

To become part of the “healthcare revolution,” sign up for a SAMI-Aid account today. We have options for you regardless of your budget! SAMI-Aid Basic Membership is free, and it costs $59.99 per visit. SAMI-Aid Premium Membership costs $79.99 per month, and gives you access to two free visits per month, which can be with any combination of doctors, therapists, and psychiatrists! SAMI-Aid Premium also includes access to exclusive premium features such as our Provider & Price Search tool and our Medical Tourism Wizard. You can compare your options here and sign up for an account today!

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