Moving away from fee-for-service requires realigning the
care delivery and payment incentives in the health care system. We must
reimburse based on the quality and utility of care provided, not just the sheer
volume of services. This idea--paying for "value over volume" or
"paying for performance"--is now a common refrain in the world of
health policy. Some experts even go so far as to say that too much care can be
detrimental to health, such as unnecessary or redundant medical
imaging scans that expose patients to excessive radiation.
ORIGINS
During the years prior to WWII, fee-for-service originated
as "traditional indemnity" health insurance--you get a service,
submit your claim, and your insurer covers your incurred expenses. What we now
think of as "managed care" emerged around the same time, as prepaid
insurance plans. In a prepaid plan, beneficiaries pay a set premium in return
for care from a defined network of providers.
Due to wage controls during WWII, employers began offering
insurance benefits as a way to attract employees--a trend which continues to
this day. Indeed, a number of key trends in health care emerged after WWII:
medical and scientific technology advanced dramatically, and more people enrolled
in health insurance coverage. As health care costs grew in subsequent years,
managed care, which encourages greater control over the utilization of health
resources and services, also increased in the 1970s and 1980s.
Unfortunately, managed care ultimately failed to control
health care costs, and increasing restrictions on care led to a patient- and
provider-driven political backlash in the late 1980s and 1990s. While managed
care plans grappled with increasing cost pressures, providers also saw their
margins narrowing, and physicians were left with more
work and less autonomy. Less restrictive models of health care payment,
like the more open-network Preferred Provider Organization (PPO), replaced more
restrictive closed-network health management organization (HMO) reimbursement
models.
ALTERNATIVES
Today, new models of care delivery which complement the move
away from FFS are underway across the nation. To ensure that our health care
system is sustainable, transformation must occur across all sectors--a coherent
strategy for "paying for performance" means we need a provider
structure capable of accountability, coordination, and timely, data-driven,
self-evaluation. Accountable Care Organizations (ACOs) and Patient-Centered
Medical Homes (PCMHs) are two frequently cited examples, but there are many
options for innovative new models of care, depending on the preference of the
payer, provider, and patient.
Some examples of payment models that depart from traditional
fee-for-service include: