Small Providers Unlikely to Abandon Fee-for-Service Reimbursement
Smaller provider practices will not give up fee-for-service reimbursement easily, but hospitals are quickly transitioning into value-based care agreements and alternative payment models.
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- Fee-for-service reimbursement is still an integral part of the healthcare system as providers are scattered along a spectrum of payment models, Emily Sokol, director of research at Xtelligent Healthcare Media, explained on Healthcare Strategies.
An Xtelligent Healthcare Media Insights report shed light on how pervasive fee-for-service reimbursement models are in today’s healthcare system.
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Over 200 providers responded to the Xtelligent Healthcare Media survey, including primary care groups, specialty care groups, behavioral health organizations, and federally qualified and community health clinics.
The majority of respondents (87 percent) stated that they were still using fee-for-service as a payment model. However, while the payment model seems ubiquitous, utilization varies among different types of providers.
For example, smaller provider organizations are more likely to be engrossed in fee-for-service models, whereas larger healthcare systems and hospitals are more likely to be open to taking on higher risk and entering into value-based care agreements.
Smaller providers indicated that this trend is unlikely to shift dramatically in the near future. They reported that their organizations were not planning to transition out of fee-for-service models in the next three years.
However, larger health system and hospital participants expected to see a steep drop in fee-for-service reimbursement model utilization in the next three years.
Hospitals anticipate dropping from 87 percent reliance on fee-for-service reimbursement to 76 percent reliance. Those nine percentage points may not seem like a significant decline, but compared to physician practices it is significant. Physician practices projected that they would only decrease two percent from 90 percent reliance on fee-for-service to 88 percent reliance.
Sokol noted that value-based care partners must recognize providers’ nuanced needs. A population-based payment model that works efficiently in one provider environment may not be as applicable in another.
“Value-based care is not a one size fits all model,” Sokol emphasized.
“It is sort of this gradual transition towards more value as opposed to the volume-based care that I think is really important. We need to help some of these organizations that do not even know where to start and carry them along in that transition and figure out what sort of nuanced model will work best for them. Otherwise, we are going to hit a really large divide between those who have the capabilities to adopt value-based care and those who are sort of trapped in a fee for service world.”
Lack of communication and general mistrust between providers and payers adds another layer of complexity to transitioning providers into alternative payment models.
The results of the survey are clear: fee-for-service reimbursement will be a fixture of healthcare in the foreseeable future. But payers and providers have the opportunity to transition providers into value-based care models if they recognize the unique designs and demands of different practices and health systems.
