FFS or Fee-For-Service is the most common and conventional payment model in health care. In this model the physicians and all healthcare providers are paid by the insurance companies and government agencies or even the individuals.

  • Their payments may vary according to the number of care services provided or the number of care processes ordered. 

  • The payments they receive are usually unbundled wherein the service procedures are billed and paid separately. 

That means the patient will be billed every time separately for doctor appointment, tests, surgical consultation, care processes and treatment, a hospital stay, and others.

However, there is a dilemma in this type of payment model since 2010, when ACA or The Affordable Care Act announced new healthcare delivery process and reimbursement called value-based care. This is aimed to replace the traditional FFS model. This is because the FFS model take healthcare spending of the individual out of their control which typically accounts for 18% of the Gross Domestic Product or GDP of US, according to 2017 report.

According to the value-based care concept, it involves alternative payment models such as:

  • ACOs or Accountable Care Organizations and

  • PCMHs or Patient-Centered Medical Homes.

This payment is based on factors like care service quality, cost-efficiency, value, and coordination, apart from the number of services provided.

The changing landscape

In the FFS system of payment, the primary health care professionals are paid for each patient visit. The issues with such payment system are that:

  • The care providers are unable to know which patients are no showing up after first visit

  • The patients who are waiting for them to fall sick till they visit a doctor

  • The prevention efforts that may be compromising the opportunities of screening individual patients for the risk for disease. 

This means the healthcare professionals are paid irrespective of the encounters being effective or ineffective.

In order to eliminate these challenges and ensure uniform health opportunities for all, the primary care repayment models are changed and more and more health and Home care agencies near me are shifting from FFS to value-based payment systems. 

Under this system the clinical outcomes are considered before making a payment based on different parameters. This ensures a better quality of treatment and care, in hospital and especially in a home care setting.

The value-based care philosophy

The philosophy of value-based care in healthcare intentionally contemplate the quality of care provided to the patient. The overall outcome of a specific care is balanced with the cost-efficiency. 

That means he value-based care model considers the best practices while treating patients and encourage a more holistic and team approach to home care. This requires better coordination among the team members, proper communication with the physicians across different specialties. 

There are four different types of value-based payment models but the goal of all is to ensure quality and efficiency of care based on the episode, specialization and patient population. These are:

  • ‍Pay-for-Coordination: This is PCMH model that ensure the primary care physician provides coordinates the care process between several care providers and specialists for a better and more unified care plan.

  • Pay-for-Performance: This P4P model incentivize the healthcare providers so that they meet the set care quality and efficiency benchmark. It involves Hospital Readmission Reduction program and Skilled Nursing Facility Value-based Programs.

  • Bundled Payment or Episode-of-Care Payment: This involves payments for specific episode of care such as hip replacement and involves Bundled Payments for Care Improvement Comprehensive Care for Joint Replacement models.

Shared Savings Programs is the last one in which the physicians form a group to provide population health management and coordinated team care and involves Accountable Care Organizations.

Issues with current system

The experts of the health care industry have pointed out that there are a few specific issues with the FFS system that needs to be changed to reduce its ballooning effects on the cost of healthcare. These issues have also resulted in the decline of primary-care workforce. 

Ideally, there are five concerns of the FFS payment model that hinders the ability of the health care industry to meet the health maintenance needs of the patients. These are:

  • It increases the health care costs

  • It reduces the focus on quality of care

  • It provides more on the care service volumes

  • It acts as a barrier to low-cost care process and 

  • It has little or no focus on preventive care.

Therefore, the FFS model needs immediate replacement which is why ACA set the value-based care standards for the health and home care industry.

Reviewing the basics

Ideally, value-based contracting in health care contains one or several of these alternative payment methods mentioned as under:

  • A part of the total payment is tied to the performance of the provider, cost-efficiency and quality of care. there is no bonus payment until the quality and cost-efficiency targets are met.

  • There may be clinical integration fees paid to the care providers. This is paid on the basis of the practice transformation, adoption of technology and the manner in which the care is delivered.

These process changes will help the health care service agencies to drive more value and be accountable to the patient and create advanced health care teams that may include nurses, care managers, pharmacists, and an automated process that will meet with the expectations of the patients for prevention and wellness.

Current and emerging payment models

There are other different models of payment for home health care that are also value-based. These are:

  • Medicare coverage that includes hospital insurance in Part A

  • Inpatient and outpatient PPS 

  • Inpatient rehabilitation facility PPS

  • MACRA and physician payment

  • Home health PPS

  • Program integrity

  • Psychiatric PPS

  • Long-term care hospital PPS

  • Hospital readmission reduction program

  • Hospital value-based purchasing

  • Bundled payment

  • Skilled nursing facility PPS

  • Accountable care organizations

  • Hospital acquired condition reduction program

  • Patient centered medical homes

  • Federal capital financing

With all these payment programs in the offer, it is quite natural that FSS model of health care reimbursement will now be put in the backseat. This is for the better for health care and its future but most importantly, it will reduce the cost burden from the patients.


Published by Zoe Sewell