Payments for Health Services Providers (125 points)
Insurance is based on pooling of losses, payment for random losses, risk transfer, and indemnification. As a result, insurers use several different approaches to mitigate their risk and set premium rates, including:
the fee-for-service method
the cost-plus approach
population health – capitation
For your assignment, evaluate two global payment systems within healthcare and address each of the following items:
Define the structure of the payment systems.
Identify risk to loss of revenue in each system.
Describe advantages and disadvantages of each system.
Identify how pay for performance can be added to each payment system.
Your paper should be four to five pages in length, not including the title and reference pages.
You must include a minimum of four credible sources. Use the Saudi Electronic Digital Library to find your resources.
Your paper must follow Saudi Electronic University academic writing standards and APA 7th edition requirements, as appropriate.
You are strongly encouraged to submit all assignments to the Turnitin Originality Check prior to submitting them to your instructor for grading. If you are unsure how to submit an assignment to the Originality Check tool, review the Turnitin Originality Check Student Guide.
Expert Solution Preview
As a Health Economics Professor at Harvard University, I am often tasked with designing and conducting lectures, evaluating student performance, and providing feedback through examinations and assignments. In this particular assignment, students are tasked with evaluating two global payment systems within healthcare and addressing several key aspects of each system.
When evaluating two global payment systems within healthcare, it is important to understand the structure of each system, identify risk to loss of revenue in each system, describe advantages and disadvantages of each system, and identify how pay for performance can be added to each payment system.
One global payment system is the fee-for-service method, which involves payment for each service rendered by healthcare providers. The structure of this payment system is straightforward as it entails payment for each service provided. The risk to loss of revenue in this system lies with overutilization of healthcare services. Providers may over-treat patients to maximize payments, which can drive up healthcare costs.
Another global payment system is population health – capitation. This method involves providers receiving a set amount per patient, regardless of the number of services provided. The structure of this payment system incentivizes providers to emphasize preventive care to reduce healthcare costs. However, the risk to loss of revenue in this system lies with underutilization of healthcare services. Providers may avoid necessary treatments to avoid exceeding the set amount per patient.
Advantages of the fee-for-service method include accurate payment for treatments rendered and the freedom for patients to choose the treatment they prefer. However, disadvantages include the potential for overutilization of healthcare services and rising healthcare costs. For population health – capitation, advantages include incentivizing preventive care and reducing healthcare costs. However, disadvantages include the potential for underutilization of necessary healthcare services and inadequate payments for complex treatments.
Pay for performance can be added to each payment system in different ways. Adding pay for performance to fee-for-service incentivizes providers to focus on quality care and efficient treatments. This approach can help reduce healthcare costs while improving patient outcomes. In contrast, adding pay for performance to population health – capitation incentivizes providers to provide preventive care while ensuring that patients receive necessary treatments.
In conclusion, evaluating two global payment systems within healthcare requires an understanding of the structure of each system, identifying risks to loss of revenue in each system, describing advantages and disadvantages of each system, and identifying how pay for performance can be added to each payment system. It is important to carefully consider each system’s strengths and weaknesses to ensure that healthcare services are provided efficiently and effectively.