PHYSICIAN PAYMENTS: The Financial Compensation Battle Continues

By Staff Reporters



Paying paying doctors and medical providers for their services may seem simple on the surface, but it’s actually extremely complex. Enter two of the most commonly heard phrases in healthcare: “fee-for-service” and “value-based care,” two models insurers use to decide how much to pay providers. According to Healthcare Brew:

  1. Under a fee-for-service model, providers are paid for each individual service they perform, like a blood test or an X-ray, according to Jennifer Clawson, partner and director of value-based health systems at Boston Consulting Group. A service is provided, and the doctor gets a fixed fee for providing it. Simple enough.
  2. The value-based care model is a bit more complicated, as there are many types of value-based payments. What makes them “value-based” is that payers take patient outcomes into consideration, aka they consider the relative value. “The core of value-based care is ultimately, ‘How do I get a better outcome for less money?’” said Sam Hendler, managing director at private equity firm Thomas H. Lee Partners.

One type of value-based payment is called a bundled payment, Clawson said. Say you have a heart condition and need to get a stent put in. There are usually several providers involved in that process, e.g., a primary care doctor, cardiac surgeon, and anesthesiologist. An insurer gives the health system a set amount of money to cover everyone involved in the procedure, and the health system decides how to divvy it up.

Another type of value-based payment is called capitation, and there’s multiple types of capitation payments. It’s sort of like a bundled payment, but instead of insurers paying a set amount per procedure, they’re paying a set amount to cover an entire population of patients with a specific disease, like diabetes.



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