Understanding the Various Components Encompassing New Payment Models!


Hospitals, physicians and other care providers require being paid in a more systematic manner to help enhance quality of healthcare that too at a low cost. The current fee-for-service system in the US through which physicians are paid has been considered a major reason for escalating costs in the healthcare system.

Under this system, physicians are rewarded financially for more services, especially expensive services. When it comes to efficiency, healthy patient outcome or care co-ordination, there are no financial rewards provided under fee-for-service payment system. As a result for decades, the US government has been trying to reduce healthcare costs.

However with the Patient Protection and Affordable Care Act passed in 2010, a renewed effort has been made by the government and commercial health insurers to control costs with multiple payment models for hospitals and physicians. Diverse payment-models are evolving that physicians may opt for; they include -


As per the P4P model, financial incentive is paid to physicians by health insurers based on their achievement of certain defined goals related to patient experience, resource usage and care processes. P4P model offers rewards only for improving chronic conditions of patients. However under this payment model, physicians may end up offering additional services and spending a lot of time only on chronically ill patients.

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Bundled Payment

In a bundled payment model, a single sum covers healthcare services that are delivered by two or more providers over a specific time span or during a single episode of care. This payment model rewards physicians for curing patients with only a certain chronic illness like asthma, cardiovascular disease or diabetes.  If cost of services is less than the bundled payment, the difference will be retained by the participating physicians and other healthcare providers. But if the cost exceeds the bundled payment, physicians and providers will not be compensated for the difference.

Shared Savings

Through this payment model, a physician group or an association of physicians is provided a percentage of any realized net savings for reducing health care expenditure for a certain population of patients. Shared savings is applied to some or all services expected to be used by that patient population.

Global Payment

Under this payment model, a budget is set for the care of a population of patients and the group of physicians or association of physicians are paid from it. In case the spending comes below the budget, all savings can be retained by the physicians; however, they will have to bear financial risks if expenditure goes beyond the budget.

Above are few value based models which physicians may opt for to increase quality of patient care, and numbers of patients. While physicians are busy migrating from fee-for-service payment model and focusing on value-based clinical activities, they may face various billing challenges and an efficient billing partner may be an optimal solution to help handle the rising tasks of billing, coding, claim filing and documentation.

Medicalbillersandcoders.com has a team of experienced medical billers that can help and guide physicians to handle the operational side of a practice’s value-based payment model. This will give ample time to physicians to focus on patient care. MBC for over a decade now has been successfully dealing with medical claim filing for physicians across 50 US states, relieving them from the headache of managing their monthly funds and revenue cycle.

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