Fee-for-service

Nevertheless, multiple challenges persist. Reimbursement on a fee-for-service or contractual basis between institutions may not be feasible for the community hospital. Government reimbursement for telemedicine services may remain limited by interstate commerce restrictions and local practice requirements, and may depend on studies demonstrating that the costs of consultation are counterbalanced by avoiding unnecessary transfers. Additionally, privacy concerns must be properly addressed with secure, encrypted transfer of information and rules governing who may access the patient s medical information from a distance. 

To better understand managed care and the reasons for its growth, it is useful to discuss the evolution of payment mechanisms for health care from no insurance, to traditional indemnity insurance, to managed care. In the no-insurance model, the patient selects a health care provider and then pays the provider directly for health care goods and services. The choice of health care provider and the type and number of services provided are limited only by the financial constraints of the patient. The problem with this model is that the patient is exposed to potentially catastrophic health care expenses. Health insurance was developed as a way to protect patients against this risk. Health insurance often is provided through the employer and prior to the mid-1980s was likely to be indemnity fee-for-service insurance. In this traditional insurance... 

The indemnity fee-for-service model protects the patient from catastrophic medical expenses but has its own set of potential problems. There is little incentive for either the provider or the patient to control costs. The patient pays less than the full cost of care, creating an incentive to use more care. The provider is paid on a fee-for-service basis and thus can generate more income by providing more services. The health care... 

Medicare Advantage A Medicare-approved private health care plan, such as a health maintenance network or preferred provider organization, that serves as an alternative to a fee-for-service plan for Medicare participants and partially or totally covers prescription drug costs. 

The SMOs in this group own and operate the sites in their network. These providers primarily vary by whether each site in its network has a staff physician serving as the principal investigator, or whether the center primarily contracts with area physicians to fill the role of the principal investigators. Corporate-owned SMO providers that do not have staff medical directors will typically staff each of their centers with a site manager, study coordinators), and, lately, patient recruitment specialists. Physicians are paid on a fee-for-service or hourly basis. Depending on the trial, patients are seen either at the physician s office or at the SMO s own facilities. 

The economic reward systems of pharmaceutical care A practice cannof survive wifhouf a revenue sfream. The mosf important revenue source is the cash-paying patient. If a service is of value to a patient, this value will be equated with the transfer of a monefary payment This monefary paymenf can be in fhe form of eifher fee-for-service reimbursement paid directly to the provider by the patient, or as part of a healfh care benefit premium. There will therefore need to be sfandard procedures in place for collecting paymenf for providing pharmaceutical care. 

Managed care was initially embraced to counter the escalating costs and distorted incentives in the fee-for-service system. Under the fee-for-service health care, a physician, hospital, or other health practitioner charges separately for each patient encounter or service rendered. Expenditures increase if the fee itself increases, if more units of service are provided, or if more expensive services are substituted for less expensive ones. In the U.S., the fee-for-service system has historically favored institutional care over community-based care, acute care over preventive care, and medical intervention over patient education and self-care. 

PBMs typically contract with employers or health plans xmder one of three contractual models fee for service, capitation, or shared risk. 

Under fee for service, the most common model, a PBM creates a retail pharmacy network and receives a fee for each claim processed, resulting in an average savings of 10 to 15% compared with an unmanaged benefit. 

Table 1. Description of protein-protein interaction databases either publicly accessible or on a license/fee-for-service basis... 

Healthy volunteers are usually paid to take part in a clinical trial. The rationale is that they will not benefit from treatment received and should be compensated for discomfort and inconvenience. There is a fine dividing line between this and a financial inducement, but it is unlikely that more than a small minority of healthy volunteer studies would now take place without a fee for service provision. It is all the more important that the sums involved are commensurate with the invasiveness of the investigations and the length of the studies. The monies should be declared and agreed by the ethics committee. 

Mixed systems—This is seen in much of Asia and Central America and usually where there is a small wealthy class and a massive lower class. The lower class receives care from public facilities, and the small upper class uses private-sector, fee-for-service, and self-paid care. 

Ware JE, Bayliss MS, Rogers WH, et al Differences in 4-year health outcomes for elderly and poor, chronically ill patients treated in HMO and fee-for-service systems. JAMA 276 1039-1047,1996... 

Fee for service Open-ended. Sponsor billed Easy to work with Can Allows flexibility in... 

Out-of-pocket payments Members pay for non-formulary drugs (either a fixed amount/co-payment or the fee-for-service (FFS) cost of the prescription)... 

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