How Are Physicians Paid?

How Are Physicians Paid?

Payors use a variety of reimbursement methodologies and reimbursement structures. Several reimbursement methodologies might be combined in a single arrangement with a payor, often as a means of transitioning to “value-based” payment. Reimbursement methodologies may include the following:



Fee-for-service reimbursement

fixed reimbursement amounts per item or service furnished, commonly negotiated in a physician participation agreement with the plan. At base, the “plan” pays the cost of medical care, while the “payor” is an entity responsible for the processing of patient eligibility, services, claims, enrollment, or payment.



Direct to Employer

direct and unique arrangements between physicians and ERISA self-funded plans for discrete categories of care.



Care coordination

payment for care coordination activities, often with a focus on population health management.



Quality incentives

payment is based in part on achieving pre-set quality of care metrics across an assigned population of members.



Bundled payments

fixed prospective or retrospective reimbursement for a defined bundle of services that can be furnished by different physicians (e.g., hip/knee replacement).



Shared savings

potential upside-only reimbursement, in addition to fee-for-service reimbursement, when aggregate population health care costs are less than a predefined baseline amount. The “savings” are shared between the payor and the physician.



Shared risk

potential upside or downside reimbursement, in addition to fee-for-service reimbursement, depending on whether aggregate population health care costs are more or less than a predefined baseline amount. The “savings” or “losses” are shared between the payor and the physician (or among physicians).



Full or partial capitated payments

A per-member, per-month reimbursement to provide all (or a defined subset of) covered services without reference to volume, utilization, or costs. There is typically no separate fee-for-service payment from the payor, except for specified carved-out services.

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