Pay-for-performance (P4P) is the compensation representation that compensates healthcare contributors for accomplishing pre-authorized objectives for the delivery of quality health care assistance by economic incentives. P4P is increasingly put into practice in the healthcare structure to support quality enhancements in healthcare systems. Thus, pay-for-performance can be seen as a means of attaching financial incentives to the main objectives of clinical care. However, reimbursement is a managed care payment by a third party to a beneficiary, hospital or other health care providers for services rendered to an insured or beneficiary. This paper discusses how reimbursement can be affected by the pay-for-performance approach and how system cost reductions impact the quality and efficiency of healthcare. In addition, it also addresses how pay-for-performance affects different healthcare providers and their customers. Finally, there will also be a discussion on the effects pay-for-performance will have on the future of healthcare.
How Reimbursement Is Affected By Pay-For-Performance Approach
Healthcare payers agree with the idea of Evidence-Based Medicine (EBM) to advocate for pay-for-performance in provider reimbursement on quality and efficiency. The fundamental system that most payers use to compensate physicians and provider associations embodies enticements for excellence and efficiency. Reimbursement can be affected by the P4P approach and other factors such as the claims process, out-of-network payments, legislation, audits and denials. While the same P4P approaches are attempts to commence incentives and new strategies into the healthcare, the underlying arrangement of the compensation system produces many personal incentives. As a result, most medical doctors are rewarded on fee-for-service, which is a criterion that has a high percentage of different services with no regard to the assessment and quality of the assistance to a precise patient. Moreover, since most duties are reimbursed more kindly compared to others, the disbursement system also affects the preference of treatment and care along with most therapeutic alternatives and favors the most procedure-based care. Pay-for-performance approach under salary or capitation arrangements and doctors pay are not attached to some services delivered (Langenbrunner, Cashin, & Dougherty, 2009). So, there may be no straight economic incentive to offer services that further increases the concerns about undersupply of needed services. This approach changes the economic incentives which later distresses physicians deliberately or unconsciously.
Capitation and fee-for-service (FFS) are some of the commonly used canonical systems for reimbursement. FSS compensates the extra provision of services; hence, it tends to perform well on access but poorly on cost efficiency. However, capitation compensates preserved services and tends to do well on cost competence but weakly on access....