3 reasons to let go of fee-for-service payment models

A stethoscope and paper money.
Resistance to value-based payment methodologies does more harm than good for physicians and patients, according to executives at Virginia Mason. (Getty/utah778)

Physicians have defended status quo in healthcare based on the fear of straddling both fee-for-service and value-based payment models. But executives at Virginia Mason Health Care System say the foundation for that position has eroded significantly.

Virginia Mason CEO Gary S. Kaplan, M.D., and C. Craig Blackmore, M.D., director of the Center for Health Care Improvement Science at Virginia Mason, wrote in an op-ed for NEJM Catalyst that ethical, professional and business considerations have rendered most arguments for resisting payment change moot.

Moving physicians from fee-for-service to value-based payment models has taken center stage amid efforts to mitigate continued growth in the country’s healthcare spending. While payers are still working out the kinks in new payment models designed to better align incentives along quality- and value-based axes, Kaplan and Blackmore argue that organizations that resist change because of “sometimes arbitrary and certainly less-predictable payment reforms” contribute to a vicious cycle that keeps those reforms from maturing and becoming more efficient.

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Doctors and organizations that say they’re waiting for the right payment system to align with value-based incentives have, in their words, “intentionally or unintentionally, continued to provide non-value-added or even inappropriate care, driving up healthcare costs without benefit and potentially harming patients.”

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The authors outline three key reasons physicians should consider ditching their resistance to value-based payment methodologies:

  • Fee-for-service forms the basis of the type of metric-oriented medical provision that bypasses patient needs in favor of the bottom line. The authors point out that this leads to increased opportunities for burnout as physicians spend time and energy fighting for reimbursement rates rather than enhancing patient care.
  • As a pragmatic business decision, joining partnerships to break down payment barriers puts organizations in a position to get ahead of the curve and help to shape new methodologies that prioritize patient input. 
  • The widely publicized downsides of fee-for-service, including overdiagnosis and overtreatment, create an ethical issue for physicians sworn by the Hippocratic Oath to avoid “overtreatment and therapeutic nihilism.”

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