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1-Let’s began by defining capitation. Online dictionary definition of capitation states: Capitation and fee-for-service (FFS) are different modes of payment for healthcare providers. In capitation, doctors are paid a set amount for each patient they see, while FFS pays doctors according to what procedures are used to treat a patient. Both systems are in widespread use in the U.S. healthcare system, but FFS has been in decline over the past decade. Partial capitation models are also being considered under accountable care organizations (ACOs) whereby the ACO would be at financial risk for some but not all of the items and services it provides. Section 3022 of the Patient Protection and Affordable Care Act created a new Medicare payment program to support Accountable Care Organizations. Section 10307 of the Act allows HHS and CMS to use payment models such as partial capitation to support ACOs.


2-Capitation and fee-for-service (FFS) are two different payment modules for healthcare organizations. Capitation is when doctors are paid a set amount for every person seen. Now, FFS pay physician according to services they received. Both capitation and FFS are widely used but FFS is starting to be used less and less. A fixed per capita payment made periodically to a medical service provider (as a physician) by a managed care group (as an HMO) in return for medical care provided to enrolled individuals (, 2010). Capitation is financially beneficial to both the providers and insurance company. The cons are as a universal payment reform mechanism, capitation has a decidedly checkered past. Once thought to be inevitable in the 1990’s, many capitation arrangements fell into disrepute and were abandoned. As a payment mechanism, FFS is relatively flexible in that it can be used regardless of the size or organizational structure of a physician’s practice, the type of care provided (eg, clinic visit, surgery, therapy session), the place of service (eg, physician’s office, nursing home, hospital, surgery center), or the geographical location of care (Silversmith, 2011). Fee-for-service does support accountability for patient care, but it is often limited to the scope of the service a particular physician provides at any point in time. Of course there are the cons of fee-for-service payments offer limited or no incentives at all for preventive care or delivering the best quality of care. Most of us want what is cost efficient but do we feel the same way when it comes to our health. Capitation is the most cost efficient and if you are going for affordability this type of insurance method is for you but if you are not concern with the most affordable plan then FFS is for you because you are not so limited to certain doctors and facilities.


3-Pay for performance uses incentives to encourage and reinforce the delivery of evidence-based practices and health care system transformation that promote better outcomes as efficiently as possible (Kongstvedt, 2007, pg 166). The vast majority of incentives come in the form of a financial reward for the demonstration of some sort of improvement in structure, process, or outcome that can be translated into a cost savings for the payer (Kongstvedt, 2007). The impact on hospitals shows that a pay for performance model coincides with the change in focus going towards patient satisfaction (Stanowski, 2015).  It also shows that the higher the cost of care, the higher patient satisfaction.  The study done in Stanowski’s article shows three hospitals with increases in patient care with pay for performance incentives. For patients, this means paying more for services, but also paying more is better quality of care.  Patients could also experience rising cost of care that increase rapidly, because the cost of incentives may go to rewarding outcomes (Stanowski, 2015).  The benefits of this are that incentives of pay for performance do increase patient satisfaction, but if the cost becomes too much, or cannot be achieved in the budget, it could end up decreasing patient satisfaction and quality of care.  I think it’s good to use incentives to increase performance in health care, but it’s a very fine line.  It should be within limits, and monitored so that cost does not skyrocket to the consumers, and so that it’s not the only incentive of providers, practitioners, and hospitals for providing the highest quality of care.


4-Pay-for-Performance is aimed at improving the quality of health care.  Incentives are paid to hospitals, physicians, and other health care providers who show improvement and have optimal patient health outcomes (Pay for Performance, 2012). One would think that by paying providers for achieving better outcomes health care would be on the upswing when it comes to quality, not so, the reviews have been mixed.  Pay-For-Performance was seen as a way to refocus on quality which in turn would reduce health care cost.  Instead it has led to an increase in cost due to the volume and complexity of services being provided.  Another negative to consider is the fact that providers can be subject to a financial penalty if they do not reach their specified goals or cost savings. For example, “the Medicare program no longer pays hospitals to treat patients who acquire preventable conditions during their hospital stay” (Pay for Performance, 2012).  Some preventable conditions that Medicare will no longer cover the cost for are bed sores, UTI’s, pneumonia etc.  This means the cost will be passed on to the patient, provider, or hospital. 

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