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Home / News & IndustryManaged Care Insight and Analysis
Updated: September 8, 2010
Fee-For-Service, Capitation Facing Competition, Extinction

In one corner stands fee-for-service, in the other capitation. Neither payment system is ideal. Fee-for-service benefits the provider’s pocketbook often at the expense of patient care.

Full capitation raises the opposite concern – that providers are put at full financial risk, and thus might withhold needed patient services to maximize profits.

Policy makers are grappling with a compromise concept, episode-based payments (EBP), which is an idea gaining steam.

This in the current result of a new study, "Episode-Based Payments: Charting a Course for Health Care Payment Reform," conducted by researchers at the Center for Studying Health System Change.

EBP would bundle payment for some or all services delivered to a patient for an episode of care for a specific condition over a defined period, according to the study. For example, the care received by an auto-accident victim from triage in the emergency department through hospitalization, trauma surgery and rehabilitation could comprise an episode.

Without dramatic reform of payment structures, payers and patients can expect to experience continued rapid growth of healthcare costs and little improvement in the quality or coordination of care, the study said. But moving too rapidly with reforms that bundle payments for all care delivered to a given patient can backfire if the majority of providers are ill equipped to respond constructively.

EBP, if carefully developed, can serve as a bridge for many providers between current fee-for-service structures and a future that emphasizes care of whole patient populations, the study suggested. Well-designed EBP system would encourage providers to improve efficiency and quality of care.

Defining episodes of care, establishing payment rates and identifying those providers who should receive payments are major obstacles health policy makers will be grappling with to make EBP work, the study concluded.

Address: Center for Studying Health System Change, 600 Maryland Ave. SW, #550, Washington DC 20024; (202) 484.5261,

  This article was taken from:
Pay-For-Performance Reporter

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