One primary goal of the Affordable Care Act was to change the fee-for-service payment model to something focused on better quality care at lower costs. With the emphasis now on value-based care, managed care programs are looking to capitation reimbursement to ensure they provide patients with quality care and can control costs at the same time.

What is Fee-For-Service?

In the conventional reimbursement fee-for-service model, the doctor or practitioner gets paid a fee or commission for each treatment, test, medicine, or any other service they provide. In addition, they receive additional compensation for added therapy. This profit-oriented approach was one of the primary forces behind healthcare reform.

What is Value-Based Care?

Value-based care concentrates more on improving outcomes for patients. The reactive ideology behind the fee-for-service model meant waiting for a patient to get sick and then treating that illness.

Value-based care is a proactive approach to healthcare, one that prevents problems before they start. It shifts the treatment core to overall wellness and preventive screenings that can give patients better health outcomes.

What is Capitation?

Capitation is a predetermined sum of money paid in advance for performing health services – per patient per unit of time. The exact amount paid depends on the services provided, the number of patients, and the time the services took to deliver.

A capitation agreement offers a list of overall wellness services that physicians must provide for their patients. These services are primarily preventative such as screenings, immunizations, and health education. At the same time, the clinician offers diagnostic and treatment when needed.

What Are the Pros of a Value-Based Care System of Patient Care?

Keeping patients well is the goal of a value-based healthcare system. By highlighting prevention and wellness, the healthcare industry also reduces the need for expensive tests and treatments. By keeping patients healthy, this system lowers the overall healthcare costs of the country.

Value-based care uses statistical data to identify the best practices for patients. Practitioners use this information to determine a care pathway for each patient based on their risk factors and current needs.

Does Value-Based Care and Capitation Reduce Healthcare Costs?

Through a value-based care system, doctors and healthcare providers receive bundled payments based on patient outcomes. When combined with electronic health records, which eliminate repetitive testing and improve care coordination, it should mean fewer hospital readmissions, lower hospitalizations, and ease of traffic going to emergency rooms.

With this new approach, patients understand how lifestyle choices affect their overall health, too. They learn how to manage their chronic conditions such as high blood pressure or diabetes. That, in turn, lowers incidents of complications.

A value-based service model is a proactive approach to patient care that will mean a healthier overall population. The traditional fee-for-service model did the opposite. It waited for patients to get sick to begin treatments. In many ways, the capitation payment method works to the mutual benefit of both the healthcare professional and the payer.