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Doctors, Hospitals & Other Providers

Why You Should Care How Your Doctor Is Paid

Historically, doctors have charged you or your insurance company for each visit, service, and procedure they performed. The more visits and tests, the more fees billed. So it shouldn't come as a great surprise that this way of paying doctors has contributed to a rise in healthcare costs and an increase in fraud and abuse of the system. 

Fee-for-service out, pay-for-performance in

To address this problem, the Centers for Medicare and Medicaid Services (CMS) is transitioning to a payment method that rewards quality of care over quantity of care.

Does this mean I haven’t been getting quality care, you ask? Most doctors and other care providers would say yes, but switching to this new system better aligns the incentives. How so?

The new payment model

The new model is designed to pay doctors for making their patients better. Four factors are evaluated: process, outcome, patient experience, and structure:

  1. Process - Did the doctor follow medically proven processes? Example: Did he provide guidance to an obese patient on how to lose weight? 
  2. Outcome - Is the patient better? Example: Is a patient's asthma under control after a new medication?
  3. Patient Experience - How did the patient perceive he was treated? Example: Did the doctor answer all his questions?
  4. Structure - How are the office's facilities, personnel, and equipment? Example: Does the practice use electronic medical records?​

What it means for you

To remain competitive, commercial insurance companies typically follow Medicare’s lead. So even if you are not covered under Medicare, your insurance company may soon pay doctors based on the pay-for-performance model (if it doesn’t already).

The pay-for-performance model is good news for patients as it provides incentive for doctors to provide the highest quality care. You may find that your doctor is more attentive and less rushed as the model allows for longer appointment times. More and more doctors will be paid under this model within the next few years, so if you haven’t noticed any changes, you probably will soon.