Risk-Based Reimbursement

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A primary care physician is often reimbursed by Health Maintenance Organizations (HMOs) via capitation, fee-for-service, relative value scale, or salary. Capitation is considered as a risk based compensation.

In an effort to understand the intricacies involved with physician reimbursement, particularly in an era of health care reform, identify and interview an expert in the field, such as:

  • Hospital Administrator
  • Managed Care Organization (MCO) executive
  • Health care Consultant
  • Legal Professional

Assumption: MCOs use risk-based reimbursement for primary care physicians.

Ask the following questions in the interview:

  • What kind of risk do the MCOs assess?
  • Does risk-based compensation limit the freedom of primary care physicians in any way in terms of patient care? Why or why not?
  • How does the capitation model of reimbursement work? Do physicians generally prefer one model over the other? Why or why not?
  • Why do HMOs prefer the prepaid, monthly premium?
  • Is pay-for-performance a better model than existing models of compensation? Are there limitations to it as well?

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