From the Guidelines
Medicare Fee-For-Service (FFS) and Value-Based Payment (VBP) schemes differ fundamentally in their approach to healthcare reimbursement, with FFS paying for individual services regardless of patient outcomes and VBP tying reimbursement to the quality of care and patient outcomes. The traditional FFS model rewards volume of care rather than quality, whereas VBP models, such as bundled payments and accountable care organizations (ACOs), focus on preventive care, care coordination, and evidence-based practices to improve patient outcomes while controlling costs 1.
Key Differences
- FFS incentivizes providing more services, which can lead to unnecessary care and higher costs
- VBP encourages providers to focus on quality and patient outcomes, controlling costs and improving healthcare sustainability
- VBP models include arrangements like bundled payments for entire episodes of care and pay-for-performance programs with financial incentives for meeting quality metrics
Value-Based Payment Models
- The Merit-Based Incentive Payment System (MIPS) adjusts FFS payments according to clinician performance on quality, cost, and practice improvement activities 1
- Bundled Payments for Care Improvement (BPCI)-Advanced model evaluates clinicians on cost and quality performance related to specific episodes of care, with positive impacts on costs and quality for certain conditions like joint replacement 1
- Medicare Shared Savings Program (MSSP) allows provider groups to share in savings if they meet quality benchmarks while keeping costs below targets
Implications
- The shift from FFS to VBP aims to improve healthcare quality and sustainability by incentivizing providers to deliver high-quality, cost-effective care 1
- VBP models require practice-level or system-level investments in dedicated staff, infrastructure, and training for success, but have a greater impact on improving patient outcomes and controlling costs 1
From the Research
Overview of Medicare Fee-For-Service (FFS) and Value-Based Payment (VBP) Schemes
- Medicare Fee-For-Service (FFS) is a reimbursement system where healthcare providers are paid for each service they provide, such as office visits, tests, and procedures 2.
- Value-Based Payment (VBP) schemes, on the other hand, aim to reward healthcare providers for delivering high-quality, cost-effective care, with payment adjustments based on value metrics 3.
Key Differences Between FFS and VBP
- FFS reimbursement encourages the quantity of care provided, regardless of its quality or necessity, whereas VBP schemes focus on the quality and value of care delivered 4, 2.
- VBP programs, such as accountable care organizations and bundled payments, have been implemented to promote value-based care, with payment adjustments up or down based on performance metrics 3.
- The Medicare Access and CHIP Reauthorization Act has solidified the role of VBP in Medicare, with many private insurers following suit 3.
Impact of Reimbursement Systems on Patient Care
- Research suggests that reimbursement systems, including FFS and VBP, can influence patient care and treatment quality, with VBP systems showing promise in improving quality and reducing costs 5.
- A systematic review of systematic reviews found that pay-for-performance and bundled payments were the most commonly studied models, with fee-for-service and value-based reimbursement systems having the most positive impact on patient care 5.
Transitioning from FFS to VBP
- Experts propose that the Medicare Physician Fee Schedule should be revised to support value-based payment, with Alternative Payment Models (APMs) addressing the limitations of FFS payment 6.
- Changing the reimbursement system can help foster the expansion of exemplary delivery models, such as the Mayo Clinic or Geisinger Health System, which prioritize high-quality, lower-cost care 2.