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provided, the more reimbursement a provider receives from the insurer.235 By incentivizing providers to over-prescribe and over-treat, the fee-for- service reimbursement model has resulted in high-cost patient health care.236 This impersonal health care can drive up costs for both patient-consumers and insurers.237 Correspondingly, patients may also feel the fee-for-service model’s negative financial implications through their health insurance premiums. The insurer, rather than the provider, bears the financial responsibility for the costs associated with each unit of healthcare services.238 The fee-for- service reimbursement model incentivizes providers to order more tests, possibly provide unnecessary treatment, and keep hospital beds full. In contrast, payors profit from not paying out their premium revenues for medical services, and ultimately prefer empty hospital beds. This inherent tension between providers and payors in the fee-for-service reimbursement model has created two enormous waves about to crash into each other, leaving the patient-consumer in the middle of the fragmented and uncoordinated healthcare delivery system storm.239 The ACA propelled the movement toward incentivizing care coordination and, thus, implemented incentives to replace the traditional fee-for-service reimbursement model with fee-for-value reimbursement models.240 To achieve the overall goals of high-quality, low-cost health care, providers and insurance companies must align financial incentives to achieve the necessary
pubs/research_reports/RR800/RR869/RAND_RR869.pdf. 235. Fee for Service (FFS), HEALTH CARE INCENTIVES, http://www.hci3.org/thought- leadership/why-incentives-matter/fee-for-service (last visited Mar. 29, 2016) [hereinafter HEALTH CARE INCENTIVES] 236. Id. 237. Kelly M. Bryant, Fee-for-Service 101: What it Means for Your Organization, PALADINA HEALTH (Sept. 3, 2015), https://www.paladinahealth.com/blog/fee-service-101- what-it-means-your-organization. Patients may experience an impersonal and hurried appointment because health care providers limit appointment times because if providers see more patients in a day, they will also receive more payment under a fee-for-service model. Id. 238. Jose L. Gonzalez, A Managed Care Organization’s Medical Malpractice Liability for Denial of Care: The Lost World, 35 HOUS. L. REV. 715, 724 (1998). 239. HEALTH CARE INCENTIVES, supra note 235 (noting that the fee-for-service reimbursement model is the “single biggest contributor to excessive use of services and the fragmentation of the [United States] delivery system”); see Bryant, supra note 237 (noting that the lack of coordination caused by the fee-for-service reimbursement model has accounted for $25–$45 billion in annual wasted health care spending). The fee-for-service reimbursement system actually incentives providers to avoid collaboration and coordination as a way to generate more services individually. Id. 240. Caleb Clarke, How the Affordable Care Act Will Affect Provider Reimbursement, NUEMD, http://www.nuemd.com/blog/affordable-care-act- will-affect-provider-reimbursement (last visited Mar. 10, 2016); VALENCE HEALTH, PROVIDER-SPONSORED HEALTH PLANS: THE ULTIMATE VALUE-BASED HEALTHCARE PLAN 1 (2015) [hereinafter VALENCE HEALTH White Paper].
