Two new reports critical of fee-for-service model

February 20, 2009

The current fee-for-service model used by the U.S. healthcare system is costly and ineffective for physicians and patients, according to two recent reports in influential health-policy journals.

The current fee-for-service model used by the U.S. healthcare system is costly and ineffective for physicians and patients, according to two recent reports in influential health-policy journals.

The January 27 issue of Health Affairs evaluates numerous Medicare physician payment reforms, noting the current fee-for-service model, in which doctors are encouraged to see more patients and order additional tests and procedures to increase revenue, is "short-changing important but less lucrative areas such as primary care."

The study's authors advocate moving to a bundled payment for "episodes of care," which combine hospital, physician, and clinical services into a single rate. The episodes would have defined services, so that care isn't curtailed to increase profit.