Alyssa Lane
The payment structure for physicians can vary, with some operating on a fee-for-service basis, others collecting annual fees for all primary care needs, and some juggling multiple income streams. In the US, patients are often charged a 'facility fee' for hospital stays, which can be billed on top of the cost of seeing a physician and may not be covered by insurance. This can be the case even when a patient has not physically entered a hospital. Patients may also be charged for out-of-network services, such as when an attending physician is out-of-network, even if the hospital is in-network.
| Characteristics | Values |
|---|---|
| Payment models for physicians | Fee-for-service, capitation, hybrid models, concierge practice, value-based care |
| Pros of different models | Multiple income streams, flexibility, more time with patients, reduced administrative burden |
| Cons of different models | Reduced financial benefit, pressure to limit costs and increase volume, potential for flawed risk adjustment methods |
| Insurance involvement | Insurance companies pay physicians based on visit cost, overhead, and complexity of care |
| Facility fees | Hospitals charge facility fees for outpatient appointments, which may be covered by insurance |
| Out-of-network providers | Patients may be protected from out-of-network charges when visiting an in-network hospital, but protections vary |
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What You'll Learn
Out-of-network physicians in in-network hospitals
It is possible for a patient to go to an in-network hospital but receive care from an out-of-network physician. This can result in the patient receiving large and unexpected out-of-network bills. Insurers may not cover these bills, leaving the patient to pay the full cost. In some cases, insurers may cover part of the cost, but at a much lower rate than the provider charges, and the patient would then be required to pay the difference, resulting in a "balance bill".
There are four physician specialties where patients have little or no choice over the physician who treats them: pathologists, emergency department (ED) physicians, anesthesiologists, and radiologists (collectively, PEAR physicians). These physicians can refuse to join insurers' networks but cannot be avoided by patients. As a result, patients can receive large and unexpected bills from these physicians, whom they cannot reasonably avoid.
To avoid receiving a "surprise" or "balance" bill, patients should inform their doctors in advance that they only want to use in-network providers. If a doctor has specific providers in mind, patients should check with their insurer to ensure that they are in-network. Patients should also ask their insurer what they can do to avoid being balance billed.
In the case of emergency services, federal law protects patients from out-of-network bills. Providers are not allowed to ask patients to give up these protections. However, these protections do not apply to post-stabilization services.
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Facility fees
The rising consolidation of the American healthcare system has contributed to the increase in facility fees and other patient costs. Large hospital systems are acquiring clinics, physician groups, and urgent care and imaging centers, turning them into outpatient departments of hospitals. This allows hospital systems to charge higher fees for services previously obtained at lower costs. However, some states, including Colorado, Connecticut, New York, Florida, Louisiana, Minnesota, and Texas, have taken action to address facility fees. They have implemented measures such as banning facility fees for certain outpatient services at non-hospital locations or requiring hospitals to notify patients about facility fees ahead of time.
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Value-based care
Value-based payment models aim to shift the focus from the volume of services provided to the quality of care delivered. Physicians are rewarded for maintaining appropriate costs while also improving quality and achieving high standards. This approach ensures that payment is based on the value provided to the patient rather than the quantity of services rendered.
To encourage participation in value-based payment models, practitioners have suggested several strategies. These include providing upfront payments, investing in the primary care workforce, and reducing the emphasis on simplistic quality measures. Addressing the primary care workforce shortage and alleviating physician burnout are also crucial steps to make these models more attractive.
While value-based care arrangements are growing, with an increasing number of physicians working in accountable care organizations (ACOs), there are challenges to its implementation. The complexity and pace of change associated with value-based care can be difficult for physician practices to navigate. Additionally, independent practices seek more transparency regarding how model participation will impact their revenues.
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Concierge practice
Concierge medicine, also known as retainer or membership medicine, is a relationship between a patient and a primary care physician in which the patient pays an annual, monthly, or quarterly fee or retainer. In exchange for the retainer, doctors agree to provide enhanced care, including commitments to ensure adequate time and availability for each patient. The practice may also be called a cash-only practice or direct care. While all "concierge" practices share similarities, they vary widely in structure, services provided, and payment requirements.
There are typically three primary types of concierge medicine business models practiced today. Variations of these models exist, although most models usually fall into one of the following categories. The Fee for Care ('FFC') is an annual retainer model, where the patient pays a monthly, quarterly, or annual retainer fee to the physician. There is also a hybrid concierge model where physicians charge a monthly, quarterly, or annual retainer or membership fee for services that Medicare and insurers do not cover. These services may include email access, phone consultations, newsletters, annual physicals, prolonged visits, and comprehensive wellness and evaluation plans. For all covered services, these providers will bill Medicare and insurance companies for patient visits and services covered by the plans. This model allows the physician to continue to see their non-retainer patients while billing their "concierge" patients a fee for the increased or "special" services. Some concierge practices are cash-only or 'direct' primary care practices and do not accept insurance of any kind. In doing so, these practices can keep overhead and administrative costs low, thereby providing affordable healthcare to patients.
Concierge doctors offer personalized care and direct access. They’re often physicians who choose to form a private practice to limit the number of patients they’re responsible for — usually a smaller number compared to the volume of a more traditional office practice — and to minimize the amount of paperwork associated with insurance payouts. Concierge doctors can do everything a primary care physician can, including administering lab tests and conducting annual physical exams. They also typically provide diagnostic screenings and minor urgent care services like stitches or treatment for minor skin conditions. However, they can’t provide many specialized treatments or major medical procedures, like surgery. Concierge doctors get the same training and licensing to practice medicine as a doctor you’d see through an insurance network.
One of the most popular reasons to consider a concierge doctor is quicker access to your physician. Same-day appointments and direct email and phone contact with your concierge doctor mean speedier access to care. Because concierge doctors can cap the number of patients they take on, they’re often better able to control their availability. Services you’d normally get in a primary care visit, like physicals and preventive screenings, are already covered by the fee you pay for concierge service, so you won’t have to cover costs for each individual visit. For those with conditions like heart disease that require frequent visits, a concierge doctor could be more cost-effective in the long run.
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Hybrid payment models
The hybrid payment model for primary care physicians has been a topic of discussion for several years, with many calling for a decisive shift from the traditional fee-for-service (FFS) payments. The proposed hybrid model combines FFS with population-based payments (PBP), with a significant number of countries already adopting this blend. In this model, physicians are compensated for services that are typically included at no extra cost, such as behavioural health integration, and are paid for being the first line of care for mental illness. This shift aims to address the issue of physician burnout and the lack of time to meet the holistic needs of patients with chronic health conditions.
The National Academy of Sciences, Engineering, and Medicine's (NASEM) 2021 report recommended a shift towards hybrid models, emphasising the need to substantially increase compensation for primary care clinicians. This increase in pay, suggested to be at least 30%, is intended to alleviate workforce shortages and promote the adoption of team-based primary care. The report also recommended that the Centers for Medicare and Medicaid Services (CMS) reduce their reliance on the American Medical Association's Relative Value Update Committee when determining relative values under the Medicare Physician Fee Schedule (MPFS).
The hybrid model is designed to provide greater flexibility in how care is delivered, allowing physicians to consider the unique needs of each patient and build relationships over time. This approach is particularly important in addressing mental health issues and managing chronic illnesses. Additionally, the model encourages the adoption of multidisciplinary care teams and increased use of communication technologies to improve patient engagement and address social determinants of health.
While the hybrid payment model offers potential benefits, there are challenges to its implementation. The United States, for example, has been working on adopting this model for over 10 years, indicating the complexity of the transition. One challenge is the current fee schedule's focus on discrete, service-based payments, which may not align with the continuous nature of primary care. Furthermore, there may be resistance to change, with concerns about the financial implications of increasing payments to primary care physicians.
Despite these challenges, the hybrid payment model is viewed as a potential solution to improve primary care and address the pressing issues faced by physicians and patients. With support from medical and policy leaders, as well as organisations like the American Academy of Family Physicians, there is a growing consensus for change. The upcoming Making Care Primary initiative in 2024 will provide an opportunity for eligible practices in eight states to experience and test the hybrid payment approach.
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Frequently asked questions
Facility fees are associated with inpatient hospital stays and outpatient doctors' appointments. Hospitals argue that these fees are necessary to fund the higher level of care they provide and to maintain 24/7 services. These fees are billed on top of the cost of seeing a medical provider.
The American Hospital Association says facility fees should be covered by insurance companies, but insurers disagree, saying that the fees unnecessarily increase the cost of care without improving its quality. It is recommended that patients ask about facility fees and request a good-faith estimate of the anticipated charge.
Also known as a direct care practice, a concierge practice collects annual fees from patients for all their primary care needs. Insurance is not involved in this model.
In value-based care, practices receive a set amount of money per patient per month, regardless of the number of visits. This model may allow for more time with patients, but physicians may feel pressure to limit costly medications and referrals.
If you receive care related to a visit to an in-network hospital, you are generally protected from out-of-network charges. However, you may be asked to sign a notice and consent form for out-of-network post-stabilization services if you can safely travel to a nearby in-network provider.
