Introduction
Today, most financing reforms focus on establishing reimbursement methods that help achieve cost containment and efficiency without compromising healthcare quality, as Guinness et al. (2022) reported. These reforms trigger the debate concerning who should oversee the process of setting reimbursement rates between providers and payers. Each party has vested interests that may conflict, affecting their relationships. Although both parties are instrumental in the healthcare sector, this paper defends the position that payers should oversee the setting of reimbursement rates.
Reasons Payers Should Oversee Setting Reimbursement Rates
Quality Improvement
Allowing payers to oversee the process of setting reimbursement rates incentivizes providers to deliver better and high-quality care, improving patient outcomes and creating an efficient healthcare sector. Payers are interested in linking quality metrics to performance standards, as reflected by calls for value-based reimbursement schemes. With the healthcare system’s evolution, payers call upon providers to shift their focus to value services (Axene, 2023). Payers perceive value as the intersection between quality and cost. The significant effect of value-based reimbursement (VBR) is that it inspires healthcare professionals to provide the optimal services at the lowest cost. This model rewards providers for exceeding performance standards and sometimes punishes them for failing to meet the goals (Axene, 2023). Hence, payers ensure reimbursement rates align with care quality.
In an ideal setting, advocating for quality improvement through VBR ensures providers manage patients effectively. It challenges providers to focus on preventive care and wellness while delivering the most effective care options to patients. Although providers encounter numerous challenges like limited resources, demotivation, and lack of information, tying reimbursement to the value generated motivates healthcare professionals to deliver safe and effective care, improving patient outcomes (Axene, 2023). Again, VBR leads to greater cost-effectiveness in healthcare facilities.
Cost Control
By overseeing the process of setting reimbursement rates, payers negotiate with providers to contain healthcare costs. In recent years, technological advances and economic development have increased health demand and associated costs due to implementing information technologies and innovative solutions (Abad-Segura et al., 2023). Payers use welfare economics to recommend more vigorous tools for improving the outcomes and cost-effectiveness of care. Such cost control mechanisms ensure that payers compensate providers for the best or proper care. Importantly, cost control makes healthcare services more affordable, highlighting why payers should lead the process of setting reimbursement rates.
Affordable health services are beneficial to all people, mainly vulnerable populations. For millions of people in vulnerable urban and rural communities, hospitals are essential and the primary source of healthcare (Bhatt & Bathija, 2018). As a result, failing to control healthcare costs means these people risk losing access to healthcare services and the resources and opportunities needed to maintain and improve their well-being. Therefore, allowing payers to oversee the setting of reimbursement rates is crucial because it allows them to accommodate different clients’ needs. Affordable healthcare means increased access to medical services. Richard et al. (2016) contend that improving healthcare access among vulnerable populations is vital for attaining health equity. Affordable healthcare makes service delivery financially sustainable for patients and payers, explaining why payers should set reimbursement rates.
Reduced Disparities
When payers oversee the setting of reimbursement rates, they identify ways to mitigate healthcare disparities, improving the health outcomes of all populations. In 2018, Johnson et al. investigated the motivations influencing healthcare stakeholders’ intention to invest in programs to address health disparities. The results show that providers focus on improving care delivery and increasing access to services, with marketing appeal and community reputation as the motivating factors. On the other hand, quality and financial improvements – where quality enhancement improves reimbursement – motivate payers to dedicate resources to overcome health disparities. This shows that payers are concerned with community needs instead of reputation. From a cause-and-effect dimension, reducing healthcare disparities improves healthcare access for vulnerable/marginalized communities, supporting health equity. This ensures that all people have access to equitable/affordable health services to safeguard their well-being.
Efficient Resource Use
Payers strategically allocate finances and other resources by establishing reimbursement rates depending on the severity and prevalence of various health conditions. The targeted method directs resources to areas where they are needed the most, maximizing health spending. Health resources provide avenues for communities to receive care, implying allocation efficiency affects people’s health as well as the development of better health services (Gong et al., 2023). To this end, efficient resource use has numerous impacts on patients and providers. Efficient use of resources leads to high-quality patient care and saves costs. In other words, payers suggest frameworks where providers administer high-quality services with fewer resources and reduced costs. Studies have shown that optimal use of healthcare resources improves patient care, clinical practices, decision-making, and staff capacity (Harris et al., 2017). when healthcare providers optimize resources, efficiency and productivity increases.
Additionally, efficient resource use motivates providers to eliminate unnecessary procedures and streamline processes, contributing to an effective and cost-effective healthcare system. With the overwhelming processes and tasks in healthcare, providers must be mindful of time-consuming and unnecessary procedure when allocating resources, especially medical staff and nurses (Schoenfeld & O’Malley, 2016). Since every minute counts, removing unnecessary processes allows sufficient time for tasks that optimally promote safe, cost-effective, and reliable care efficiently. When payers lead the process of setting reimbursement rates, they focus on optimally rewarding procedures. This optimal allocation and use of resources helps providers eliminate wastes while providing quality care to patients. Therefore, payers should set the reimbursement rates.
Innovation Encouragement
Since payers are interested in patient outcomes, they are inclined to provide reimbursement rates that encourage providers to adopt cost-effective and innovative technologies and treatments. Payers have conventionally played a critical role in stimulating healthcare innovation. These stakeholders use their influence over reimbursement policies to foster innovation. Research suggests that private payers are more likely to reward value and quality compared to Medicare (Medalion, 2023). The demand for value and quality is the main driver of innovation in healthcare organizations. Further, payers incentivize providers to invest in research and development, promoting evidence-based intervention.
The impact of innovation encouragement extends beyond R&D. First, adopting innovative treatments leader to more accurate and faster access to patient information or records. Today, the use of electronic health records (EHR) promotes instant access to patient information for patients and providers because the system facilitates automated interactions (Medalion, 2023). Secondly, innovative technologies reduce medication errors. Integrating technology into healthcare practices has led to systems that can save lives by reducing medical errors. For example, the clinical decision support system allows healthcare professionals to access patient-specific information. This helps recommend evidence-based interventions (Medalion, 2023). Technology also increases healthcare access, improves communication among providers, reduces costs of logistics, and improves care efficiency.
Another effect of promoting innovation is facilitative personalized treatments like precision medicine, virtual care games, connected devices, and 3D printing. The Healthcare Information and Management Systems Society report disclosed that about 85 percent of payers invest in technologies that enhance population health management and care coordination (Medalion, 2023). These efforts reduce costs and improve patient outcomes, making healthcare affordable and accessible for all. It also leads to satisfied patients and care providers. As the healthcare evolves, payers can drive positive change. Hence, payers should oversee the setting of reimbursement rates to improve healthcare outcomes for everyone.
Conclusion
Payers are perfectly positioned to oversee the setting of reimbursement rates because they strive for efficiency. They incentivize providers to improve care quality, control costs, reduce healthcare disparities, encourage innovation, and promote optimal resources use. Payers leverage their influence over reimbursement policies to improve patient and clinical outcomes by reimbursing for value and quality.
References
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Axene, J.W. (2023). Paying healthcare providers: The impact of provider reimbursement on overall cost of care and treatment decisions. Axene Health Partners. https://axenehp.com/paying-healthcare-providers-impact-provider-reimbursement-overall-cost-care-treatment-decisions/
Bhatt, J., & Bathija, P. (2018). Ensuring Access to Quality Health Care in Vulnerable Communities. Academic medicine: Journal of the Association of American Medical Colleges, 93(9), 1271–1275. https://doi.org/10.1097/ACM.0000000000002254
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Medalion. (March 3, 2023). The power of payers: Leading the way in healthcare innovation. Medalion. https://medallion.co/resources/blog/the-power-of-payers-leading-the-way-in-healthcare-innovation
Richard, L., Furler, J., Densley, K., Haggerty, J., Russell, G., Levesque, J. F., & Gunn, J. (2016). Equity of access to primary healthcare for vulnerable populations: the IMPACT international online survey of innovations. International Journal for Equity in Health, 15(1), 1-20. https://doi.org/10.1186/s12939-016-0351-7
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