Could standardized fee-for-service payments work in the United States?
Rutgers researchers examine the policies in three other high-income countries for clues.
In an effort to lower health care spending, lawmakers in the United States have focused on eliminating fee-for-service reimbursements, which provide an incentive for physicians performing additional services. A group of researchers at Rutgers University, however, contends that standardizing fee-for-service payments and structuring negotiations between insurers and providers could help slow the rate at which U.S. health care prices increase.
In a new study titled “Getting the Price Right: How Some Countries Control Spending in a Fee-For-Service System,” published in Health Affairs, a research team from Rutgers School of Public Health compared policies in France, Germany, and Japan. Payers and physicians in those countries engage in structured fee negotiations and standardized prices in systems where fee-for-service is the main model of outpatient physician reimbursement.
Related: Fee-for-service is the crack cocaine of health care – with Brian Klepper
The Rutgers team interviewed 37 stakeholders and health policy experts in those three countries to understand the process for creating physician fee schedules and updates, learn about recent policy changes in physician payment, and identify other challenges in the use of fee-for-service payment to physicians.
“The parties involved, the frequency of fee schedule updates, and the scope of the negotiations vary, but all three countries attempt to balance the interests of payers with those of physician associations,” said Michael K. Gusmano, the study’s lead author.
“France, Germany, and Japan are the three most populous high-income nations that combine universal health insurance with fee-for-service physician payment,” the study stated. “At the same time, their health systems combine a robust system of regulation with systemwide managed competition. In the U.S., in contrast, insurance regulation is less developed and has suffered from a lack of national uniformity.”
France, Germany, and Japan limit the incomes of physicians by standardizing and adjusting the fees they are paid while using a variety of approaches to limit the volume of services provided, the study noted. Prior research shows that U.S. health care expenditures are higher than in other countries because of the price, not the volume, of services.
“The purpose of international comparisons for policy learning is not to transplant or import foreign systems into domestic institutions,” the study concluded. “Our approach to understanding physician payment policy across nations acknowledges the absence of solidarity in the United States. Price negotiations must reflect the history and distinct characteristics of each country. Cross-national comparisons, however, offer perspective on the challenges that Americans confront and the ways in which experience abroad might be adapted to the specificities of other national institutions. The ways and means by which France, Germany, and Japan are ‘getting the price right’ should not be ignored by U.S. policy makers concerned with universal health insurance or with the incremental extension of affordable health insurance coverage.”
Related: