Hamadeh wanted to pay primary care doctors a small fee for referring his service to patients, but discovered it could be construed as fee-splitting.
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The Association of American Medical Colleges reported last November that medical-loss ratios of for-profit HMOs paying a flat fee to doctors for treatment averaged only 70% of their premium revenue.
The fee is so small that doctors used to earn extra money through the sale of drugs.
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Our fee for service system rewards doctors for seeing more patients, doing more procedures and prescribing more drugs.
Indeed, they are some of the most forward-thinking institutions when it comes to managing a patient holistically, versus compensating doctors operating in discrete silos on a fee-for-service basis.
In addition, doctors and hospitals need to move away from fee-for-service medicine so they have further incentives to operate more efficiently and therefore improve their health IT.
Doctors will come to your house for a small fee and diagnose your illness.
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The fee-for-service system already creates incentives for doctors to do the more costly thing.
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But years ago the doctors agreed among themselves to a system that paid them a similar fee whether they saw Medicare, Medicaid, or private-insurance patients, so that there would be little incentive to cherry-pick patients.
Its staff of three includes a vision technician who examines patients and also arranges consultations with doctors at the base hospital via videoconference--all for a fee of less than 50 cents, which is good for three visits.
Insurers are increasingly paying doctors and hospitals if they can better coordinate patient care rather than the fee-for-service system of today that pays for more care even though it is not necessarily better.
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Doctors in public hospitals are salaried whilst those in private hospitals are paid on a fee-for-service basis.
The number of legal actions against doctors has soared since the law was changed to allow no-win no-fee and the medical litigation industry has boomed.
Fee-for-service plans--with their equally problematic incentives for doctors to provide too much costly treatment--continue to shrink.
"In the fee-for-service days, there was a very perverse system that rewarded doctors for doing way too much medicine, " says Dr. David Lawrence, chairman and CEO of California's huge, and nonprofit, Kaiser Permanente.
She added that the move to more "no win no fee" legal cases had increased costs and now amounted to 30% of cases against doctors and 50% of cases against dentists and the same was probably true for hospital staff.
In addition to its fee increase for visits, which will vary by market, WellPoint will offer primary-care doctors payments for services such as developing treatment plans for patients with chronic diseases.
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