Should the US blame high healthcare spending on fee-for-service? Maybe not, researchers say

In the U.S., fee-for-service medicine has long been cited as creating incentives for overuse of medical services, which ultimately leads to higher spending. But with structured fee negotiations and standardized prices, high-income countries like France, Germany and Japan have seen some success with fee-for-service models, according to a new analysis published in Health Affairs.

For the analysis, health policy researchers examined how the fee-for-service systems for outpatient physician reimbursement in the three countries operate compared to the U.S. The researchers reviewed literature, interviewed policy experts in the three countries and visited all the countries between 2016 and 2018 to collect information. 

While the approaches of each country vary, France, Germany and Japan all use centralized fee negotiations. This type of fee-for-service model appears to be economically sustainable in the three countries analyzed. 

The authors acknowledge using fee-for-service physician payment models creates some tension between physicians and the government. Physicians in Japan, France and Germany earn lower incomes than their U.S. counterparts because the countries limit physician income by standardizing and adjusting their reimbursement.

Still, "marking fee-for-service as the major cause of high healthcare spending in the U.S. is problematic, especially as countries with lower prices and expenditures use fee-for-service systems," the authors said. They added: "Americans should work within their institutional framework to allow for greater standardization of prices based on negotiation. Such an approach would be a shift away from the current system, in which payment negotiations lack transparency."

Read more here.

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