Payment Model
A payment model is a structured method by which healthcare providers are reimbursed for delivering medical services. It determines how, when, and how much doctors, hospitals, or clinics are paid.
📌 Common Types of Payment Models
| Model | Description |
| ————————— | ——————————————————————————— |
| *Fee-for-Service (FFS)* | Providers are paid for each individual service (e.g., test, surgery, consult). |
| *Capitation* | Providers receive a fixed amount per patient, regardless of service volume. |
| *Bundled Payment* | A single payment for all services tied to an episode of care (e.g., surgery + rehab). |
| *DRG (Diagnosis-Related Group)* | Hospitals receive a fixed payment per case, based on diagnosis and expected resource use. |
| *Value-Based Care* | Payment is linked to patient outcomes and quality metrics, not just volume. |
🧠 In Context
“China adopted a DRG-based payment model to control inpatient surgical costs.”
This means hospitals are paid a predefined amount based on diagnosis (e.g., spinal tumor) rather than on each procedure, test, or implant used.
⚠️ Why It Matters
The chosen payment model directly impacts:
- Clinical decision-making
- Length of stay
- Access to complex procedures
- Financial sustainability of high-risk specialties (like neurosurgery)
A poorly designed payment model can lead to:
- Overtreatment (in FFS)
- Undertreatment or early discharge (in DRG)
- Avoidance of complex patients (in capitation)