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What are some advantages and disadvantages of the Fee-for-service, Per diem, Capitation and the DRG-based payment systems on cost containment and provider behavior?

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An advantage of fee for service payment systems on cost containment is the fact that these guaranteed upfront payments help to keep the costs of medical services down, due to the fact that providers won't have to pay for as many payment management systems or collection services, which would normally be added to total medical services charges. A disadvantage is the fact that medical fees may be raised due to the fact that hospital service providers are guaranteed to receive payment immediately. An advantage in respect to provider a behavior is that providers will be willing to treat a wider variety of patients due to guaranteed receipt of payment. A disadvantage is that providers may start to only focus upon treating higher end customers who pay for higher level more expensive hospital services. An ...

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Health Services & Financial Mechanisms

I would like some help on these questions to compare to mine. I am getting a little confused with cost controls and containment.

1. What are the three most significant challenges facing the healthcare system due to changes in financial mechanisms?

2. Why are the major cost controls by the states and the federal government focused primarily on hospitals?

3. Five substantive reasons the federal government would focus on hospitals in an effort to constrain costs. Justify why each of your reasons explains the focus of the U.S. government.

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