Providers must review participation contracts very carefully before signing and agreeing to one to avoid any consequences or negative effects for themselves. These participation contracts are put in place to allow the providers to have an overview of a plan to make decisions of participation. Providers can either gain financially or lose revenue when they participate in these contracts so it is best they go over them cautiously. Participation contracts can either be a gain or a fail for the provider. There have been cases where the provider loses revenue because the contract offers or pays less than the physicians set fees but can also increase patient numbers at the same time. With discounted fee-for-service, physicians are paid for every service and test provided based on a fee schedule or pre-determined discount from the usual fee charged by the physician. Physicians are only at risk if the cost of their care is greater than the payment the health plan will give them.
This is typically why physicians will only test what is absolutely necessary. There are positive and negative ramifications of discounted fee-for-service arrangements. Positive ramifications of discounted fee-for-service arrangements are mainly geared towards the patient. When a patient is insured by a Preferred Provider Organization (PPO) and uses a physician within their network, their co-pays tend to be lower and they only pay an annual premium. Using an out-of-network provider would result in higher out-of-pocket costs for the patients.
The most significant negative ramifications of discounted fee-for-service arrangements is that preventative care is not covered. This really affects the patient more so than the physician because any unnecessary tests or exams would be an out-of-pocket cost for the patient. There are benefits and disadvantages for not only the physician but also the patient when it comes to discounted fee-for-service and participation contracts. It is very critical that the physician look closely at the participation contracts and choose what is best for their practice or facility.
Valerius, J., Bayes, N., Newby, C., & Blochowiak, J. (2014). Medical insurance: An integrated claims process approach (6th ed.). Boston, MA: McGraw-Hill.