Insurance is based on pooling of losses, payment for random losses, risk transfer, and indemnification. As a result, insurers use several different approaches to mitigate their risk and set premium rates, including:
The fee-for-service method
The cost-plus approach
Population health – capitation
For your assignment, evaluate two global payment systems within healthcare and address each of the following items:
Define the structure of the payment systems.
Identify risk to loss of revenue in each system.
Describe advantages and disadvantages of each system.
Identify how pay for performance can be added to each payment system.