What are the two main categories of reimbursement methodologies used by CMS?

The two primary categories of reimbursement methodologies used by the Centers for Medicare & Medicaid Services (CMS) are fee-for-service and value-based payment.

Fee-for-service is a traditional model where providers are paid for each individual service rendered to a patient. This model encourages the volume of services, as providers receive payment for every procedure or treatment without a direct connection to patient outcomes.

On the other hand, value-based payment shifts the focus towards the quality and efficiency of care provided. It aims to incentivize healthcare providers to deliver better patient outcomes while managing costs effectively. This model often includes performance metrics that providers must meet to receive full reimbursement, thereby aligning financial incentives with patient health results.

Understanding these categories is essential because they represent the fundamental approaches CMS employs to compensate healthcare providers and drive improvements in care delivery and health outcomes. Additionally, knowing the distinctions helps in analyzing how reimbursement may influence clinical practices and patient engagement strategies.