Question

Basis of hospital compensation in the United States and United Kingdom:

a.) Fee for service

b.) DRG-type

Answer 1

A) Fee for service is a type of health insurance plan that compensate you after you have filed an insurance claim for each covered medical expenses, or, this plan will directly pay the medical providers. Fee for service payment is dependent on quantity of care rather than quality of care, so it gives physicians an incentive to provide more treatments.

b) DRG type of payment is one type of hospital payment that enables performance comparison across hospitals. It is used primarily by purchasers to reimburse providers for acute inpatient care. This type of payment mechanisms are taken to use reources efficiently along with capitation payment, global budgets etc. The payment formula is based on the base rate multiplied by a relative cost weight specific for each DRG.