Table 2 Payment models explained
From: Policy brief: ambient AI scribes and the coding arms race
Payment model | How payment is determined | Scribe’s role | Payer countermeasures |
|---|---|---|---|
Fee-for-service (FFS; including U.S. Original Medicare Parts A and B) | Clinicians are paid per visit or procedure based on Evaluation and Management (E/M) codes, and hospitals are paid per discharge based on diagnosis-related groups (DRGs). | Drafts thorough documentation so higher-level codes are justified | Claim audits and automatic downcoding of high-level visits |
Medicare Advantage (MA) | Plans receive capitated payments adjusted for members’ risk scores (HCCs) | Captures all relevant diagnoses to increase risk scores | CMS risk-score adjustments and targeted audits |
Key difference | FFS pays providers per service, so plan expenditures rise with billed visits, procedures, and hospitalizations; MA pays plans per enrollee using risk-adjusted capitation, so plan revenue rises with members’ risk scores even when provider payment remains FFS. Payers adjust formulas and audits to neutralize coding inflation. | ||
