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OMAR AL ABBASI
Healthcare Reimbursement Methodologies in Saudi Arabia With the United Satets
COLLAPSE
In Saudi Arabia, the healthcare system is primarily funded through a governmentsponsored model, with the Ministry of Health (MOH) serving as the main provider of healthcare
services. The prevalent reimbursement method within this system is a fee-for-service (FFS)
model, where healthcare providers are compensated on a per-service basis (AlRuthia et
al., 2020). This approach incentivizes providers to offer a higher volume of services, which can
sometimes lead to overutilization of healthcare services. Additionally, Saudi Arabia has
government-funded insurance programs such as the Saudi Arabian Cooperative Council Health
Insurance (CCHI) that extend coverage to Saudi citizens and residents, contributing to the goal
of universal healthcare access.
The strengths of the Saudi Arabian healthcare reimbursement system lie in its
commitment to universal coverage, ensuring that essential healthcare services are accessible to a
significant portion of the population. Moreover, the government’s substantial financial backing
reduces out-of-pocket expenses for patients and strives to reduce disparities in access to care,
emphasizing equity in healthcare provision (AlRuthia et al., 2020). However, this model has its
limitations, notably the potential for overutilization driven by the FFS reimbursement system and
a relatively limited role for the private sector in healthcare delivery. Furthermore, the system’s
dependency on oil revenues for funding raises concerns about its long-term sustainability
(AlRuthia et al., 2020).
In contrast, the United States employs a complex healthcare reimbursement system that
combines public and private funding sources. Major reimbursement methodologies include
private health insurance, Medicare (for seniors and certain disabled individuals), and Medicaid
(for low-income individuals and families). Fee-for-service, capitation, and value-based payment
models are predominant, with private insurance providers negotiating payment rates with
healthcare providers and Medicare and Medicaid having predetermined reimbursement
schedules. (Vilendrer et al., 2020)
The American healthcare system’s notable strengths include fostering innovation and
competition among healthcare providers, resulting in advances in medical technology and
treatment options. Patients benefit from a high degree of choice in selecting their healthcare
providers and insurance plans, and the system offers access to a wide array of specialized
healthcare services and treatments. However, the system’s complexity, with multiple payers and
reimbursement models, leads to administrative inefficiencies and high administrative costs.
Additionally, the high cost of healthcare in the United States, exacerbated by the fee-for-service
model, is a significant concern, and healthcare inequities persist, with many individuals lacking
adequate insurance coverage or facing barriers to accessing healthcare services (Vilendrer et al.,
2020).
In Saudi Arabia, there is a recognized need for a more diversified healthcare funding
model to address the challenges and limitations of the existing system. While the government
plays a central role in healthcare financing, there is potential for greater private sector
involvement to stimulate competition, innovation, and efficiency in healthcare delivery.
Expanding the role of private insurance and encouraging increased participation of private
healthcare providers can contribute to a more dynamic and sustainable healthcare ecosystem,
particularly as the country’s healthcare demands continue to evolve (AlRuthia et al., 2020).
References
AlRuthia, Y., Abdulaziz Bin Aydan, N., Sulaiman Alorf, N., & Asiri, Y. (2020). How can Saudi
Arabia reform its public hospital payment models? A narrative review. Saudi
Pharmaceutical Journal: SPJ: The Official Publication of the Saudi Pharmaceutical
Society, 28(12), 1520–1525. https://doi.org/10.1016/j.jsps.2020.09.020.
Vilendrer, S. M., Asch, S. M., Anzai, Y., & Maggio, P. (2020). An Incentive to Innovate:
Improving Health Care Value and Restoring Physician Autonomy Through PhysicianDirected Reinvestment. Academic Medicine: Journal of the Association of American
Medical Colleges, 95(11), 1702–1706. https://doi.org/10.1097/ACM.0000000000003650.
JABER ALOSAIMI
Healthcare Reimbursement Methodologies in the United States and Saudi Arabia
COL LAPSE
Healthcare Reimbursement Methodologies in the United States and Saudi Arabia
Healthcare spending continues to rise in Saudi Arabia and the United States. The contributing
factors to increased healthcare spending are lifestyle-based diseases, an aging population, and
high-cost health technologies. These factors have increased pressure on policymakers to reduce
costs and move to value-based systems. Healthcare reimbursement utilizes various payment
mechanisms with different levels of effectiveness. Nations have different reimbursement models
for healthcare depending on policies and patients’ needs. The common reimbursement models in
Saudi Arabia are fee-for-service, salary payment model, payment for performance, shared
savings payment model, and payment for episodes of care. The reimbursement models in the
United States are fee-for-service, Medicaid, Medicare, and private insurers. The fee-for-service
model encompasses health insurance plans paying hospitals and physicians based on provided
services. The model is used in the United States and Saudi Arabia. Erickson et al. (2020)
stipulate that the model reimburses physicians and other healthcare practitioners based on tests,
appointments, or procedures instead of appropriateness or quality of services. Tikkanen et al.
(2020) found that Medicaid pays healthcare institutions on a diagnostic-related group or
reimbursement basis. The Medicaid reimbursement model is a common form of payment in the
United States healthcare system.
Payment for performance is another significant payment model in healthcare that encompasses
physicians and healthcare practitioners receiving payment based on performance. Insurers use
the method to pay physicians for delivering quality healthcare. Payment for episodes of care is
another method for a single payment for each episode. Hospitals adopt the reimbursement
models since they have benefits that enrich the healthcare system and benefit the patient. For
instance, the Medicaid reimbursement model benefits patients and hospitals by carving out
contractual agreements with managed behavioral care. According to Tikkanen et al. (2020),
Medicaid reimbursement offers long-term care and social support since they account for most
Americans. The primary advantage of payment for performance is its addressing of overlooked
quality in other models. For instance, AlRuthia, Aydan, Alorf, and Asiri (2020) stipulate that the
payment for performance improves care outcomes among patients with diabetes, heart failure,
and asthma. Besides, the model has enhanced rates of social equity and immunization. The
benefits of payment for episodes of care stem from its cost-saving instance in healthcare since it
replaces surgeries among Medicare beneficiaries.
The reimbursement models have significant cons that require appropriate measures to address
and mitigate the growing concerns related to the models. AlRuthia et al. (2020) state that the feefor-service model has significant disadvantages stemming from physicians and hospitals
providing more services than required. According to AlRuthia et al. (2020), the model could
generate additional costs in healthcare since providers want to compensate for losses by
maximizing their profits. The healthcare system’s goal is the primary incentive for adjusting the
prices and services provided to patients. Another significant disadvantage of the fee-for-service
model is its failure to consider quality of care. AlRuthia et al. (2020) stipulate that individuals
using the model should determine the care quality attributes to measure quality definition among
payers and providers. Besides, the model pays physicians and hospitals according to their
services and fails to consider the treatment’s outcome. Therefore, the model raises essential
questions regarding whether the care is appropriate. AlRuthia et al. (2020) found that the model
penalizes clinicians and hospitals who fail to provide unnecessary procedures, resulting in
insurers paying less for the services. The model encourages physicians and hospitals to provide
additional services that could be challenging to healthcare. Therefore, physicians engage in
unnecessary activities and procedures that would profit them, which deemphasizes compensation
to minimize costs and care utilization. The approach encourages wastefulness and increases the
risk of unnecessary services that could harm patients. According to AlRuthia et al. (2020), the
additional costs due to the fee-for-service model encouraging hospitals to provide unnecessary
services have contributed to the rising healthcare costs. Therefore, the approach requires
amendments to improve care quality and patient outcomes.
The disadvantage of Medicare is that it covers post-acute care after hospitalization, limiting the
care patients receive even when required. It increases the risk of patients seeking private
insurance or out-of-pocket spending, increasing care costs, which could negatively affect
healthcare by reducing the number of people who seek healthcare. The disadvantage of pay for
pay-for-performance model is its encouragement of clinicians to provide under-used services.
Therefore, the patient might not receive the best treatment since the physician could consider the
under-used services unnecessary. AlRuthia, Aydan, Alorf, and Asiri (2020) stipulate that the
commonly under-used services are counseling and other soft services that could enhance patient
quality. However, limited utilization of the services could negatively affect care quality.
References
AlRuthia, Y., Aydan, N. A., Alorf, N. S., & Asiri, Y. (2020). How can Saudi Arabia reform its
public hospital payment models? A narrative review. Saudi Pharmaceutical Journal, 28(12),
1520-1525. doi:10.1016/j.jsps.2020.09.020
Erickson, S. M., Outland, B., Joy, S., Rockwen, B., Serchen, J., Mire, R. D., & Goldman, J. M.
(2020). Envisioning a better US health care system for all: health care delivery and payment
system reforms. Annals of internal medicine, 172(2_Supplement), S33-S49.
Tikkanen, R., Osborn, R., Mossialos, E., Djordjevic, A., & Wharton, G. (2020). International
profiles of health care systems. The Commonwealth Fund.
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