Fee-for-service

Fee-for-service is a payment model for health care where providers are paid for each service rendered to patients. This model contrasts with capitation, salary, or value-based payment models, where providers are paid based on the number of patients they care for, their employment status, or the quality of their care, respectively.

Overview

In a fee-for-service system, health care providers (such as doctors and hospitals) are paid by the patient or the patient's insurance company for each service provided, including tests, procedures, and consultations. This system is often used in private practice settings.

Advantages and Disadvantages

The fee-for-service model has both advantages and disadvantages.

Advantages

• Flexibility: Fee-for-service allows patients to choose their own providers and to receive any services deemed necessary by their providers.
• Incentive for service provision: Providers are incentivized to provide more services, as they are paid for each one.

Disadvantages

• Cost: Fee-for-service can lead to higher health care costs, as providers may provide more services than necessary.
• Lack of coordination: This model does not incentivize coordination of care among different providers.

Alternatives

Alternatives to the fee-for-service model include capitation, where providers are paid a set amount for each patient they care for, regardless of the number of services provided; salary, where providers are paid a set salary regardless of the number of services provided; and value-based payment, where providers are paid based on the quality of their care.

See also

• Health care finance
• Health insurance
• Payment model

Fee-for-service Resources
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