What differentiates fee-for-service reimbursement?

The key characteristic that differentiates fee-for-service reimbursement is that it involves reimbursement for each individual service provided to a patient. In this model, healthcare providers are paid separately for each service, procedure, or treatment they deliver. This method encourages providers to perform more services, as their compensation is directly tied to the quantity of care they deliver, regardless of patient outcomes or efficiency.

Fee-for-service contrasts with other payment models, such as capitation, where providers receive a fixed amount per patient, or bundled payments, where multiple services are paid for together. The focus in fee-for-service is on individual service delivery and the associated fees, which can lead to variability in patient care costs based on the number of services provided.

In this model, the financial incentive is aligned with delivering more procedures rather than managing patient care over time, which is a critical distinction that shapes its use in healthcare systems.