What does the fee-for-service model entail?

The fee-for-service model is a payment structure in healthcare where providers are compensated for each individual service they perform. This means that doctors, hospitals, and other healthcare professionals bill for each test, consultation, treatment, or procedure they provide to a patient. This model incentivizes providers to offer more services since their income is directly related to the volume of procedures they perform.

In contrast, other payment models, such as those that involve a flat fee for a hospital stay or monthly premiums for insurance coverage, do not operate on a per-service basis. Likewise, percentage-of-cost arrangements involve shared expenses between the patient and insurer but lack the direct correlation to individual services that defines the fee-for-service system. Thus, identifying the fee-for-service model as being characterized by payment for each medical procedure aligns naturally with its fundamental premise.