What does Fee-For-Service refer to in health care payments?

• A. Payment to a provider for each medical service rendered
• B. Payment by capitation
• C. Fixed annual reimbursement
• D. Salary-based payment

Answer: (A)

Fee-for-service means payment to a health care provider for each medical service rendered. In this model, every visit, test, procedure, or other service is billed separately, usually using standardized codes, and reimbursement depends on the quantity and type of services delivered. Because providers are paid for each service, there can be an incentive to offer more services, which can raise costs if not checked by quality measures or utilization controls. This approach contrasts with capitation (a fixed amount paid per patient per period), salary-based pay (a fixed salary regardless of services provided), or fixed annual reimbursement (a pre-set yearly amount for a defined scope). In practice, fee-for-service is common and underpins many billing systems, making it straightforward to track what was done and paid for, but it can encourage higher service volume without necessarily improving outcomes.