Fee-for-service
Definition: Fee-for-service (FFS) is a traditional health care model in which health care providers and hospitals are reimbursed based on the number of services and procedures they provide. This model focuses on volume of services provided.1
How it relates to ACO/PCMH: One of the common reimbursement models for services provided in health care is FFS.2 This model may result in high out-of-pocket costs for individuals or high costs for their health plan and can result in uneven care between patients, excessive services, and health care inflation.1 An example of FFS would be physicians billing the insurance company for every service, test, or procedure that is provided to each patient. In this scenario, the physician is rewarded for seeing a greater number of patients and is incentivized to perform more procedures in order to receive higher reimbursement regardless of the overall health outcomes of their patients. This model of reimbursement does not promote efficiency and quality in care and fails to consider the improvement of a patient’s health condition over time, a failure which can raise the cost of health care. The disproportional increase in costs and complexity of health care gave rise to value-based health care models which place more emphasis on quality of care.3
Involved organizations/oversight: Medicare, Medicaid, Affordable Care Act
Resources:
- PrognoCIS. What is fee for service in healthcare? PrognoCIS. https://prognocis.com/what-is-fee-for-service-in-healthcare/
- DECO. Guide to healthcare reimbursement models. DECO. https://www.decorm.com/guide-to-healthcare-reimbursement-models/
- Prasad A. What is fee for service (FFS) in healthcare? RevenueXL: Accelerating healthcare revenues. https://www.revenuexl.com/blog/fee-for-service
Contributing Author:
Neeloufar Fakourfar, PharmD, BCACP, APh
Clinical Assistant Professor of Pharmacy Practice
Chapman University School of Pharmacy
Last Updated 9/2/2021