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Fee For Service

Fee-for-Service

Definition

The current and predominant model for providing medical care in the United States. Under a fee-for-service approach, physicians, hospitals, and medical care providers in general are paid/reimbursed based upon the nature and especially the volume of services they provide to a given patient.

The fee-for-services model contrasts with the value-based care model, in which physicians and hospitals are compensated based on achieving positive results (e.g., achieving a reduction in both initial hospital admissions and hospital readmissions for chronic conditions, improving the overall health of patients and maintaining that improvement over time), rather than on the sheer quantity of medical services they provide.

The major criticisms of the fee-for-service model are that it offers no incentive for either controlling the cost of medical care or improving overall patient health.

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