Glossary Term

Fee-for-service

Fee-for-service is a health care payment model where a medical provider is paid for services on an individual basis. In other words, payment is made per treatment, as opposed to a bundled payment for multiple services delivered during a specific episode of care (e.g. a heart attack) or a monthly capitated amount paid for the ongoing care of a patient.

Fee-for-service is often blamed for high American health care costs because of the financial incentive the model provides for over-treatment. Over-treatment, in this context, means excess medical care and services that do not provide a material improvement in health outcomes for a patient and in some cases harm a patient.


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