What does the term 'fee-for-service' refer to in a medical billing context?

The term 'fee-for-service' in a medical billing context refers to a compensation model where healthcare providers are paid for each individual service or procedure they perform. This model contrasts with others that may involve a predetermined payment scale or capitation payment structures.

In fee-for-service, each visit, test, or treatment generates a separate payment based on the price associated with that particular service. This means that the healthcare provider bills the insurance company or the patient for every service rendered, leading to a clear, itemized account of treatments and costs. The model encourages providers to offer more services, as they receive direct payment for each procedure.

While other billing structures impose limits or flat fees irrespective of the number of services utilized, fee-for-service maintains a direct correlation between the services provided and the payment received, which is a significant aspect of its definition.