Which reimbursement methodology is considered traditional for healthcare insurance?

The reimbursement methodology considered traditional for healthcare insurance is indemnity or fee-for-service (FFS) payment. This model operates on a straightforward principle where healthcare providers are paid for each service they provide to patients. Under this arrangement, services are billed individually, encouraging providers to offer a wide array of services since they are compensated based on the volume of care rather than the quality or outcomes.

The FFS payment model allows patients a high degree of freedom in choosing their healthcare providers, as there are typically fewer restrictions regarding provider selection compared to other models. One significant characteristic of this methodology is its common use prior to the growth of managed care plans that introduced alternative reimbursement structures aimed at controlling costs and managing care more effectively.

In contrast, bundled payment systems, capitation payment models, and indirect reimbursement strategies represent more modern approaches aimed at addressing some of the challenges associated with traditional FFS, such as rising healthcare costs and the need for coordinated care. These methods differ fundamentally in how they incentivize providers and manage healthcare expenses.