Fee-for-service (FFS) is defined as

Fee-for-service (FFS) is defined as

• A. A system that pays a fixed amount per case.
• B. Reimburses for each individual service performed.
• C. A prepaid plan with network restrictions.
• D. A universal system financed by taxes.

Answer: (B)

Fee-for-service means providers are reimbursed for each individual service performed. Each visit, test, procedure, or consultation is billed separately, so payment rises with the number of services delivered. This setup makes utilization directly tied to revenue, which can incentivize more services and potentially higher overall costs, unless paired with utilization controls. This differs from a fixed payment per case (which bundles services into one payment for an episode), a prepaid plan with network restrictions (an HMO-style arrangement), or a universal system funded by taxes (single-payer).

Fee-for-service means providers are reimbursed for each individual service performed. Each visit, test, procedure, or consultation is billed separately, so payment rises with the number of services delivered. This setup makes utilization directly tied to revenue, which can incentivize more services and potentially higher overall costs, unless paired with utilization controls.

This differs from a fixed payment per case (which bundles services into one payment for an episode), a prepaid plan with network restrictions (an HMO-style arrangement), or a universal system funded by taxes (single-payer).