Fee For Service Model

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Fee for Service payment systems are based on a “budget”- that is, a prediction of how much it will cost to treat a particular patient population or a particular condition.(1) Fee for service is, by design, a less complex model. It has clear definitions and expectations. It has predictable outcomes. The provider knows in advance how much reimbursement a particular procedure of service will bring. Fee for service models can also be used in combination with other models. Newer models emerging now are more complex and most health care entities are ill equipped to transition to newer models. The Fee for Service model has positively influenced the health care system in several ways. It has allowed consumers to budget for health care services in that services have predetermined fees. The fee for service model has been critical to the health care system in that it has been a relatively simple system that was easy to follow and easy to understand for consumers.

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