Fee for Service (FFS) is a model of healthcare payment wherein providers and physicians are reimbursed based on the number of services they provide. This is in contrast to bundled payments, which are fixed amounts paid for a bundle of services or all the care a patient is expected to need.
The term is sometimes used as shorthand for Medicare Private Fee for Service, a program that offers two-part insurance — hospital insurance and supplementary medical coverage for eligible citizens.
What is Covered Under Medicare Fee for Service?
Under Medicare Fee for Service, hospital insurance will generally cover hospitalization, surgical procedures, admission to a nursing facility, hospice, and healthcare at home.
The supplementary insurance of the Medicare Fee for Service program provides coverage for services provided by physicians, medical equipment, outpatient care, and specific preventive care.
In recent years, healthcare industry observers have questioned the FFS payment model. Critics contend that FFS encourages physicians and healthcare providers to order as many services as possible, as they will be paid for each of them. Others have said that the Medicare Fee for Service plan is a wasteful use of the tax dollars that fund federal healthcare programs.
The Value-Based Care (VBC) model is seen as the answer to these criticisms. VBC programs reimburse providers and physicians for the entirety of a patient’s treatment. Proponents of the VBC model contend that it focuses more on the quality of care rather than the number of services provided.
The Future of Fee for Service
The Center for Medicare & Medicaid Services (CMS) aims to move healthcare in the US, including Medicare, toward VBC by the year 2030.
As FFS has long been the standard reimbursement model in the healthcare industry and is still widely used, it’s unclear if that goal will be met. However, many private healthcare providers are already making the changes necessary to adopt the VBC model.
How TempDev Can Help You With Fee for Service
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