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What is the difference between fee-for-service and capitation?

What is the difference between fee-for-service and capitation?

Fee-for-service (FFS) means that providers bill and are paid for each medical service delivered – physician visit, test or intervention, hospital day. Capitation means that providers are paid a monthly amount per beneficiary for all services or just some (e.g., primary care).

What is a fee-for-service payment model?

Fee-for-service is a system of health insurance payment in which a doctor or other health care provider is paid a fee for each particular service rendered, essentially rewarding medical providers for volume and quantity of services provided, regardless of the outcome.

What are capitation models?

Capitation is a model that pays a fixed amount to providers based on the number of patients they have or see. Meanwhile, fee-for-service (FFS) pays based on the procedures or services that providers perform. Both these systems are used in the U.S. healthcare system.

What does the fee-for-service model incentivize?

Fee for service provides very little or no reward for delivering holistic and value-based care. FFS incentivizes doctors to order unnecessary tests and procedures to generate more income, and encourages them to practice “defensive medicine.”

What is meant by capitation fee?

Capitation fee refers to an illegal transaction in which an organisation that provides educational services collects a fee higher than that approved by regulatory norms.

What are the pros and cons of capitation?


Pros Cons
The physician has better contract leverage in negotiation with payers Physician personal financial risk can be high if care of complex or chronically ill patients are taken in
Brings in certain standardization of information systems

What is capitation payment?

Capitation is a fixed amount of money per patient per unit of time paid in advance to the physician for the delivery of health care services.

What are capitation fees and how should they be accounted for?

A capitation fee is a fixed monthly payment made to a health care provider by a health care plan in exchange for a commitment to provide service to certain patients. Payment is made even if a patient never appears.

How does the capitation model of reimbursement work?

Capitation payment is a model of reimbursement in which the providers receive a fixed amount of money per patient. This is paid in advance, for a defined time, whether the member seeks care or not. Ideally, patients who have little utilization will naturally balance out with the patients who have higher utilization.

Why is capitation better than fee-for-service?

Capitation gives physicians control over their patients’ care instead of payers and also mitigates unnecessary spending. It also increases predictability of cost, administrative efficiency, and the use of telemedicine, which was difficult to bill for under traditional FFS models.

What are the benefits of fee-for-service?

List of the Pros of Fee for Service

  • Patients always receive access to the care that they require.
  • You get to decide what kind of treatment you want.
  • There is an unlimited choice of non-experimental treatments with fee for service.
  • Fee for service is not responsible for every healthcare cost problem people face.

Why managed care is better than FFS?

Compared with FFS, managed care can allow for greater accountability for outcomes and can better support systematic efforts to measure, report, and monitor performance, access, and quality. In addition managed care programs may provide an opportunity for improved care management and care coordination.

What are reimbursement models?

Healthcare reimbursement models are billing systems by which healthcare organizations get paid for the services they provide to patients, whether by insurance payers or patients themselves.

What is capitation method?

What is the main difference between the fee-for-service and capitation reimbursement methods quizlet?

7. What is the difference between fee-for-service reimbursement and capitation? A fee for service reimbursement is that it provides payment each time a service is offered or provided. Capitation reimbursement is based on covered lives or people instead of offered amount of services provided.

What are the pros and cons of fee-for-service?


Pros Cons
Encourages the delivery of care and maximizing patient visits Offers little or no incentive to deliver efficient care or prevent unnecessary care

Is capitation the future of fee-for-service payment?

The Fee-For-Service (FFS) payment model has increasingly been seen as costly and cumbersome overall to providers. Medicare programs highlighted the need to transition to a quality-based payment model, which is Capitation.

What is capitation and how does it work?

The traditional model of paying for individual services on a case-by-case basis is being challenged by the newly introduced alternative model known as capitation. Capitation is a quality-based system measured by health outcomes, patient satisfaction, and clinical compliance.

What is capitation method of reimbursement?

Capitation Method. This reimbursement method will be given the primary care provider or physician practice a set fee per year or month for each patient. This new model aims to offer a perfect balance of patient protection with incentives to restrain the costs. This method gives doctors, not the payers, more control over decisions about care,…

What is the difference between FFS and capitation in healthcare?

In capitation, doctors are paid a set amount for each patient they see, while FFS pays doctors according to what procedures are used to treat a patient. Both systems are in widespread use in the U.S. healthcare system, but FFS has been in decline over the past decade.