Fee for Service Contracts
Fee for Service Contracts:
- Each health service is priced and charged independently, without necessitating coordination between services
- Most common method of paying for healthcare
- Negotiated between insurers and other payers and providers
- For government payers, it is based on defined or administered rates often determined by a formula or funding levels
- Volume based care
- Constrained by coding guidelines and rules (i.e., CPT and ICD-9) that define what can be billed and paid
- No incentive to improve health of patient
- Perverse incentive to encourage office visit and volume, not quality of care
- The conversion factor may be different than the one used for surgery.
- Sometimes, health plans have different conversion factors for different types of services (radiology, laboratory, surgery, office visits, injections, etc.).