Fee For Service (FFS): A Case Study

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Fee for service (FFS), which compensates physicians for each service they deliver, generates a strong incentive to perform a high volume of tests and services, regardless of whether those services improve quality or contribute to a broader effort to manage care. As such, I feel it is the largest contributor of our unsustainably high health care costs and cost inflation. FFS is the most common payment model for health care in the United States. Currently, about 82 percent of all private workers who are enrolled in health insurance are in fee-for-service plans (U.S. Department of Labor, Bureau of Labor Statistics, 2013).
Another reason I chose the FFS system as the largest contributor is because it also plays a significant role in contributing to the problem of the cost impact of other drivers of high health care costs such as medical technology and fragmentation of care. For example, by encouraging the application of new medical technologies to all patients regardless of whether they are likely to benefit from that technology, the FFS environment plays a large role in cost increases that result from medical technology. FFS payment contributes to fragmentation of the health care delivery system because when providers are paid on the basis of service volume rather than on the basis of taking …show more content…
By including provisions aimed at accelerating the transition from the fee-for-service system to a value-based payment system structured around financial incentives for reduced hospital readmissions and meeting federal performance standards, the Affordable Care Act of 2010 encourages health care providers and systems to participate in care coordination activities. This new payment arrangement encourages and supports the development of teams, networks, and integrated care system relationships (Traver,

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