Which statement best describes fee-for-service payment?

• A. Salary-based payment
• B. Bundled payments
• C. Payment for each service provided, regardless of quality or need
• D. Capitation

Answer: (C)

Fee-for-service is a payment model in which providers are paid for each service performed, such as visits, tests, or procedures. This means the total payment rises with the number of services delivered, which is why it’s described as payment for each service provided, regardless of quality or need. This differs from salary-based payment, where the clinician receives a fixed salary; bundled payments, where a single payment covers all services for a defined episode or condition; and capitation, where a provider is paid a set amount per enrolled patient over a period, regardless of how many services are used. The key point is that fee-for-service creates a direct link between volume of services and revenue, which can influence utilization.