Which statement correctly describes Fee-for-Service in health coverage?

Which statement correctly describes Fee-for-Service in health coverage?

• A. Benefits are paid based on actual services provided.
• B. Benefits are based on a designated capitation fee regardless of services.
• C. It requires preauthorization for all services.
• D. It covers only hospital stays.

Answer: (A)

Fee-for-Service means the plan pays for each specific service that is provided. Each bill reflects the actual service performed—like an office visit, a lab test, or a procedure—and payment is made for that service rather than a single bundled amount. This setup contrasts with capitation, where a fixed per-member fee is paid regardless of how many services are used, and it isn’t limited to hospital stays. While some plans may require preauthorization for certain services, that isn’t an inherent feature of Fee-for-Service.

Fee-for-Service means the plan pays for each specific service that is provided. Each bill reflects the actual service performed—like an office visit, a lab test, or a procedure—and payment is made for that service rather than a single bundled amount. This setup contrasts with capitation, where a fixed per-member fee is paid regardless of how many services are used, and it isn’t limited to hospital stays. While some plans may require preauthorization for certain services, that isn’t an inherent feature of Fee-for-Service.