Which payment system reimburses healthcare providers based on the services rendered?

The charge-for-service payment system is a method where healthcare providers are reimbursed for each specific service they deliver to a patient. This model allows providers to bill separately for each individual service, which can include office visits, procedures, diagnostic tests, and any other medical interventions performed. The fundamental principle of this system is that healthcare providers receive payment according to the volume and complexity of services provided rather than a predetermined amount for a patient’s care over time.

This system aligns reimbursement closely with the actual services delivered, incentivizing providers to offer more treatments and interventions since payments are directly tied to the quantity and type of services rendered. As a result, this model can lead to increased utilization of services, which can be beneficial for patients needing extensive care; however, it can also lead to unnecessary tests or procedures if not managed properly.

In contrast, the capitation model provides a set payment per patient, regardless of the number of services provided, which focuses more on cost-control and preventive care. The prospective payment system sets fixed payments for a patient's care based on diagnosis rather than the actual services rendered. Flat-rate payment, similar to capitation, provides a fixed amount for a service or episode of care instead of variable pricing based on services performed.