What term describes a health care payment system where the provider is paid for each service rendered?

• A. Capitation
• B. Salary
• C. Fee-for-service
• D. Per diem

Answer: (C)

Fee-for-service describes a payment model where the provider earns a separate payment for each service delivered, such as an office visit, test, procedure, or prescription. This structure ties compensation directly to the number and type of services provided, which can incentivize higher utilization because income increases with volume. It differs from capitation, where the provider is paid a fixed amount per patient each month regardless of services; from a salary, where compensation is a fixed wage; and from a per diem arrangement, which pays a daily rate. Hence, paying for every service rendered is the essence of fee-for-service.