Fee-for-service (FFS)
Fee-for-service (FFS) is a payment method in which a health plan or program pays a provider a separate amount for each covered service delivered, based on the specific services billed rather than a fixed per-member payment.
Updated
Fee-for-service (FFS) is a reimbursement model in which each individual covered service, procedure, or item is billed and paid separately. Payment is tied to the volume and type of services rendered: the more distinct covered services a provider furnishes and documents, the more separate payments can be generated, each subject to the payer's coverage rules and payment rates.
In Medicaid specifically, FFS is one of the two broad ways states arrange to pay for care, the other being managed care. Medicaid is jointly funded by the federal and state governments and administered by each state within federal requirements, so the details of FFS payment, covered services, and the rates paid are set at the state level and vary from state to state and over time. Under Medicaid FFS, the state Medicaid agency (or its claims administrator) receives claims from enrolled providers and pays them directly according to the state's approved payment methodology.
Because FFS pays per service, claims must identify each service using the standardized code sets maintained for procedures, items, and diagnoses, and are submitted on the standardized institutional or professional claim formats. Whether a given service is covered, how it must be documented, and what it pays depend on the applicable program, state plan, and effective date rather than on any single universal schedule.
In practice
In an FFS arrangement, a provider furnishes covered services, records what was done, and submits a claim listing each billable service with the appropriate procedure, item, and diagnosis codes. The payer adjudicates the claim against its coverage policies and payment rates and issues payment for the services it determines are covered and correctly billed. Documentation that supports the specific services billed is central, because payment and any post-payment review are keyed to the individual services claimed.
The exact rates, covered-service lists, prior-authorization requirements, and billing rules differ by program (for example, Medicaid versus Medicare), by state Medicaid plan, by the provider's enrollment and contract, and by the date of service. For those specifics, the authoritative program and state sources should be consulted rather than relying on a fixed figure, because these amounts and rules are set by each program and state and change over time.
Commonly confused with
- Managed care (capitation): Under Medicaid managed care, the state typically pays a managed care organization a fixed per-member, per-month amount (capitation) to arrange care, rather than paying separately for each service as in FFS. Many states use managed care for most enrollees while retaining FFS for certain populations or services.
- Value-based / alternative payment models: These tie payment partly to quality or total cost of care rather than paying purely per service. FFS is volume-based, whereas value-based models adjust or bundle payment around outcomes, episodes, or performance.
- Bundled or episode-based payment: A single payment covers a defined group of services for an episode of care, unlike FFS, which pays each service separately.