Fee for Service

Fee for service (FFS) is a payment model where your insurance plan pays health care providers a separate fee for each service they perform; every office visit, test, procedure, and prescription is billed individually. It's the traditional way health care has been paid for in the United States.

Under fee for service, you generally have more freedom to choose any doctor or hospital without needing referrals or staying within a network. You see a provider, they bill your insurance (or you), and the plan pays based on its allowed amount for that specific service.

The upside is flexibility: you can see specialists directly, go to any hospital, and don't need preauthorization for most services. The downside is cost. FFS plans tend to have higher premiums, and because providers are paid per service, there's less incentive to coordinate care or limit unnecessary procedures.

Most modern health plans (HMOs, PPOs, EPOs) have moved away from pure fee-for-service toward managed care models that include provider networks and some level of care coordination. Pure FFS plans are now relatively rare in the individual market, though the payment structure still underlies many employer-based and government plans.

Medicare Part B uses a fee-for-service structure (Original Medicare), where Medicare pays providers a set fee for each covered service. Beneficiaries can see any provider who accepts Medicare assignment.

If you prefer maximum flexibility in choosing providers and are willing to pay higher premiums and out-of-pocket costs, a fee-for-service arrangement may suit you, but for most families on the Marketplace, managed care plans offer better value.