Question

Which of the following statements about fee for service reimbursement is incorrect?

1) Fee for service reimbursement is a payment model where healthcare providers are paid for each service they provide.
2) Fee for service reimbursement encourages overutilization of healthcare services.
3) Fee for service reimbursement is a cost-effective payment model.
4) Fee for service reimbursement can lead to fragmented and uncoordinated care.

Answer 1

Statement 3 about fee for service being a cost-effective model is incorrect. Fee for service can drive overutilization and lead to fragmented care, contrasting with fixed-payment models like HMOs that incentivize efficient care management.

Step-by-step explanation:

Among the statements given about fee for service reimbursement, the incorrect one is Statement 3) Fee for service reimbursement is a cost-effective payment model. This statement is incorrect because fee for service reimbursement typically encourages healthcare providers to perform more services, and more services can lead to higher healthcare costs overall. It can sometimes result in overutilization of healthcare services, as providers have financial incentives to provide more treatments or tests, which might not always be necessary.

Further, fee for service reimbursement can contribute to fragmented and uncoordinated care, as providers focus on the quantity rather than the coordination or quality of care. This is in contrast to health maintenance organizations (HMOs), where providers receive a fixed payment per patient, which encourages more efficient management of care and potentially fewer unnecessary services.

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