South Carolina Insurance Practice Exam

A health care provider claim may be settled using which of the following payment methods?

1. Capitation

2. Fee-for-service

3. Bundle payments

4. Global payments

The correct answer is: Fee-for-service

The fee-for-service payment method is a significant aspect of health insurance and healthcare provider claims because it allows providers to charge for each individual service they perform. Under this model, the provider receives a separate payment for each specific procedure or visit, which promotes a direct correlation between services rendered and payment received. This method offers transparency and straightforwardness, making it easy for both patients and insurers to understand the charges associated with healthcare services. Fee-for-service is commonly used in many insurance plans, allowing healthcare providers to submit claims for each service performed. This model can often lead to higher costs for patients and insurers because there is less emphasis on cost control and more emphasis on the volume of services delivered. Other payment methods like capitation, bundle payments, and global payments involve different approaches to reimbursement and can sometimes limit the provider's ability to bill for each individual service. Capitation involves a set fee for providing a range of services over a specific period, bundle payments group payments for multiple services related to a single condition or treatment episode, and global payments cover all costs associated with a patient’s care for a specified period. These systems may not suit all providers, particularly those offering a wide array of individual services, and thus fee-for-service remains a fundamental method in healthcare claims.