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Fee-For-Service vs Value-Based Care: What’s the Difference Between the Two Models?

A Whole Health Story
January 22, 2025

Fee-for-service has been the primary way to pay care providers for decades. As the healthcare industry continues to evolve, another payment and care delivery methodology has emerged: the value-based care model.
 

Rationale For Implementing Value-Based Care in a Healthcare Organization

The fee-for-service model pays healthcare providers for each service they provide. The more services delivered, the more the care providers are paid. This payment model creates an incentive to perform more services.  

Value-based care models reward care providers who deliver safe, high-quality care that results in the best health outcomes for consumers while also controlling overall cost of care. The shift to value-based care models moves the focus from quantity of services to the quality of care. Transitioning payment models from fee-for-service to value-based care demonstrates a commitment to partnering with care providers to improve consumers’ health and making healthcare more affordable.
 

What Is the Primary Difference Between Fee-For-Service and Value-Based Care?

These are the differences between fee-for-service and value-based care: 

Value-Based Care Model

  • Pays care providers based on the quality of care provided
  • Supports engagement between care provider and consumers
  • Leads to more collaborative relationships between payers and care providers
  • Prioritizes preventive services that keep consumers healthier and improves health outcomes
  • Reduces inefficient and wasteful healthcare practices that do not lead to improved consumer health outcomes

Fee-for-Service Model

  • Pays care providers based only on services provided, without regard to outcomes or quality
  • Creates a focus on volume of services provided
  • Could require less administrative effort

 

 

 

 

Making the Shift to Value-Based Care

Care providers that agree to participate in value-based care models receive extra support from payers in the form of accurate, focused, and timely data. Payers work closely with care providers to develop contracts and integrate services with outcomes in mind as well as to simplify administrative processes.

For value-based care to be successful, care providers will want to continue focusing on improving health outcomes, finding additional ways to engage consumers, and building trust. Working closely with payers to get the support, time, and information needed will foster even better health outcomes.

Continuing to move away from fee-for-service to value-based care can create a health system that is more interconnected and capable of improving health outcomes. In fact, the success of value-based care is evident in consumers’ better health outcomes. 

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