What is one of the key limitations of the fee-for-service reimbursement model?

The fee-for-service reimbursement model is primarily based on the quantity of services provided rather than the quality of care or health outcomes. This structure incentivizes healthcare providers to perform more procedures or services since they receive payment for each one, regardless of necessity. As a result, there is a potential for overutilization of healthcare services—patients might receive tests, treatments, or procedures that are not essential for their health. This not only raises overall healthcare costs but can also expose patients to unnecessary risks and complications.

Understanding this limitation is crucial in discussions about healthcare policy and reform, as it highlights the need for models that connect payment more closely with the quality of care delivered, such as value-based care models.