Fee-for-service (FFS) is the dominant healthcare payment model in which a medical practice is paid a separate amount for each service rendered — each office visit, procedure, or test billed individually to the payer using CPT codes.
In fee-for-service healthcare, every discrete service generates a separate payment event: the practice bills a CPT code for each service, the payer applies a contracted reimbursement rate (or the Medicare fee schedule for Medicare patients), and the practice collects the resulting allowed amount. Fee-for-service incentivizes volume — practices that see more patients and perform more procedures generate more revenue, independent of whether the care was necessary or produced good outcomes. The FFS model is the foundation for wRVU calculation: CPT codes, which define payment events under FFS, are the unit to which CMS assigns wRVU weights, making wRVU tracking inherently a fee-for-service construct. Revenue cycle analytics infrastructure — tracking denial rates, collection rates, and AR aging by CPT code and payer — is designed primarily for fee-for-service environments, where payment depends on successful adjudication of individual claims. The ongoing shift from pure fee-for-service to value-based care and capitation introduces different revenue dynamics and analytics requirements, though most outpatient practices still derive the majority of revenue from fee-for-service or fee-for-service-equivalent arrangements.
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