Fee for Service: How Long Will It Be Around?

Kenneth J. Terry, MA


October 14, 2011

In This Article


There's good news and bad news about fee for service, the system under which most US physicians are reimbursed today.

The good news, for those who are comfortable with fee for service, is that it's not going away anytime soon.

The bad news is that fee for service will likely not just continue in its current form, nor will rates remain the same.

Kent Giles, a healthcare consultant in Atlanta, explains that fee for service is one of the reasons why healthcare costs are twice as high in the United States as in other countries. "Beyond the fact that we pay doctors more here, we reward overutilization of procedures," he notes. "If doctors' payments are cut, they do more procedures. We have to move away from fee for service to control healthcare spending."

If doctors' payments are cut, they will do more procedures.

Some doctors expect this to happen and are prepared for it. New Orleans urologist Neil Baum, a clinical professor of urology at Tulane University, is one of them. But few of his colleagues think the same way. "The majority of doctors are living like an ostrich with their head in the sand and think that fee for service is going to last forever," he says. "But I don't think it will. The healthcare system we have now is unsustainable."

Whichever way you see things, it's clear that some kind of change is coming. Here are the views of a few experts and practicing physicians on where fee for service is likely to go in the next decade.


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