Question 1Briefly describe a fee-for-service and a capitated physician payment model. Can you name one reason a physician might prefer each?

Fee-for-service and capitated physician payment models are two common methods of payment in the healthcare industry.

1. Fee-for-service (FFS): This is a traditional method of payment where physicians and healthcare providers are paid for each service they provide such as tests, procedures, or other healthcare services. The payment is usually determined by the type, quality, and quantity of the service provided.

Reason a physician might prefer FFS: A physician might prefer this model because it allows them to bill separately for each service they provide. This can potentially lead to higher income if they provide a large number of services or procedures.

2. Capitated Payment Model: In this model, physicians or healthcare providers are paid a set amount for each enrolled person assigned to them, per period of time, whether or not that person seeks care. The amount is determined by the average expected healthcare utilization of that patient, with greater payment for patients with significant medical history.

Reason a physician might prefer Capitated Payment: A physician might prefer this model because it provides a predictable and steady income stream. It also encourages efficiency because providers are rewarded for preventing unnecessary healthcare services.