Medicare Glossary

Definitions for common Medicare terms

fee-for-service

DEFINITION: Fee-for-service is a system of health care payment in which a provider is paid separately for each particular service rendered. Original Medicare is an example of fee-for-service coverage, and there are Medicare Advantage plans that also operate on a fee-for-service basis.

Alternatives to fee-for-service programs include value-based or bundled payments, in which providers are paid based on outcomes and efficiency, rather than for each separate procedure that they perform.