Fee For Service (FFS)

A Fee for Service plan is one of the many types of health plans that are offered by health insurance carriers. A Fee for Service plan is the most simplistic of all of the plan types since standard Fee for Service plans are not considered managed care plans.

The patient is seen by any doctor they choose. There are no provider directories to look through in order to locate an in network provider.

  • No referral or any pre-approvals are needed.
  • The claims are billed to the health carrier but there is no need to try and figure out allowed amounts or contracted rates because regardless of what the health carrier ultimately pays toward that claim, the balance is deemed to be the patient’s liability.

Most health carriers will not just pay off the billed amount, the claim will pass through some type of pricing data. Usually for Fee for Service plans, that data is Usual, Customary and Reasonable (UCR). 

Let’s look at an example.

Dr. Smith performs an office visit for $200.00 and a chest x-ray for $100.00 and he bills the claim to the insurance company for his normal rate of $300.00. In spite of the fact that no in network arrangement exists, the health carrier will still seek ways to price this claim. After being priced, the health carrier determines that $150.00 for the office visit and $50.00 for the x-ray is accepted. The plan allows $200.00 instead of the billed amount of $300.00. The patient is responsible for the difference.

Since Fee for Service plans were written so that the plan participants would share in the cost of healthcare, members are required to pay the deductible and co-insurance amounts.


Let's look at another example of how a payment would be made on a standard fee for service plan.

James has a Fee for Service plan. He becomes ill and is seen in the emergency room. His total bill is $3500.00. 

Carrier pays $2720.00

Patient pays $780.00 ($100.00 deductible + $680.00)

Standard Fee for Service plans are the most expensive plans to purchase because they do not have the managed care component that helps to control costs; contracted providers that accept reduced rates, more front end controls and requirements, etc.

Note: For the purpose of this article, Standard Fee for Service means that the Fee for Service plan is not part of a managed care plan.


Advantages to Members Participating in FFS Plans

  • Members have the freedom to select any doctor and not worry about in network or out of network.
  • They can see any doctor or specialist without having to wait for a referral or preapproval.
  • Plan is easier to understand and out of pocket is easy to predict. Usually 20% of billed will be expected on all charges.

Disadvantages to Members Participating in FFS Plans

  • The member can expect to pay more out of pocket because the provider is not required to accept the health carrier's allowed amounts. The provider can bill what he wants and make the patient responsible for any amounts not paid by insurance.
  • Due to the unpredictability of UCR rates, a member will not be able to determine how much their health carrier will pay for a service.
  • Higher premium costs.

Advantages to Providers Participating in FFS Plans

  • Doctors can expect 20% of costs.
  • No need to worry about which methodology will be used to calculate the claim.
  • Plan will be easier to understand.
  • Patients can be billed for any non-covered charges.

Disadvantages to Providers Participating in FFS Plans

  • Very few employers choose FFS plans resulting in fewer patients with FFS plans.

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