What is the main difference between fee-for-service and bundled payments?

• A. FFS pays for each service; bundled payments reimburse for a set of services for a condition.
• B. Bundled payments reimburse for a set; FFS pays per service (swap).
• C. FFS is a fixed amount per patient; Bundled payments pay per visit.
• D. Bundled payments pay for premiums; FFS pays nothing.

Answer: (A)

The main idea here is how payment models incentivize care. Fee-for-service pays providers for each individual service, test, or procedure rendered. Bundled payments, by contrast, give a single, comprehensive payment for all the services needed to treat a specific condition or episode of care, often spanning pre- and post-acute care within a defined period. This setup encourages coordination and cost control across the care team, since the total amount is fixed and going over it can eat into the bundle’s value, while under the bundle is discouraged by quality/outcome expectations.

This description matches the correct choice because it succinctly contrasts per-service payments with a set, condition-focused bundle. For example, a knee replacement episode would be covered by one bundled payment that includes pre-op, surgery, and post-acute care, rather than paying separately for each service.