What payment method is based on provider charges?

The payment method based on provider charges is fee for service. This approach allows healthcare providers to bill separately for each service rendered to a patient. Providers charge specific amounts for individual services, tests, and procedures, and payment is made based on those established charges.

Under this method, the reimbursement is directly tied to the volume and types of services provided, meaning that the more procedures or consultations a provider performs, the higher the reimbursement will be. This model encourages providers to deliver more services, as they are compensated for each individual service provided to the patient.

In contrast, capitation involves a fixed payment per patient regardless of the number of services provided, which does not directly relate to the charges for specific services. Global payment involves a single payment that covers all services for a related treatment episode or condition, while bundled payment groups multiple services into one payment, often for a specific procedure or set of procedures, again deviating from direct provider charges for each service.