How does rate setting differ between fee-for-service and value-based care models?

• A. In fee-for-service, rates are tied to unit services; in value-based care, rates are influenced by quality, outcomes, and capitated payments.
• B. In fee-for-service, rates are influenced by quality and outcomes.
• C. Rate setting is fixed and uniform across all models.
• D. In value-based care, rates are fixed per service regardless of outcomes.

Answer: (D)

Rate setting differentiates fee-for-service from value-based care by what drives payment. In fee-for-service, reimbursement is tied to each unit of service delivered—every test, visit, or procedure has a set price, so payments increase with volume regardless of outcomes. In value-based care, payments are linked to quality and patient outcomes and often use arrangements like capitation (a fixed amount per patient per period) or bundled/shared-savings models. This means the total payment depends on performance on defined metrics and risk-sharing arrangements, not simply on the number of services provided. Consequently, the idea that payments in value-based care are fixed per service regardless of outcomes does not fit how these models incentivize care quality and efficiency.