Which statement about fee-for-service reimbursement is incorrect?

The statement regarding fee-for-service reimbursement that is identified as incorrect centers around how payment structures are organized. In a fee-for-service model, providers receive compensation based specifically on the volume and type of services they provide to patients. This system fundamentally relies on the individual actions taken by healthcare providers, such as tests, treatments, and procedures, rather than being a function of the number of covered lives in a plan.

Fee-for-service incentivizes providers to offer more services because their payment increases with the number of services rendered. This can lead to a situation where the quantity of care may sometimes overshadow the quality, as providers are rewarded for performing additional procedures rather than for patient outcomes.

Additionally, fee-for-service models typically promote patient choice, enabling patients to select providers based on preferences rather than being limited by a managed care framework, which may restrict options to specific provider networks.

Thus, the statement that payment is based on the number of covered lives does not accurately characterize fee-for-service reimbursement, which focuses on payment per service delivered rather than a fixed payment model influenced by enrollee numbers.