Which payment model incentivizes volume in healthcare financing?

• A. Fee-for-service
• B. Bundled payment
• C. Capitation
• D. Pay-for-performance

Answer: (A)

The movement of incentives is driven by how payment is tied to activities. In fee-for-service, providers are paid for each individual service delivered—every visit, test, or procedure brings reimbursement. That direct link between activity and payment encourages increasing the number of services to boost revenue, so volume rises as a primary driver of income.

Other models shift incentives away from sheer quantity. Bundled payments set a single price for a defined episode of care, pushing efficiency and avoidance of unnecessary services. Capitation gives a fixed amount per patient per period, encouraging cost containment and care coordination rather than expanding service counts. Pay-for-performance offers extra pay for meeting quality and outcome benchmarks, focusing on value rather than volume.

So, the model that drives higher utilization by paying for more services is fee-for-service.