Why Is It Argued That the Fee-For-Service Method of Determining

question 39

Multiple Choice

Why is it argued that the fee-for-service method of determining medical expenses has contributed to rising health care costs?

• A) It rewards health care providers who prescribe the most services.
• B) Insurance companies must pay the full amount of services provided.
• C) The practice of preventive health care is discouraged.
• D) Too many people use health care services.

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Definitions:

Variable Cost

Costs that vary directly with the level of production output, such as raw materials and labor costs directly involved in production.

Units

Measurements or quantities of a product or service that are produced or sold.

Sold

The past tense of sell, indicating that a transaction where goods were exchanged for money has been completed.

Conversion Cost

The combination of direct labor and manufacturing overhead expenses, representing the costs required to convert raw materials into finished products.