What is the key component of fee-for-service payment model?

In a fee-for-service payment model, the key component is that payment is made based on individual services that are delivered and billed separately. This means that healthcare providers are reimbursed for each specific service they provide to a patient, such as an examination, a procedure, or a test, rather than receiving a fixed salary or a set amount for a group of services. This model can incentivize providers to offer more services since their compensation directly correlates with the volume of care provided.

The other options point to different payment models or arrangements. For instance, annual salary payments reflect a capitation model where providers receive a fixed salary regardless of the number of services rendered. Bundled payments involve a single payment that covers multiple services related to a specific treatment or care episode, which is distinct from the fee-for-service approach. Discounts for prompt payment typically pertain to billing practices rather than the structure of payment for healthcare services.