Exploring Fee-for-Service, Direct Primary Care, and Value-Based Care
Updated October 21, 2026
Originally Published January 14, 2025
Healthcare is changing fast, and independent practices are feeling it. Reimbursements keep shrinking (thanks, Medicare), the admin pile never does, and somewhere in the middle you’re supposed to pick the right billing model. Do you stick with fee-for-service (FFS)? Switch to direct primary care (DPC)? Dive into value-based care (VBC)? There’s no one-size-fits-all answer, only the best fit for your practice. Let’s walk through what each model means for physicians, patients, and the admin teams and billers who keep the whole operation running.
Fee-for-Service (FFS): The Classic Approach
Fee-for-service has been the standard billing model for decades. For doctors, the path to revenue is clear: you get paid for every visit, test, and procedure. However, staying profitable in this model is becoming more challenging. For 2027, the proposed Medicare conversion factor falls to $32.84, a 1.68% decrease from 2026, and other payers will likely follow suit. Practices that prioritize efficiency and automation can more easily navigate these challenges and thrive using a FFS model.
For patients, FFS provides freedom. They can choose their providers and access care without being tied to a specific plan. The flip side? Out-of-pocket costs can pile up, especially for those needing frequent visits. For office managers and billers, FFS means managing a high volume of claims, coding, and insurance reimbursements. The workload can feel overwhelming, but the right tools and workflows can make a huge difference in keeping the revenue cycle healthy.
As Medicare reimbursements shrink and administrative demands grow, many practices are looking for alternatives to FFS. Transitioning to a new model requires upfront investment in technology, new workflows, and patient education. But if done right, it can leave you with a more sustainable and patient-focused practice.
Direct Primary Care (DPC): Simpler, Smarter, Freer
Direct primary care is a breath of fresh air for many physicians. Instead of chasing down insurance claims, you charge a flat monthly or annual membership fee. That means financial predictability and more time for actual patient care. For physicians frustrated by shrinking reimbursements, DPC can be a potential solution. With private physician ownership dropping from 60.1% in 2012 to 42.2% in 2024, DPC gives practices a way to remain independent and competitive.
Patients appreciate DPC’s simplicity and personalized care. Predictable costs make budgeting easier, and a closer relationship with their doctor is a pretty great perk. And, starting January 1, 2026, people in certain DPC arrangements can contribute to an HSA and pay DPC fees tax-free from it. However, patients may still need traditional insurance for specialists, hospital visits, or medications, which adds a layer of complexity to an already complicated system.
For office managers and billers, DPC drastically simplifies billing. Instead of juggling insurance claims, the focus shifts to managing memberships and communicating the scope of services clearly to patients. This transition can be appealing for practices of all sizes, but success depends on strong patient communication and a focus on attracting and retaining members.
Value-Based Care (VBC): Focus on Outcomes
Value-based care flips the traditional model by prioritizing quality over quantity. Instead of being paid for every visit or procedure, physicians are rewarded for improving patient outcomes, focusing on preventive care and long-term health management. For doctors, it can be rewarding, but also demanding, as meeting performance metrics becomes critical. The upside? More consistent income and a more collaborative approach to care. Larger practices are well-positioned to succeed in this model with their high volume of encounters.
Patients benefit from VBC’s emphasis on wellness and coordinated care. It’s a model designed to deliver better long-term health outcomes. However, patients may need to adjust to new approaches, such as population health management, which focuses on preventive care and managing chronic conditions.
For office managers and billers, VBC requires careful tracking of data and outcomes. But with the right tools and analytics, billers can play a pivotal role in turning data into actionable insights that drive success. While transitioning to VBC takes time and effort, the result is often a more dynamic and sustainable care model.
Questions to Help Guide Your Practice
Not sure which path fits? Start by asking yourself:
What are your financial goals? Do you want predictable income and better patient outcomes, or does the tried-and-true FFS model still serve you well?
How will your patients respond? Would they embrace predictable fees, outcome-focused care, or pay-as-you-go services?
Are you ready to invest in the resources needed for success? Technology, training, and strategy all matter when you make a change.
The Bottom Line
Whichever model you choose, the goal is the same: excellent care, delivered by a practice that’s built to last. Fee-for-service, direct primary care, and value-based care each offer unique opportunities to build a thriving, patient-centered practice. Match the model to your goals, and you’ll be in a much better position to handle whatever healthcare throws at you next. And wherever you land, OpenPM is here to help.
