Broadly speaking, a provider’s compensation for patient care activities can be earned through two different channels. In one channel, services are provided to patients in exchange for a fee that is specific to the service provided (fee-for-service or FFS). In the other, the provider is compensated for “standing ready” to provide services that may be needed during a specified time period, regardless of the nature or volume of services that will ultimately be provided (capitation contracts).

This chapter provides an overview of the revenue recognition model in ASC 606, Revenue from contracts with customers, and describes how it would be applied to transactions in the fee-for-service channel. Fee-for-service transactions are the predominant way in which health care providers in the US are compensated.