Final answer:
In a fee-for-service system, patients are billed for each individual health service they receive. This billing method contrasts with HMOs, where providers are paid a fixed amount. Patients may also pay deductibles, co-insurance, or co-payments as part of their health insurance plan.
Step-by-step explanation:
When patients are billed individually for each act of assistance they receive, including treatment by doctors, laboratory work, hospital visits, prescriptions, and other health-related expenses, this is known as a fee-for-service system. This is in contrast to a Health Maintenance Organization (HMO), where care providers are paid a fixed amount per person regardless of the number of services provided. With fee-for-service, patients may also encounter a deductible, which is the amount they have to pay out-of-pocket before insurance coverage starts paying for services. Furthermore, there may be additional cost-sharing mechanisms like co-insurance, where the patient and insurer share the costs at a certain percentage, and co-payments, which are fixed amounts paid by the patient for specific services.