Question

What is the key difference between a fee-for-service healthcare system and a system based on health maintenance organizations?

a. Fee-for-service focuses on prevention, while HMOs focus on treatment
b. Fee-for-service does not charge fees, while HMOs do
c. Fee-for-service does not allow choice of healthcare providers, while HMOs do
d. Fee-for-service reimburses for each service, while HMOs emphasize prepaid comprehensive care

Answer 1

The main difference lies in the reimbursement model: fee-for-service systems pay for each service provided, whereas HMOs pay a fixed rate per enrolled patient, irrespective of services used.

Step-by-step explanation:

The key difference between a fee-for-service healthcare system and a health maintenance organization (HMO) is how medical care providers are reimbursed. In a fee-for-service system, providers are paid for each service they perform, which might encourage the provision of additional services. In contrast, an HMO pays a fixed amount per person enrolled in the plan regardless of the number of services provided, incentivizing providers to manage resources efficiently and potentially limit unnecessary services.