Final answer:
A Health Maintenance Organization (HMO) pays providers a set amount per member per month via a capitation system, which stands in contrast to a fee-for-service system. HMOs aim to reduce healthcare costs through preventive care. This is different from a deductible, which is an out-of-pocket expense for the insured before insurance starts paying.
Step-by-step explanation:
The concept described in the question refers to a payment method adopted by Health Maintenance Organizations (HMOs), where healthcare providers are paid a fixed amount for each member each month, a system referred to as capitation. This amount is paid regardless of how many or few services the member uses. In contrast, a fee-for-service model compensates providers based on the individual services they deliver to patients.
An HMO provides a cost-effective structure for healthcare delivery, focusing on preventive care and utilizing a network of providers who agree to adhere to its payment terms and conditions. It essentially aims to manage the overall healthcare costs by streamlining the services provided.
The term deductible differs from these models as it represents an out-of-pocket cost that insurance policyholders must pay before their insurance coverage begins to pay for services.