Final answer:
The insurance type where the insured pays a specific amount per service and the insurer pays the rest is called fee-for-service. Healthcare providers under this plan are reimbursed based on the individual services provided, contrasting with fixed-fee models like HMOs.
Step-by-step explanation:
A type of insurance whereby the insured pays a specific amount per unit of service and the insurer pays the rest of the cost is called fee-for-service. This health financing system operates under the principle that medical care providers are reimbursed according to the individual services they provide to patients. It’s different from other health insurance models like the Health Maintenance Organization (HMO) or Preferred Provider Organization (PPO).
In a fee-for-service plan, patients may be responsible for paying a deductible, which is an out-of-pocket expense before the insurance begins to cover costs. Once the deductible is paid, the insurance typically covers the remaining expenses at a certain percentage, and the insured may also pay a co-payment for services. This model encourages healthcare providers to offer more services since their payment is service-based, compared to an HMO which operates on a fixed fee basis regardless of the services provided.