The New Health Care Lexicon

As our world changes, so does our language. This column presents definitions of terms that are part of the new health care reform lexicon.

HMO vs. PPO

Health-Maintenance Organization (HMO). A prepaid health plan in which doctors are paid a fixed fee to treat patients covered by the plan (see capitation). HMOs may employ physicians as salaried staff members or they may contract with a specific physician group (a closed panel) or with any physician in a community who can accept capitation (an open panel).

Preferred-Provider Organization (PPO). An organization that contracts with "preferred" physicians who agree to provide health care to subscribers for a discounted fee. Some PPOs require doctors to put part of their discounted fee into a risk pool. They get all or part of this money back if their charges don't exceed an annual limit.

------------------------ These definitions are reprinted with permission from the glossary of Revolution -- The New Health Care Takes Shape, authored by noted health-care futurist Russell C. Coile Jr. The published is Whittle Direct Books, 1993.