Inconsistently used, sometimes synonymous with insurance, sometimes refers to any payment ahead of time to a provider for anticipated services (such as an expectant mother paying in advance for maternity care), sometimes distinguished from insurance as referring to payment to organizations (such as HMOs, prepaid group practices and medical foundations) which, unlike an insurance company, take responsibility for arranging for and providing needed services as well as paying for them.
Payment in advance. Under a prepayment system, a fee is paid to a third party payer, such as a health maintenance organization (HMO), Blue Cross/Blue Shield (BC/BS), or commercial insurance, and the third party agrees to pay for stipulated care when it is provided.