A health plan that contracts with a specific network of physicians and hospitals to provide services at a discounted rate for enrollees is known as a

A health plan that contracts with a specific network of physicians and hospitals to provide services at a discounted rate for enrollees is known as a

• A. Preferred Provider Organization (PPO)
• B. Health Maintenance Organization (HMO)
• C. Point of Service (POS)
• D. Capitation Plan

Answer: (A)

This question targets understanding a managed care arrangement that negotiates discounted rates with a defined network of providers. That setup is a Preferred Provider Organization. The hallmark is cost savings when you use in-network doctors and hospitals, since prices are negotiated for those providers. You usually have the flexibility to seek care from out-of-network providers, but at higher out-of-pocket costs. In many PPOs you can see a specialist without a referral and you don’t have to designate a primary care physician, which distinguishes it from an HMO. Capitation refers to a payment method for providers, not the discount-network structure, and a POS plan blends features from HMO and PPO with different referral rules.

This question targets understanding a managed care arrangement that negotiates discounted rates with a defined network of providers. That setup is a Preferred Provider Organization. The hallmark is cost savings when you use in-network doctors and hospitals, since prices are negotiated for those providers. You usually have the flexibility to seek care from out-of-network providers, but at higher out-of-pocket costs. In many PPOs you can see a specialist without a referral and you don’t have to designate a primary care physician, which distinguishes it from an HMO. Capitation refers to a payment method for providers, not the discount-network structure, and a POS plan blends features from HMO and PPO with different referral rules.