Question

Which of the following is described when a selected group of practitioners, in a certain area, agrees to provide services at a pre-determined cost on a fee-for-service basis?

A) Health insurance
B) PPO (Preferred Provider Organization)
C) HMO (Health Maintenance Organization)
D) Managed care

Answer 1

A group of practitioners offering services at a predetermined fee-for-service rate is known as a Preferred Provider Organization (PPO), which differs from HMOs in payment structure and helps reduce adverse selection in the insurance market.

Step-by-step explanation:

The selected group of practitioners who agree to provide services at a pre-determined cost on a fee-for-service basis is described by a Preferred Provider Organization (PPO). Unlike Health Maintenance Organizations (HMOs), which pay a fixed amount per enrollee regardless of the number of services provided, PPOs allow patients to visit any doctor or specialist within the provider network at pre-negotiated rates, though typically PPOs also cover a portion of the cost for out-of-network services. Moreover, this system helps mitigate adverse selection by offering a network of providers at lowered cost, making it more attractive for individuals regardless of their risk levels.