Final answer:
The question covers a type of health insurance plan that behaves like a PPO but has characteristics of an HMO, encouraging members to use in-network providers by potentially making them responsible for full costs outside the network.
Step-by-step explanation:
The student's question pertains to a specific type of health insurance plan which combines features of Preferred Provider Organizations (PPOs) and Health Maintenance Organizations (HMOs). These health plans are known for providing incentives for members to stay within the network of approved providers, and they typically assign higher costs to services obtained outside the network. In fact, if you choose a provider outside of the network, you may be responsible for the entire cost of the visit, making it crucial for policyholders to understand their insurance terms and network coverage. This structure is designed to minimize moral hazard and adverse selection, as higher out-of-pocket costs discourage overuse of medical services and ensure that people with higher health risks are not the only ones opting for the insurance.