Final answer:
The termination of patients within an HMO should be handled by balancing ethical care and financial considerations, focusing on healthcare provider incentives and mitigating moral hazard while ensuring good patient health outcomes.
Step-by-step explanation:
The most appropriate method in handling the termination of patients within a Health Maintenance Organization (HMO) centers on maintaining a balance between ethical patient care and financial sustainability. Within an HMO, where providers receive a fixed payment per enrolled patient, there is an incentive to manage resources effectively. Therefore, the termination process should involve a thorough review of the patient's needs and costs, ensuring that care decisions align with the HMO's policies without compromising patient health outcomes. This approach mitigates potential instances of moral hazard by focusing on healthcare provider incentives to deliver cost-effective care, without leading to worse health problems or higher costs down the line.