Final answer:
Pre-hospitalization authorization is a feature of managed care designed to control healthcare costs by requiring insurer approval before hospital services are provided, aligning with the managed care model of managing utilization and expenses.
Step-by-step explanation:
Pre-hospitalization authorization is considered an example of managed care. Managed care organizations require this type of authorization as a way to control costs and manage the utilization of health services. By requiring pre-hospitalization authorization, the insurer can assess the necessity of the proposed services and make decisions on whether the care should be provided outside of the hospital setting or if it is even necessary. This contrasts with a fee-for-service system, where providers are reimbursed for each service rendered, which may lead to an incentive for over-utilization of healthcare services. Adverse selection is a related concept where individuals with higher health risks are more likely to maximize their health insurance benefits, potentially leading to increased costs for insurers.