Question

A __________ is a selected group of hospitals and medical practitioners in a given area who have joined together in an effort to reduce medical costs:

Option 1: Health Maintenance Organization (HMO)
Option 2: Preferred Provider Organization (PPO)
Option 3: Exclusive Provider Organization (EPO)
Option 4: Point of Service (POS)

Answer 1

A Health Maintenance Organization (HMO) is a group of medical entities working together to lower costs, providing a fixed payment per patient rather than payment based on services rendered.

Step-by-step explanation:

A health maintenance organization (HMO) is a selected group of hospitals and medical practitioners in a given area who have joined together in an effort to reduce medical costs. HMOs reimburse medical care providers according to the number of patients they handle, providing a fixed amount per person regardless of how many services are provided. This system contrasts with the fee-for-service model, where providers are paid based on the services they deliver. HMOs aim to reduce the moral hazard by focusing on healthcare provider incentives, encouraging the efficient use of medical resources and limiting unnecessary services. These strategies are part of an effort to shift the structure of healthcare to manage costs more effectively and mitigate issues like adverse selection in insurance markets.