Which statement about HMOs is true?

Which statement about HMOs is true?

• A. HMOs are not restricted by service areas.
• B. HMOs provide prepaid services but have no network.
• C. HMOs do not require referrals for specialists.
• D. HMOs are a prepaid health care plan that requires subscribers to reside within a service area.

Answer: (D)

HMOs are prepaid health plans that operate through a defined network of providers, with coverage tied to a specific geographic service area. This structure keeps costs controlled by requiring members to use in-network providers within that area, and, in most cases, to obtain referrals from a primary care physician to see specialists. Because of these features, the statement that HMOs are a prepaid health care plan that requires subscribers to reside within a service area is the accurate description. The other options don’t fit: HMOs do rely on a provider network and service-area restrictions, they aren’t restricted-free in geographic terms, and they typically do require referrals for specialist care.

HMOs are prepaid health plans that operate through a defined network of providers, with coverage tied to a specific geographic service area. This structure keeps costs controlled by requiring members to use in-network providers within that area, and, in most cases, to obtain referrals from a primary care physician to see specialists. Because of these features, the statement that HMOs are a prepaid health care plan that requires subscribers to reside within a service area is the accurate description. The other options don’t fit: HMOs do rely on a provider network and service-area restrictions, they aren’t restricted-free in geographic terms, and they typically do require referrals for specialist care.