Which of the following is a characteristic of Health Maintenance Organizations (HMO)?

Health Maintenance Organizations (HMOs) are designed to provide managed care and cost-effective health services. A defining characteristic of HMOs is that they offer lower costs for members by establishing a network of contracted healthcare providers. This network includes doctors, specialists, and hospitals that agree to provide services to HMO members at reduced rates.

Members typically must choose a primary care physician (PCP) who coordinates their care and refers them to specialists within the network, which helps manage both costs and healthcare utilization. As a result, by utilizing these contracted providers, members enjoy the benefits of lowered premiums and reduced out-of-pocket expenses when they seek healthcare services.

The other options highlight aspects that do not align with the HMO structure. For instance, HMOs do involve network restrictions, meaning they do not generally have higher premiums without limitations on provider choices, and they do not support out-of-network coverage to the same extent as other health plans. Additionally, HMO members are usually required to have a primary care physician who oversees their care and provides referrals.