Which of the following statements about HMOs is TRUE?

This statement is incorrect because HMOs typically require members to select a primary care physician and obtain referrals to specialists within a defined network. Unlike plans with more freedom of choice, such as Preferred Provider Organizations (PPOs), enrollees in HMOs have limited options for providers, emphasizing a coordinated care model.

This choice is misleading as HMOs generally offer lower cost-sharing compared to PPOs. HMOs often have lower premiums and out-of-pocket expenses, making healthcare more affordable for members. In contrast, PPOs provide more flexibility in provider choice but usually involve higher costs for services and greater out-of-pocket expenses.

This statement is false because HMOs often require pre-authorization for certain services, such as specialist visits or specific procedures, to ensure that they are medically necessary and covered under the plan. This requirement is a key component of the HMO model to control healthcare utilization and costs.