Medical Expense✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
An HMO operates with a panel of physicians who are employed directly by the HMO or are under exclusive contract with it, and members must receive care from these providers. This arrangement is best described as a:
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
A closed-panel HMO delivers care through physicians who are either salaried employees of the HMO (staff model) or under exclusive contract (group model). Members must use these participating providers, which gives the HMO strong cost control through prepaid capitation and tight utilization management. An open-panel HMO, by contrast, contracts with private physicians in the community who also see non-HMO patients.
Why the other options are wrong
- A) An open-panel HMO contracts with community physicians in private practice who treat many patients, not exclusively employed or contracted doctors.
- B) A PPO is not an HMO; it allows broader provider choice, often without a gatekeeper, and pays a fee-for-service with discounted rates.
- D) An EPO is a network-only plan without a gatekeeper; its defining feature is no out-of-network coverage, not a staffed closed panel.
Memory hook
Closed panel = doctors work for the HMO (staff/group model). Open panel = community doctors sign contracts.