What is the difference between a PPO and an HMO?

The correct choice highlights the primary characteristics that distinguish a Preferred Provider Organization (PPO) from a Health Maintenance Organization (HMO). PPOs are designed to provide more flexibility in choosing healthcare providers. Members of a PPO plan can see specialists and out-of-network providers without requiring a referral, which contrasts sharply with the structure of HMOs.

HMOs, on the other hand, typically require members to select a primary care physician (PCP), who serves as a gatekeeper to manage and coordinate all aspects of their healthcare. This means that if a member wishes to see a specialist or receive certain services, they often first need to obtain a referral from their PCP. Such a system restricts choices but can lead to lower costs and a more coordinated care approach.

While the other options cover various aspects of PPOs and HMOs, they do not accurately encapsulate the foundational structural differences that the correct choice addresses. Options regarding cost comparisons or provider availability do not capture the critical operational elements of flexibility and referral requirements that are key to understanding the differences between these two types of health insurance plans.