What is the primary goal of Health Maintenance Organizations (HMOs)?

• A. To negotiate hospital pricing.
• B. To manage costs through a gatekeeper concept that requires referrals and pre-authorization of care.
• C. To maximize out-of-network services.
• D. To provide cash-only services.

Answer: (B)

HMOs are designed to control costs by coordinating care through a gatekeeper system. The primary-care physician acts as the gatekeeper, requiring referrals for specialists and pre-authorization for many tests and procedures. This arrangement keeps services within a defined network, reduces unnecessary care, and makes overall spending more predictable for both the plan and the member. While provider discounts are negotiated, the essential feature is the gatekeeper model that governs how and when care is accessed. Out-of-network use is limited, and HMOs operate on prepaid plans rather than cash-only payments.