Certified Application Counselor Practice Test 2026 - Free Practice Questions and Study Guide

In the context of health insurance plans, the distinction between Health Maintenance Organizations (HMOs) and Preferred Provider Organizations (PPOs) is significant in how they manage patient care and provider access. An HMO is designed to provide comprehensive health services to its members through a network of doctors and hospitals. One of its defining characteristics is that it restricts service use to in-network providers, meaning that members are generally required to select a primary care physician (PCP) and must get referrals to see specialty providers within the network. This helps the HMO control costs and maintain a coordinated care approach.

The other responses highlight aspects of PPOs which allow greater flexibility in provider choice. Specifically, PPOs offer the option to receive care from out-of-network providers without significant restrictions but at a higher out-of-pocket cost compared to in-network services. Therefore, understanding that an HMO mandates the use of an established network of providers to manage costs and services explains why the option regarding HMO restrictions is essential in distinguishing it from a PPO's more flexible structure.