Certified Nurse Manager and Leader (CNML) Practice Test

Which type of insurance model provides coverage primarily through contracted providers?

1. Capitation

2. Exclusive Provider Organization

3. Preferred Provider Organization

4. Health Maintenance Organization

The correct answer is: Exclusive Provider Organization

The appropriate choice is an Exclusive Provider Organization (EPO). This insurance model is designed to deliver health care services through a network of contracted providers. In an EPO, members are required to utilize the network of doctors and hospitals that have agreements with the insurance company. If they seek services outside of this network, they typically will not be covered, except in emergencies. This model emphasizes a controlled environment where costs can be managed effectively since care is coordinated within a pre-established group of providers. While it allows for some flexibility compared to other models like Health Maintenance Organizations (HMOs), where a primary care physician is necessary for referrals, the defining feature of an EPO is the stipulation that patients must receive care exclusively from the network of providers. In contrast, capitation is a payment model where providers are paid a set amount per patient regardless of the number of services used, but it doesn’t specifically define a provider network in the same way as an EPO. Preferred Provider Organizations (PPOs) encourage but do not strictly require the use of contracted providers, allowing more freedom to see out-of-network providers albeit at a higher cost. Health Maintenance Organizations (HMOs), while also utilizing a network of providers, typically involve a more stringent requirement for primary