Which system involves a group of doctors and hospitals contracting with an insurer to provide services at a prearranged cost?

The correct choice describes a Preferred Provider Organization (PPO), which is designed to offer a network of healthcare providers, including doctors and hospitals, who contract with an insurance company to deliver services at reduced rates. In this arrangement, the insurer negotiates fees for services ahead of time, which can help lower overall costs for both the insurance company and policyholders.

Members of a PPO have the flexibility to choose healthcare providers from the network without a referral, which contrasts with other types of managed care plans that might have stricter guidelines regarding provider selection. This arrangement allows for a more extensive range of choices compared to health maintenance organizations (HMOs), providing members with the option to visit out-of-network providers, albeit at a higher cost.

This contrasts with other plans such as HMOs and exclusive provider organizations (EPOs), which have their own limitations regarding provider choice, typically requiring members to select a primary care physician or limit services to specific networks without the same level of flexibility in provider access.