What term describes a type of organization that provides services based on contracts with groups of physicians and hospitals?

The correct answer is Preferred Provider Organization. This term specifically refers to a type of managed care organization that offers healthcare services through a network of preferred providers, which include physicians and hospitals. These organizations contract with healthcare providers to create a network that patients can access at lower out-of-pocket costs compared to non-network providers.

In a Preferred Provider Organization (PPO), the emphasis is on flexibility and choice for the patient, who can choose to see any provider but will benefit from lower costs if they utilize the in-network services. This structure allows for a balance between cost control and access to a wide range of healthcare services.

Other options, while related to healthcare management concepts, do not specifically refer to the arrangement described in the question. Health Maintenance Organizations (HMOs) have a more restrictive network and typically require patients to select a primary care physician and get referrals for specialty care. Accountable Care Organizations (ACOs) focus on coordinating care amongst providers to improve quality and reduce costs, but are not solely based on contracts with groups of physicians and hospitals in the manner defined by the question. Integrated Care Systems also involve coordinated services but may not strictly operate on the PPO model.