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

The correct answer is a PPO, which stands for Preferred Provider Organization. In this system, a network of doctors and hospitals has agreements with an insurance company to provide healthcare services to its members at reduced rates. Members of a PPO can choose to see any healthcare provider, but they receive the highest level of benefits when they use providers that are in the network. This arrangement allows for flexibility in choosing providers while still benefiting from lower costs due to the contracted rates.

PPOs typically offer a wider range of choices compared to other types of managed care plans, such as HMOs, where members are usually required to select a primary care physician and get referrals for specialists. EPOs (Exclusive Provider Organizations) also limit members to a specific network but do not require referrals, similar to PPOs. FSAs (Flexible Spending Accounts) are different altogether; they are tax-advantaged accounts that allow individuals to set aside pre-tax money for eligible healthcare expenses, rather than a structure for managing healthcare services.