There are three kinds of managed care plans are called Health Maintenance Organizations (HMO), Preferred Provider Organization (PPO), and Point of Service (POS).
HMOs work by having policy holders pay health coverage premium in advance, whether or not they will need health care eventually. In care the policy holder does need health care, including preventive care, the HMO will pay for all of the medical bills incurred, provided that the health condition are covered by the policy and that the patient went to a provider that is part of the HMO’s network. There are no hidden fees involved but all tests and procedures to be done must first be approved by the HMO.
For PPOs, patients have the option of going doctors and hospitals part of the networks, or “preferred providers”, only when they want to. Whenever they go to a preferred provider, PPO members get discounted rates but have to pay a small amount, which is called co-pay. The good thing is that even with a primary care doctor outside of the network, tests and procedures ordered by that doctor can still be covered through the PPO.
POS are plans that combine features of HMOs, PPOs, and traditional fee-for-service plans.