Indemnity or "fee-for-service." Under this traditional, but increasingly rare, form of health insurance, you are free to choose whichever doctor, hospital, or other health care provider you wish. The doctor and patient together agree on what tests or treatments the patient should have. The doctor submits the bill to the insurance company, which then pays the agreed portion of the bill as long as it comports with "usual and customary" fees.
Preferred Provider Organization (PPO). Under this approach, the health insurance company negotiates rates of pay for tests and treatments with a "network" of doctors, hospitals, and other health care providers. Patients insured under this arrangement are free to go to doctors and providers outside the network, but each time they do so they pay a higher rate of "co-insurance" - - the amount toward the provider's fee that is not covered by insurance but directly paid by the patient.
Managed Care. This term covers a wide variety of insurance plan types whose common element is that in order to reduce costs the insurance company exercises various means of control over what tests and treatments the patient is permitted to receive. Examples:
· restricting the drugs that can normally be prescribed to those in a "formulary" often consisting of the least expensive (but not necessarily most effective) drugs;
· requiring doctors to submit to "utilization review" under which insurance company bureaucrats can reject requests for treatment; and paying doctors and hospitals through formulas that create financial disincentives for treatment.