SATURDAY, Nov. 19, 2005 (HealthDay News) -- Twenty-five years ago, most people in the United States had health insurance through an "indemnity" -- or fee-for-service -- plan, in which doctors get paid when they treat you.
Today, more than half of all Americans with health insurance are enrolled in some sort of "managed care" plan, such as a health maintenance organization (HMO) or preferred provider organization (PPO).
While the terms "HMO" and "PPO" may be familiar, lots of folks are at a loss to explain how one arrangement differs from the other, and with good reason.
"The differences among fee-for-service plans, HMOs and PPOs are not as clear-cut as they once were," explains the federal Agency for Healthcare Research and Quality.
Fee-for-service plans have borrowed many of the tools used by managed care plans to control costs, such as limiting access to a specified group of health care providers, the agency says. At the same time, HMOs and PPOs now give people more freedom to see the doctor of their choice, just like traditional fee-for-service plans.
The blurring of the lines between these different models of health insurance adds to many people's confusion. That's why it's important to know what type of coverage you have and how it works.
The term "managed care" describes a model of delivering and financing health care, explains the National Association of Health Underwriters. Managed care plans typically enter into contractual agreements with selected health care providers whose overall goal is to provide the highest quality care at the lowest possible cost by controlling the use of services.
Managed care comes in several varieties. Here are the basic models and their main features:
More information
The Agency for Healthcare Research and Quality can tell you more about choosing and using a health plan.