Although there are many types of benefits available, medical expense insurance can generally be categorized as basic medical expense insurance, major medical insurance, comprehensive medical insurance, and special policies. It should be noted that these products have largely been replaced by managed care alternatives and are not sold as standalone coverages any longer.

Health Care Providers
Patients have traditionally been seen by physicians in office or hospital environments. Today physicians also see patients in a variety of settings including the following:

➤ Surgicenters provide a site for outpatient surgery where general anesthesia must be used, but a patient does not need to stay overnight.

➤ Urgent care centers see patients often without an appointment during the daytime, as well as evening and weekend hours.

➤ Skilled nursing facilities provide medical care for patients who no longer require hospitalization but cannot yet care for themselves at home.

➤ Home health care is also provided by nurses and others for patients ready to be at home but who cannot yet fully provide for all of their own needs.

The traditional broad health coverage provided by insurance plans provides little incentive for efficient, cost-effective health care delivery. Managed care imposes controls on the use of health care services, the providers of health care services, and the amount charged for these services, usually through health maintenance organizations (HMOs) or preferred provider organizations (PPOs) (discussed in the following sections).

Health Maintenance Organizations (HMOs)
The number of HMOs has grown rapidly in response to increasing health care costs in recent decades.The purpose of HMOs is to manage health care and its costs through a program of prepaid care that emphasizes prevention and early treatment. This prepayment, which entitles the health care consumer to a wide range of services, is referred to as a service-incurred basis. In contrast, traditional health insurance coverage is handled on a reimbursement basis, with the insured or provider being reimbursed for all or part of medical expenses actually incurred.

Preferred Provider Organizations (PPOs)
Other efforts to reduce medical costs have resulted in preferred provider organizations (PPOs), arrangements under which a selected group of independent hospitals and medical practitioners in a certain area, such as a state, agree to provide a range of services at a prearranged cost. The organizers and the providers agree upon medical service charges that are generally less than the providers would charge patients not associated with the PPO. The providers are paid on a fee-for-service basis. Providers are willing to enter into this arrangement in return for guaranteed payment from the PPO and a potential increase in the number of patients. The people who will receive services choose a preferred provider from a list the PPO distributes. As a general rule, the users have more choices among doctors and hospitals under a PPO than under an HMO arrangement.