The following are some general models of health plans that use managed care techniques. Most of today's health plan companies cannot be easily classified in just one of these categories, but rather are a composite of more than one type of model.

Health Maintenance Organization (HMO)
A state-licensed health plan that provides comprehensive coverage of all medically necessary health care services, including primary and preventive services, with limited consumer out-of-pocket expenses.

Community Integrated Service Network (CISN)
A small, state-licensed Minnesota health plan that is locally governed and has fewer than 50,000 enrolled members. CISNs are exempt from some regulatory requirements that apply to HMOs.

Staff Model or Network Health Plan
An HMO or other type of health plan that uses employed, salaried physicians, or owns its own clinics or health care provider networks.

Independent Practice Association (IPA)
An HMO or other health plan that contracts with independent hospitals, doctors and other health care providers rather than employing or owning its own.

Preferred Provider Organization (PPO)
A health plan that negotiates discounted fees with hospitals, doctors and other health care providers, then encourages enrolled members to use the preferred network by offering lower copayments and other incentives. Enrolled members may choose to go to out-of-network providers at a higher cost.

Self-Insured Health Plan
A group health coverage plan offered by an employer or labor union that pays for all covered health care services rather than purchasing a health insurance policy to cover these expenses. As an alternative to purchasing insurance, these groups insure themselves, although they often hire an HMO or other health plan company to administer the health plan. Self-insured health plans are regulated under federal law and are exempt from state health insurance and HMO laws.

Third Party Administrator (TPA)
An organization that manages or administers an employee health benefit plan under contract with a self-insured employer. TPAs do not provide insurance, but simply offer administrative services to employers who are self-insured. An HMO or health insurance company may serve as a TPA for a self-insured employer, in which case the health plan is governed by federal law, not state law.

Point-of-Service Health Plan
A common and popular type of health plan that combines a preferred provider network with the option of choosing out-of-network providers whose services are subject to a higher consumer copayment.

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