One type of health insurance is the preferred provider organization.

This is a collection of health care providers, such as physicians, hospitals and clinics, who offer their services to a specific group for prearranged prices. In return, the group refers its members to the preferred providers for health care. Most of these providers are in private practice and they have agreed to perform their services for members of the group for less than their normal fees. In exchange, the providers broaden their scope of patients. Groups that contract with preferred providers include employers, insurance companies or health insurance providers. While it is not mandatory to select a physician or hospital from the preferred provider list, the benefit will generally be reduced if individuals go outside the PPO or POS for health care.