Health Maintenance Organizations (HMO) requires that each "covered life" have a primary care provider (PCP). That PCP receives a flat fee (called "capitation") for the care of each "covered life" in the practice. The PCP's job is to provide care that decreases the probability that the patient will become sick and need the services of a specialist (part of the cost of such care comes out of the PCP's capitated payment) so a large focus is made (theoretically) on screening, wellness programs, immunizations. In practice, most people don't stay with a given HMO for long enought for the HMO to reap the economic benefits of prevention programs and the care sometimes seems like barebones aimed at reducing costs in the short-term. In a closed panel HMO, the PCPs and other providers are employed by the HMO. In general, HMO member is not covered (except in emergencies when one is traveling) for care delivered outside of the panel and access to specialists must be pre-approved by the PCP. There is often "first dollar" coverage for care (no "deductable") and no co-pay so the choice for patients is less out of pocket cost but less liberty in choosing when and who to see for speciality services.
A Preferred Provider Organization (PPO) looks pretty much like regular insurance from the patients' perspective. There is often a deductable (a certain amount that must be paid out of pocket before insurance coverage begins) a co-pay (a proportion of the bill for which the patient is responsible), and an annual maximum out-of-pocket after which the insurer covers 100%. The difference is that there is a network of "preferred providers". If a patient choses a preferred provider the copay is lower (perhaps 10-20%) while an out -of-network visit will be covered but the patient may be responsible for a larger proportion of the bill. Physicians and hospitals are encouraged to join the PPO because it drives business to their practices/facilities. However, in joining they agree to accept payments that are lower than what they would ordinarily bill for a given service. In a sense, the insurance company has negotiated lower prices in exchange for bringing patients to the door.