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Preferred Provider Organizations (PPOs)
Preferred Provider Organizations (PPOs) is a Managed Care organization type, a variation of the HMOs, which unites physicians, hospitals, and other health care providers who have contracted with an insurer and provide health services to the insurer's clients at reduced rates.
PPO combines features of traditional Indemnity Health Insurance plan (Fee-for-Service) with Managed Care. A PPO Health Insurance plan is similar to an HMO in that members pay a fixed premium on a monthly basis, while the health insurance company and its health care network provide them with basic medical benefits.
The major difference between PPOs and HMOs is that PPO enrollees have more freedom in their choices of physicians and can seek medical care outside of the network, still receiving some coverage. Thus, even if your doctor does not belong to the network, you don't have to change physicians in order to join a PPO plan. Generally, you can consult any specialist, including those outside the plan.
When you need medical services, you are free to decide between a higher costing Fee-for-Service Plan with its freedom of choice and a lower costing HMO type of plan which narrows your health care choices to within a network. However, if you need health care from outside the PPO network, be ready for a higher co-payment.
Besides the advantage of having a greater choice of doctors, with the PPO you don't need to get a referral to see a specialist, which is also considered a big advantage. Members of the PPOs are not required to see a primary care physician (PCP) to get their in-plan benefits.
Among frequently noted disadvantages of PPOs is the high cost of this type of Managed Care plans. Though PPO premiums are generally lower than in Indemnity Plans and comparable to premiums paid in an HMO, the annual medical expenses with a PPO Health Insurance plan are rather high.
Expect to pay co-insurance, which will be larger than with other Managed Care plans. If you use PPO network health care providers, the co-insurance will naturally be lower than if you chose to apply to non-network providers. Out-of-plan benefits will be more costly for the PPO member than in-plan benefits. A PPO tends to reimburse up to 80% of out-of-network costs.
With PPO, deductibles and co-insurance are often applied for many medical services such as hospitalization. In case you prefer non-network health care, you will be required to satisfy a deductible before your health insurance company starts rendering assistance with payment. You may be required to pay the difference between the amount the health care provider charges and the sum the PPO plan claims to be "reasonable and customary" for the given medical service.
Members of PPO have an opportunity to choose from a list of physicians and hospitals. The member seeking medical attention is required to pay a set fee per visit, while the insurer pays the rest. The type of plan usually predetermines the amount of the co-payment, for example PPO members with higher premiums have lower out-of-pocket costs.
For the use of their network, PPOs charge an access fee to the insurance company. After negotiation with providers, they set discounted fee schedules for members of the PPO, and then handle disputes between insurers and health care providers. The plan sponsor pays participating doctors and hospitals on a Fee-for-Service basis. Preferred Provider Organizations can contract with one another in order to increase their position in some geographic areas.
Emergency care received from non-network facilities will usually be covered as in-plan, irrespective of the fact whether the member is in or out of the service area. Prescription drug coverage is normally provided with all PPO plan designs. In order to have the drug prescriptions covered, PPO members should use participating pharmacies.
When it comes to filing claims, participating doctors will often file claim forms for PPO members when the patients receive in-plan medical services. In case members receive out-of-plan services, they may need to file claims on their own.
The choice of Health Insurance plan type largely depends on your situation. Assess your health care needs, financial situation and consider your preferences before you start comparing the choices available on the Health Insurance market. The freedom to choose, fewer restrictions, and flexibility of PPOs may counteract the greater costs of this Health Insurance plan.