What is a preferred provider organization (PPO)?
A Preferred Provider Organization (PPO) is a network of providers and hospitals that offers services at discounted rates. The PPO pays most expenses after you pay your required deductible, coinsurance and/or any copayments. The plan usually has an out-of-pocket feature. With this, once you have paid the maximum amount, the plan pays any following allowable claim at 100 percent. Under the PPO, network and non-network providers are available. However, when you receive your medical care from network providers, the plan pays a greater percentage of covered expenses. If you use non-network providers, the plan pays a lower percentage of usual, customary and reasonable charges.
A Preferred Provider Organization (PPO) is the form of managed care which typically allows you to see any doctor at any time. A PPO negotiates discounts with doctors, hospitals and other providers, who then become part of the PPO network. These in-network healthcare providers have been contracted to provide services to the health insurance plan’s members at a discounted rate. When you see a physician out-of-network, you usually still receive coverage but at a higher cost to you. One of the things many people like about PPOs is the ability to make self-referrals. That means you can see any doctor you want, including specialists inside and outside the PPO network, without a referral. However, you usually pay less when you see an in-network provider because of the negotiated provider discounts.
A preferred provider organization (PPO) is a network of physicians and/or hospitals that contracts with a health insurer or employer to provide health care to employees at predetermined discounted rates. PPOs offer a broad choice of health care providers. Because of the broader choice of providers, PPOs are more expensive than HMOs. Although there is no requirement for employees to use the PPO providers, there are strong financial reasons to do so. PPOs may have less comprehensive benefits than HMOs, but the benefits usually can meet almost any need. Furthermore, PPO providers usually collect payments directly from insurers.
Although it is not required that you do so, when you use the insurance company’s network of preferred doctors and hospitals, a PPO plan will have lower costs. If you choose an out-of-network provider, the cost will be much higher. In-network healthcare providers have predetermined rates, usually nominal, for the provision of each service to the health insurance plan’s members. Consider the following example: Let’s assume that the out-of-network coverage rate is sixty percent. This means that the insurance company will pay sixty percent of what that service would have cost had you gone to an in-network provider. If you received $1000 worth of services from an out-of-network provider and those same services were available from an in-network provider for $500, the insurance company will only pay sixty percent of $500, which is $300, leaving you responsible for the remaining $700. Another consideration is that not only may up-front payment be required, but the out-of-network provider will
