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Preferred Provider Organizations are payment service providers that offer health care plans that are usually more affordable than tradtional health insurance plans, but with fewer limits than HMOs.
What Is a PPO?
A PPO, or Preferred Provider Organization, is a managed care organization that is very similar to an HMO (Health Maintenance Organization). Like HMOs, PPOs are sort of middle-men organizations designed to reduce health care costs, while taking a significant percentage of every transaction for their services. Though one could argue that the cost of the PPO outweighs the savings they provide, usually health care coverage through an PPO costs less than comparable traditional health insurance.
How Do PPOs Reduce Health Care Costs?
Like HMOs, savings are accomplished with a very large membership base, and limitations on the range of treatments available.
PPOs deal with very large quantities of employers and individual members. By bringing a large amount of individuals to health care providers, PPOs are able to negotiate for lower health care costs.
Another way PPOs keep health care costs down is by limiting the kinds of treatments their network of health care providers can provide. PPOs review their network to track dollar amounts or number of visits per patient. Though this review process can help patients by preventing unnecessary treatment, some patients and physicians consider these limitations too intrusive.
What Happens When I Join a PPO?
PPOs are similar to HMOs where your employer provides you with a reduced-cost health insurance plan. Unlike an HMO, with a PPO, you can choose the primary care physician rather than being limited to doctors in a determined group of health care providers. PPOs do have networks or contracted groups of doctors and facilities like HMOs. The benefits are better and the costs are lower if you choose a physician in your PPO's group.
Generally with PPOs, treatments do not require as much approval as they might with an HMO. Therefore the responsibility to pay the bills rests with you, the patient. Depending on the health care provider, you may pay the medical expenses, and then get reimbursed. Or the health care provider may invoice the PPO directly. Before you visit for the first time, be sure to ask your doctor how the invoicing will be handled.
What Are the Benefits of Joining an PPO?
Though every PPO is unique and the various insurance plans they all offer are different, they all share some some generally common traits.
- You may go to any doctor in the network at any time without a referral, including all specialists.
- A co-pay at the doctor's office of $10 - $45.
- You may go out-of-network to any top specialist for your serious problems.
- No claim forms or paperwork.
- Choice of deductible.
- Prescription coverage is included.
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