PPO

From LoveToKnow Insurance

A PPO or preferred provider organization is an association of medical doctors, hospitals, and other health care professionals who have agreed to provide reduced rate health care through an insurer or another third party. Read on to find out if this form of health insurance is for you.

How a PPO Works

A PPO is an organization that has developed a network of medical professionals and facilities that work through insurers and third party administrators to offer various forms of health care at reduced costs. Health care providers benefit by receiving increased business as a result of referrals from the network. Patients who have this form of insurance reap their benefit from discounted medical and dental fees.

To become a member of the PPO network, physicians and medical administrators must sign a contract with the PPO promising to provide services to those insured through the preferred provider organization. They must also follow any guidelines that have been established within the contract.

To receive the full benefits of this type of insurance plan, patients must use an in-network provider. There are usually many different physicians, specialists, hospitals, and other medical facilities to choose from. If you have PPO insurance, you will be given a book or a website that you can access to learn who is in the network and who isn't.

PPO vs. HMO

A preferred provider organization is similar to a health maintenance organization (HMO). Both are managed care plans, meaning that both provide quality care while managing the cost. The main difference is that with a preferred provider organization, you are still covered when seeking care from an out of network provider. Most HMO plans will not pay or reimburse you for health care provided by an out of network physician or facility.

However, it is important to note that while you will most likely be covered should you choose to go outside of the PPO network, you may incur more out-of-pocket expenses. For example, your insurance plan may stipulate that it pays 90 percent of the costs when you use an in-network provider, but only 60 percent of the costs if you choose to go out of the network.

If you are interested in learning more about the differences between PPOs and HMOs, click on the link below:

HMO vs. PPO

Pros and Cons

As with any other form of insurance, there are pros and cons that come along with being insured under a preferred provider organization. Before choosing this health plan over another, it is a good idea to evaluate the benefits and the drawbacks as they apply to your personal situation.

Pros

There is normally a wide array of physicians to choose from.
If you need to see a specialist or another physician, referrals are not necessary.
You get to choose the health care provider; this is not the case with many insurance plans.
When you go in-network, you can receive a discount on your health care. In some cases, this discount can be as much as 20 percent. This means affordable health care and less out-of-pocket expenses.

Cons

The premiums for this form of insurance can sometimes be more expensive than the premiums for other plans.
Preferred provider organization plans can vary. This means deductibles, co-pays, and other out-of-pocket expenses are not the same from one plan to the next.
Your current physician may not be a member of the network.
Physician offices, hospitals, and other facilities sometimes drop their network status. Just because they accept PPO insurance today, it doesn't mean they will tomorrow.