PPO stands for preferred provider organization. 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 a benefit in discounted medical and dental fees.
How a PPO Works
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 at negotiated rates. 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 what providers and facilities are in your approved network.
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.
- There is normally a wide array of physicians from which to choose.
- If you need to see a specialist or another physician, referrals are typically not necessary.
- You get to choose your health care providers, something not allowed for under some insurance plans.
- When you use network providers, you can receive a significant discount on your health care. This means more affordable health care and fewer out-of-pocket expenses.
- You can still opt to receive care outside of your network, though reduced benefits will apply if you choose to do so.
- 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 are in your PPO network today, that doesn't mean they will be tomorrow.
- Kiplinger cautions you to verify whether your coverage is valid when traveling outside your home area.
Best PPOs in the Nation
The National Committee for Quality Assurance (NCQA) is a national non-profit organization that helps to set the bar for high quality healthcare. The organization rated more than 500 private plan providers, including PPOs, Health Maintenance Organizations (HMO), and Point of Service (POS) providers, based on customer satisfaction, prevention, and treatment. Within those categories NCQA evaluated dozens of key quality criteria, from well child visits to the use of beta blockers after a heart attack. The highest ranking PPO's for 2012-2013 have been extracted from the NCQA report and include:
- Tufts Benefit Administrators: While Tufts scored extremely well in categories, it garnered almost perfect scores in preventative care and in the treatment of diabetes.
- Harvard Pilgrim Health Care: Harvard received outstanding scores for preventative care, and the treatment of mental health, heart disease, and diabetes.
- Capital District Physicians' Healthcare Network (Self-Funded): This plan earned superlative scores in preventative care, customer satisfaction, and mental health treatment.
- CDPHP Universal Benefits: CDPHP's greatest strengths lay in preventative care and customer satisfaction. The plan also received high marks in the treatment of heart disease and mental health.
- Blue Cross and Blue Shield of Massachusetts: While customer satisfaction scores were moderate, this plan attained exceptionally high scores in every other area.
Even if these particular plans aren't available in your area, reviewing them should provide you with some insights about what to look for in a plan.
Tips for Selecting a PPO
If you contract for a PPO through your employer, many of the choices will have already been made for you. If you are shopping privately, a few tips to help ensure your overall satisfaction include:
- Did you know what where you live plays a huge role in the coverage you can obtain? Health insurance is regulated by state law, so the options open to you in Rhode Island vs. Florida vs. California may be dramatically different. Visit Health Insurance Marketplace by State to learn more about health plans available in your area. Keep in mind that the market is a work in progress, as states work to create insurance exchange systems, in compliance with the Affordable Care Act of 2010.
- Carefully review the coverage offered by individual plans. Some may be particularly strong in the area of preventative treatment, while others focus more heavily on maternity care, or the treatment of diabetes or heart disease. Look for the plan that best meets your individual and/or family's health needs.
- If you have a great relationship with your doctor, check to make sure he or she is in the network you are considering.
- Recognize that premiums are only a small portion of healthcare costs. Consider co-payments, deductibles, and annual maximums as well.
- Not all PPO plans are as they seem when you look at the fine print. Pay attention to the warning from Consumer Reports against junk insurance plans in the video below:
Before choosing any health coverage, it is a good idea to evaluate the pros and cons of each, as they apply to your personal situation. Explore coverage options available in your area, to find the best "fit" for you and your family.