A PPO, or Preferred Provider Organization, is a type of healthcare management organization that offers insurance coverage to its members at a reduced rate as compared to traditional health insurance.
In return for these lower prices, PPO members must abide by certain rules and restrictions regarding healthcare.
HMOs, or Health Maintenance Organizations, generally have more stringent restrictions and requirements for members.
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What are the advantages of a PPO health insurance plan?
A PPOs utilize a network of doctors who have been approved to provide services. The network is generally larger than an HMO, and members have the option of seeing an out-of-network doctor at a reduced coverage rate.
Further, PPOs may be more flexible about agreed costs, or the amount the doctor agrees to accept for services.
PPOs do not require a member to have a primary care physician. Primary care physicians are required by most HMOs, meaning that a member must visit this doctor prior to seeing any specialists.
This practice is known as “gatekeeper healthcare,” and is designed to reduce visits to specialists, who generally charge more for their services.
If the primary care doctor is able to provide certain services, the HMO may deny the member the right to visit a specialist. Under a PPO, members can go directly to specialists, without visiting their primary care physicians first.
PPO Health Insurance Deductibles
PPOs are also more likely to charge their members deductibles. A deductible is the amount that you, as the member, must pay before the insurer will pay anything on the bill.
While most HMOs do not have deductibles or have very low deductible amounts, PPOs often let you choose among several plans with varying deductible rates.
They may charge an individual deductible with a family cap. In other words, your deductible might be $1000 for each member of your family, but only $3000 for the family as a whole.
Once three members of the family have met their deductibles, you would not be required to pay any more as part of a deductible for other family members.
Do PPO health insurance plans have co-pays?
Similar to an HMO, PPOs also require co-pays. Your co-pay may be larger for an out-of-network provider. Within the network, there is a set amount you must pay for each doctor visit or service.
For example, if your co-pays are $20 for a primary care physician, $35 for a specialist, and $50 for emergency services, you will be charged these amounts when you visit these providers.
The Reasonable Cost Restriction
Members can also run into problems with a PPOs “reasonable cost” restrictions, especially if they visit out-of-network physicians.
One of the ways a PPO manages healthcare costs is by agreeing with physicians and providers on a cost for various services.
If you visit an out-of-network provider, this doctor or service provider has not made this agreement and can charge far more for the same services as a network physician.
It is important to determine the cost before you visit an out-of-network provider so that there are no unpleasant surprises when the bill comes.
Is PPO health insurance the right choice?
PPOs are great alternatives to HMOs for people who want more options with their healthcare coverage but are looking for an affordable alternative to traditional health insurance plans.
For example, your employer may offer a high deductible option with lower premiums, a mid-range deductible and co-pay option with mid-level premiums, or a more expensive option that utilizes lower deductibles, co-pays, and even additional coverage.
You can also lower your costs by taking advantage of benefits for preventive care. Many PPOs offer lower premiums or other incentives for non-smoking clients, those who have regular preventative checkups such as mammograms or prostate exams, and those live healthy lifestyles.
PPOs often provide some form of triage care. Usually, a group of nurses or other healthcare professionals are generally on call who can answer questions about routine health problems, perhaps saving you a trip to the doctor or emergency room.
You will probably also be required to have pre-approval for certain visits, so it is a good idea to familiarize yourself with these services early in your coverage period.
Both PPO and HMO health insurance plans have a number of advantages and disadvantages but the right choice will entirely depend on your unique family needs.
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