A preferred provider organization (PPO) is a network of doctors, hospitals and other health care providers who contract with an insurer or third-party administrator to provide health services at substantially reduced rates. Both the PPO and the insurer benefit in this type of arrangement. The insurance company is billed at a lower rate when its clients utilize the services of the PPOs, and in turn the PPO network of medical professionals experience an increase in business.
Enrollment
Most people enroll into a PPO during an open enrollment period designated by their place of employment, which pays a portion of the monthly premium, and the employees pay the rest through payroll deductions. Self-employed individuals sign up directly with a PPO of their choice and pay the monthly premium. The PPO issues a membership card to enrollees to show upon visiting a participating provider in order to receive reduced rates.
Services
Persons who utilize a participating health care provider receive full health services as specified by the PPO plan. A co-payment may be required depending on the provider and PPO. You may need to satisfy a deductible depending on the type of services provided.
Advantages
According to the USA Health Insurance website, a PPO is a good choice for people who want more flexibility in choosing a doctor. Unlike health maintenance organizations (HMOs) that require that a member utilize only network providers, a PPO member can utilize an out-of-network provider. In addition, a member can see a specialist without a referral. Specified plan limits on out-of-pocket expenses are another benefit of PPOs.
Disadvantages
PPO plans are the most expensive of managed care plans, according to the Health Insurance In-Depth website. Therefore, members pay higher co-payments and deductibles than HMO members. While PPO members have more flexibility when choosing a health care provider, that flexibility comes at a higher cost. For example, a person may be reimbursed 100% if they receive treatment from a participating provider, yet will be reimbursed 70% if they go to a non-participating provider. A PPO member receiving treatment from an out-of-network provider pays a higher co-payment or deductible than what he already pays under their PPO plan. Reimbursement for medical services require more paperwork.
Considerations
A PPO should offer the type of preventative, hospitalization, emergency and other health care services you and your family needs. You should carefully review information such as covered health care and emergency services, names and locations of participating doctors, costs such as co-payments, deductibles, monthly premiums and cost of utilizing non-network doctors, participating hospitals and any limitations on medical treatments.
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