PPO: Preferred Provider Organizations

PPO insurance is a rapidly growing, type of managed care plan, one developed to combine the lower cost of managed care with the greater degree of choice found in traditional health insurance.

How PPO insurance works

PPO insurance lies between HMOs and pure fee-for-service plans. Your health care is managed (and so restricted), but you are granted a degree of choice in providers. A PPO health insurance plan operates like an HMO in that you pay a fixed monthly premium, and, in return, the health insurance company and its health care network provide basic medical benefits to you.

However, a PPO does differ from the original HMO, primarily in that under a PPO insurance plan, a primary care physician or "gatekeeper" physician is not required. As a result, seeing a specialist does not require a referral.

If you need or want health care from outside the network, you should expect to pay a higher co-payment than if the provider were from within the PPO network.

In essence, each time you need medical attention, you can decide between an higher costing indemnity plan with total freedom of choice over care or a lower costing HMO plan that restricts your care to within a network.

Advantages and disadvantages of PPO insurance

Health care costs are low when using the PP0 networks.
You can consult any specialist, including ones outside the plan.
Seeing a primary care physician is not a prerequisite.
Paperwork is your responsibility if the care is non-network.
Out-of-pocket costs per year is limited.
Cost of treatment outside of network is more expensive.
Co-payments are larger than with other managed care plans.
You may need to satisfy a deductible.

The cost of PPO insurance

PPO insurance is generally the most expensive type of managed care plan. Even with a premium comparable to that of. say, an HMO, the other fees associated with PPO insurance can increase its cost significantly.

Just what are these costs? Well, on top of the premium, you can expect to pay coinsurance (lower charges if using network providers and higher charges if using non-network providers). For preventative services, co-insurance is usually waived and, instead, but may be replaced with a (low) co-payment.

With non-network care, you must satisfy a deductible before the health insurance company begins contributing. After the deductible is met, you pay a higher percentage of the cost and may also be require to pay the difference between what the health care provider charges and what the plan deems to be "reasonable and customary" for the service.

Don't necessarily let these extra fees scare you away from PPO insurance. It is popular for a reason. It's simply important to note that premiums alone are not an accurate indicator of your potential yearly medical costs under a PPO insurance plan.

Questions to Ask About a PPO

If you are struggling with how to evaluate the quality of your PPO plan or want to know how an HMO compared to a PPO does service wise, use the list of questions below as a guide. If, for any reason, the health insurance policy does not answer to your satisfaction, be hesitant about purchasing it.

How many doctors are there to choose from?
Are doctors in the network private or group practice physicians?
Where are the offices and hospitals in the network located?
How are referrals to specialists handled?
What hospitals are available through the plan?
What arrangements does the plan have for emergency care?
What health care services are covered?
What preventive health care services are covered?
Are there limits on medical treatments or other services?
How much is the health insurance premium?
What, if any, are the copayments for specific services?
How much more will it cost to use non-network physicians?
What is the deductible and coinsurance for non-network care?
Is there a out of pocket maximum?