What is a preferred provider organization?
A preferred provider organization, or PPO, is a type of managed care organization that is often offered as part of health insurance coverage in the United States. The basic concept of this approach is to offer insurance plan members access to highly qualified medical professionals who have also agreed to provide care at reduced prices to all plan members. While the exact structure of the PPO will vary somewhat from provider to provider, most plans of this type provide greater benefits if the member uses doctors and health care facilities that are part of the network. Often a reduced benefit is available in the member uses a doctor or facility that is not considered part of the network.
A point of service plan structured like a preferred provider organization is available in multiple configurations. Group insurance plans offered through employers and other types of organizations often use this model. People who want personal health insurance coverage are also often offered this type of plan. Many people prefer this approach as it provides the ability to pick and choose their health care providers from the list of doctors supplied by the insurance provider. This is in contrast to most HMOs or health maintenance organizations, where plan administrators assign the member to a primary care physician.
Another benefit of most preferred provider organization plans is that members can choose to use doctors outside the plan but at a reduced benefit. For example, using a primary care physician who is part of the PPO may mean that the member-only pays 20% of the charge for the office visit. In contrast, seeing a doctor who is out of network can mean a 50% out-of-pocket cost. This encourages members to seek care within the network, but still offers the option to go out of network if circumstances require and receive some form of coverage benefit.
Primary care physicians, specialists, and even health care facilities such as hospitals benefit from membership in the preferred provider organization. Since most patients who are covered will choose to use in-network health care services, this means increased business for health care providers. Also, when the PPO has a reputation for quickly processing claims, this also means that the doctor or hospital gets paid quickly, a factor that is often an important consideration when deciding whether or not to accept insurance plans offered by different providers.
When evaluating a preferred provider organization, it’s a good idea to obtain a list of health care providers that are currently enrolled in the network. Not only will this allow you to determine if the person’s current providers are included, but it will also allow you to identify specialists and various health care facilities that do accept the insurance plan. Doing so can be helpful if some kind of unusual medical situation arises at a later date, as the insured party will already be aware of the selection of in-network care options that are available in the immediate area and can plan accordingly.