Preferred Provider Organization, Health Insurance
What Is A Preferred Provider Organization or PPO?
In contrast to HMOs, PPOs health insurance plans permit you to use primary care providers outside the PPO network. You are given financial incentives to use doctors registered in the preferred group, however. These PPOs health insurance plans include small or no deductibles and lower coinsurance payments. PPOs health insurance plans are contractual arrangements that provide services at a discount to a volume group of patients. Unlike HMOs, which are prepaid systems, PPO providers operate on a fee-for-service basis, similar to traditional indemnity arrangements. The rates, however, have been pre-negotiated between the PPO provider and parties such as employers, unions, and insurance companies. In return for their discounted rates, the "preferred" group of doctors is guaranteed a specific volume of patients.
When assessing health insurance plans offered by a PPO or an HMO make sure that your health insurance quote provides disclosures about the plan's policy towards pre-existing condition, in particular whether the coverage plan requires specific minimum waiting periods before benefits accrue. Next, do you best to determine whether the health insurance plan states clearly what your out of pocket expenses are for each plan model. As you dig deeper, ask what the health insurance plan rate increases have been over, say the past 10 years.
Buying health insurance is complicated. You'll face dizzying choices as regards policy choices and the many payment plans offered by the health insurance companies. Your choice of plans and payments will directly influence the type of care and coverage that you obtain. Despite repeated attempts to "nationalize" health care, as in the 1990s Clinton presidency, no one guaranteed universal care plan exists. Regulations grow daily. Overheads and insurance liability costs for practitioners increase astronomically, all increases eventually flowing to you, the consumer, as you see annual coverage rates increase as much as 12% per annum.
Most HMOs tend to be geared more toward members of group plans rather than individuals due to the underlying economics and economies of scale advantage if larger "pools" rather than single persons. HMOs are generally the least expensive, but least flexible type of health insurance plan. An HMO requires that you only see its approved network of doctors. In general, you must see HMO-approved physicians or pay the entire cost of the visit yourself. Prior to your visit, you get a referral from your primary care physician before you receive authorization to see a specialist. Indeed, even in the direst situation you may need to get clearance before you can visit the emergency room. Clinics or central medical offices may be owned or operated by your HMO or it may consist of a network of individual practices. While rigid in regards to policy HMOs have the best reputation for covering preventive care services and health improvement programs.
Consider the following example: a visit to an in-network doctor might mean you'd have a $10 co-pay. In order for you to see an out-of-network doctor, you'd have to pay the entire bill up front and then submit the bill to your health insurance company for an 80 percent reimbursement. In addition, you might have to pay a deductible if you choose to go outside the network, or pay the difference between what the in-network and out-of-network doctors charge.
For a health insurance individual, you might expect out of pocket expenses to range from $300 to perhaps $3000 before the health insurance company takes over payments. Generally, once you've paid the deductible for a single health "event" then the health insurance company takes over payments. Your health insurance provider will then require you to initially pay up front and then send in your bill for reimbursement. In many current practices, your care provider will send out bills directly to the health insurance company, after taking your co-payment. Your health insurance provider's policy will generally describe an upper limit or ceiling for your co-pays or out of pocket expenses. After that expense threshold has been reached, then the health insurance provider pays 100% of the costs. Bottom line, fee-for-service health insurance coverage delivers flexibility in exchange for higher premiums and higher out-of-pocket expenses.