A Preferred Party Provider Organization (PPO) is a cluster of physicians and hospitals that have contracts with an insurance company, an employer or any other third party to provide healthcare services to that party's clients at reduces prices.
Unlike with an HMO, Preferred Party Provider Organization (PPO) members don't pre-pay for the medical services. PPO members usually get paid for the services rendered, minus co-payment if any. Typically, the bill is directly submitted by the physician to the insurance company.
Perhaps the highest difference between HMOs and PPOs is that the members of a Preferred Party Provider Organization (PPO) may visit a specialist without first getting any recommendation from a primary-care doctor. Care can also be sought from outside the provider's network against a higher co-payment.
Advantages of a Preferred Party Provider Organization (PPO)
- Limited out-of-pocket expenses - Out-of-pocket expenses like deductibles and co-payments are normally restricted, usually limiting at approximately 1,200 USD for a person or 2,100 USD for entire family unit. However, while looking for out-of-network coverage, anticipate considerably higher expenditures.
- Freedom of choice - A consumer is not restricted to sought care from within the network of the PPO. If you presently visit a doctor not included in your PPO's network, you can keep seeing the doctor. Repayment for the non-network care is however much more limited.
- No “gatekeeper” - You can visit any specialist without first getting a recommendation frpm a primary-care physician.
Disadvantages of a Preferred Party Provider Organization (PPO)
- More paperwork - You are required to complete huge amount of paperwork each time you need to be repaid for the care. In addition to that, sometimes for non-network care may need extra paperwork.
- Reimbursement is restricted to the “Customary, Usual and Reasonable” - PPO plans generally limit repayment of non-network care to certain amount they decide to be “customary, usual and reasonable” for the services provided. If your health care provider charges even more than your PPO's pre-decided limit for the service, you will have to bear the difference money.
- Deductibles for out-of-network care - While looking for non-network treatment, you might be asked to satisfy certain deductible prior to the insurance provider will start repayment.
Usually, a Preferred Provider Organization (PPO) is a better option than the HMO plan for individuals probable to incur higher medical expenditures. However, if you are given an option of PPOs, you should keep in mind that the premiums are not always the indicator of how much you will wind up paying. Chances are that the plans with high premiums could provide you with more comprehensive coverage as well as low deductible and out-of-pocket expenditures. A Preferred Provider Organization (PPO) is a good option for individuals who prefer much flexibility than the HMO providers.