Preferred Provider Organization / PPO
If your health insurance plan is a Preferred Provider Organization, also called PPO Plan, what does that mean and what can you expect? PPO plans offer a wide range of coverage and pricing options. As confusing as health insurance is for the average consumer, you can learn just what PPO plans do and become knowledgeable about their shortcomings, as well.
A couple of decades ago, groups of healthcare advocates put their heads together to reduce costs while increasing benefits to individuals and families. These days, the companies that specialize in such techniques are called managed care organizations (MCOs). Your Preferred Provider Organization plan is supervised by an MCO that has contracted with an insurance company to provide benefits for you.
PPO stands for Preferred Provider Organization. Some people call it Participating Provider Organization. It means that you can seek medical services from whatever healthcare providers you want within their network of providers. Here’s how it works:
First of all, the subscribers—you and your family—will receive a discount for medical services compared to the prices that other people pay. Whether or not you realize it, part of your health insurance premium is a fee that you pay to the MCO for negotiating those rates. But the discount for services is so great that it mitigates the fee that you pay to the MCO. Very few people realize there is an intermediary MCO operating at this level. For all intents and purposes, you are dealing directly with the Preferred Provider Organization plan providers.
Why do the providers agree to accept lower rates from patients in the PPO plans? The answer is that PPO plans provide them with a ready, steady base of customers. In addition, reimbursements generally occur more quickly so that doctors don’t have to wait so long to be paid.
From the list of providers that you receive from your PPO, which includes physicians, hospitals, laboratories, and all other kinds of healthcare practitioners, you are free to see whichever ones you please. You are not required to consult with a primary care physician for referrals to specialists.
With PPO plans, many services that are beyond routine care require precertification. If your orthopedic surgeon is going to operate on your wrist for carpal tunnel syndrome, for example, his medical assistant will call the PPO plan office and speak with someone there to receive prior approval for the surgery. This kind of communication takes place for just about all hospitalizations and most outpatient procedures.
Whenever there is a dispute between a provider and the insurance company, the PPO plan comes into play. If your orthopedic surgeon disagrees with the payment from the insurance company, someone from the MCO gets involved in moderating.
Most Preferred Provider Organization plans require providers to participate in utilization review (UR) procedures. That means that doctors review other doctors’ procedures to be certain that they are truly earning their fees.
Your Preferred Provider Organization plan offers set fee schedules for providers that are in your network of choices. It usually covers about 80% of the usual, customary, and reasonable fees in your geographic area. What if you want to see a physician out of network? If you need a knee replacement and your Aunt Sally just loved her doctor but he’s not in your network, you can go to that doctor but you will pay a much higher percentage of the fees.
Preferred Provider Organization plans are among the most popular and prevalent of all health insurance options. They do the best job of blending flexibility and affordability for today’s concerned consumers.
