When it comes to health insurance, it is good to have choices. PPO or “Preferred Provider Organization” is one of the most popular types of health insurance plans on the market. Much like an HMO (Health Maintenance Organization), PPO health insurance offers members a wide network of healthcare providers that can be used for your medical care needs. These healthcare providers have agreed to provide members with care at a certain rate. While similar to other types of health insurance, PPO plans do have some distinct differences. Learn more about PPO health insurance and what you can expect as a member.
What Is a PPO?
A PPO is essentially a managed care arrangement that consists of a group of physicians, hospitals, and other healthcare providers. These professionals have contracts with an insurer to provide healthcare services to members at predetermined rates. With PPO health insurance, members also have the option to see physicians and visit hospitals that are out of the insurance company’s network. However, doing so will require the member to pay higher out-of-pocket costs compared to staying in-network. Today, most health insurance plans offered on the individual marketplace are PPOs.
In addition to seeing healthcare providers both in and out of network, PPOs also offer other perks. In most cases, PPO health insurance covers prescription drugs. However, as all policies are different, it is important to check the plan’s formulary. A formulary is a list of drugs that your health insurance plan will cover. With a PPO, you do not need to choose a primary care doctor. If you need to see a specialist, you will not usually have to have a referral. Much like any other healthcare provider, if you choose a specialist covered under your plan, your out-of-pocket costs will be much lower than if you choose a specialist out of your network.
While a PPO gives you ample independence compared to other types of health insurance plans, there are some downfalls that you should consider. Depending on the policy terms, you may still need to gain approval before undergoing a costly service, such as an MRI. As a health insurance member, you will also be responsible for paying high premiums, as well as your deductible before your healthcare pays for any medical care. The average deductible for an individual PPO plan is $1,046, according to a report published by the Kaiser Family Foundation.
What are the Benefits?
PPO health insurance combines the cost-saving benefits associated with managed care plans with the plethora of options associated with FFS (Fee-for-Service) plans. With a FFS insurance plan, you have the choice to select a doctor that you would like to see and payment is typically based on the charges for any serviced incurred. FFS health insurance is not as common as PPO, but does have its advantages, especially for individuals who travel out of state frequently. However, FFS health insurance plans do have a maximum cap on the medical bill amount you are responsible for paying each year.
The main benefits of PPO health insurance include:
- PPO networks are generally much larger than HMO and other networks
- PPO’s allow you to see any doctor or facility in-network without a referral
- You have the option to see specialists without going through your primary care provider (PCP)
- While you have the option of choosing a primary care provider, you do not need to remain with only that provider
- You can be admitted to any hospital or healthcare facility of your choice
- When you choose a participating provider, the amount you pay is pre-negotiated and considerably less than what you would pay without a plan
- You have more freedom to control your healthcare decisions
What Is Its History?
The history of PPOs dates back to the Health Maintenance Organization of 1973. Up until then, health insurance was generally provided to patients on an indemnity basis, meaning the insurance company would pay the doctor the total balance of the bill. While indemnity coverage was beneficial for more costly services, it typically did not cover basic services like doctor visits. To gain better control over healthcare costs, PPO health insurance was born. Today, the largest and oldest PPO network in the U.S. is MultiPlan.
What Is Its Current State?
Over the past two decades, the healthcare industry has seen managed care as its principal form of healthcare in the U.S. More than 90 million people are part of a PPO which includes 58 percent of covered workers. Today, plan enrollment patterns vary by the size of the business. Workers in firms with more than 200 workers are more likely to enroll in PPOs than workers in smaller firms. In general, PPO health insurance is more expensive than HMO plans and costs are growing. With a PPO, your monthly premium is typically higher and you must meet your deductible before your insurer will begin paying.
Is a PPO Plan Right for You?
PPO health insurance may be right for you if you want the freedom to choose nearly any healthcare provider or facility for your medical care needs. A PPO plan may also be right for you if you want a portion of your out-of-network medical care claims to be covered by your insurance company instead of having to pay it all out-of-pocket. This type of insurance may also be suited for your lifestyle if you do not want to have to get a referral before visiting a specialist.
Health Insurance for Employees
Whether you are a small business or a large corporation, choosing the right type of health insurance for your employees is critical. Providing your employees with a flexible and advantageous plan displays your commitment to the business and signifies that you value your workers. To learn about all of your health insurance options, contact the Business Benefits Group in Fairfax, VA. Our team of highly knowledgeable and certified professionals can guide you through each type of health insurance to help you make an informed decision about which is best for your employees.