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Preferred Provider Organizations for Health Insurance

By Compuquotes Team on April 7th, 2008

Health Insurance

Preferred Provider Organizations (PPOs) are comprised of a network of doctors, hospitals and other healthcare providers that work with a health insurance carrier or another type of third-party administration organization to provide managed care health plans. The providers in the network provide healthcare services to people who purchase the carrier's health insurance plan, at a reduced rate compared to the costs of non-insured healthcare.

  • PPO Plans: The Basics

PPO plans resemble HMO plans in that both types fully cover the costs of network-provided healthcare visits. However, unlike HMOs, PPO plans offer consumers a certain degree of flexibility when it comes to choosing a primary care doctor. In fact, under a PPO plan, policy owners can chose not to have a primary care doctor at all. With a PPO plan, you may also visit specialists without a referral from a doctor (again, in contrast to an HMO in which a doctor's referral is needed for specialist visits.

PPO plans differ from HMO plans yet again in that on a PPO plan, you may visit doctors and specialists who are not in the organization's network. However, non-network visits do incur costs for the policy owner, with the insurance covering only part of the cost.

Another advantage of PPO plans is that they tend to have wider geographic coverage, meaning that the network extends further than an HMO network. In fact, while HMOs rarely provide out-of-state coverage, PPO plans frequently do provide this benefit.

This increased flexibility does come at a price, however. PPO plans are typically more expensive than HMO plans that provide consumers with a much lower degree of choice and flexibility in their healthcare. PPO policy holders usually pay higher premiums, and must also cover part of the cost of visiting non-network providers (in the form of co-payments that must usually be paid at the time of the visit).

  • What do PPO Plans Cover?

A standard PPO plan may provide some or all of the following:

  • Visits to network primary care doctors
  • Visits to network specialists
  • Diagnostic laboratory tests
  • Emergency treatment
  • Procedures that require hospitalization (including essential surgery)
  • Prescriptions
  • Partial reimbursement of the costs of using non-network providers (each individual plan offers this benefit in varying degrees)
  • Dental services (optional; not offered by all plans)

Most plans do not include coverage for alternative treatments and therapies such as homeopathy, aromatherapy and acupuncture. Elective surgery, such as cosmetic surgery, is also excluded from coverage.

  • Who should use a PPO Plan?

PPO plans can be purchased by individuals and families, and are also available for small and large businesses. Unlike HMO plans, which can usually be obtained only though an employer, a family or individual does not need to obtain PPO health cover via an employer.

PPO plans are ideal for families and individuals who want low-cost healthcare, but want more flexibility than an HMO plan provides. Families with members that need specialist care will also find a PPO more suitable than an HMO, as the PPO allows family members to visit specialists without a primary care doctor's referral, and also pays partial costs of non-network visits.

These plans are also suitable for anyone who travels out-of-state frequently, as the PPO can provide out-of-state healthcare cover.

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