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​What is a PPO?

PPO stands for Preferred Provider Organization. A PPO is a kind of health insurance or managed care plan.

PPO Basics

Networks:
Like HMOs, PPOs have a network of doctors and other providers. However, you can choose to see providers who are not in the network. You usually pay a higher cost to see providers who are not in the network.

The providers in the network have an agreement with your PPO that sets a price to provide you a service, like an office visit or surgery. These providers cannot charge you more than the set price. But a provider that is not a part of the network can charge you more. Check with your PPO plan about its provider network and about costs.

Primary care doctors and medical groups:
In most PPOs you are not required to select a main doctor, also known as a primary care doctor or PCP. Some PPOs will ask you to select a doctor or a medical group that will provide most of your care. A medical group is a group of doctors and other providers that contract with a health plan. Check with your PPO plan about its rules and network of providers.

Referrals and pre-approvals:
In most PPOs, you usually can go to a specialist and get certain other services without first seeing a primary care doctor and getting a referral. You or your doctor may need to get pre-approval from your PPO before certain treatments, procedures, or services are performed. Check with your PPO plan about its rules regarding referrals and pre-approvals.

Why would I choose a PPO?

  • You have a doctor you like and you want to keep this doctor, and the doctor is in the PPO network.
  • You want to see specialists and other providers without having to get referrals and pre-approval first.
  • You want more of a choice of doctors and hospitals you can go to.
  • You want the freedom to see providers who are not in the network. You are willing to pay an extra cost if an out-of-network provider charges more than the PPO's allowed amount.

Why would I NOT choose a PPO?

  • You want easier to understand fixed costs (such as a co-pay) instead of a percentage of service costs.
  • You do not want to get bills from providers.
  • You want to avoid more paperwork related to insurance claims.

PPO Costs

In-Network Costs

PremiumThe fee the PPO charges each month to maintain your coverage. The total premium is what you pay PLUS what your employer pays.
Co-PayThe flat fee that you pay each time you see a doctor or get services. Doctor visits, prescription drugs, emergency room visits, and hospital stays have different co-pays.
Co-InsuranceMany PPOs charge you a co-insurance instead of a co-pay.  The co-insurance is a percent of the cost of a service.
Yearly DeductibleSome PPOs have a yearly deductible. This is the amount you must pay each year to providers before your PPO pays anything. In most plans, the yearly deductible does not apply to preventive services. You may pay a separate yearly deductible for prescription drugs.
Out-of-Pocket MaximumThis is the total you have to pay each year for most of your services. However, you may still pay co-pays or co-insurance for some services, such as prescription drugs or medical equipment, even after you meet your yearly maximum.
Hospital CostsThe co-insurance or co-pay for a hospital stay can cost a lot. If you pay a co-insurance, you pay a percent of the hospital costs. This can be very expensive.

Out-of-Network Costs

If you see a provider outside the PPO network, your cost will depend on the PPO's allowed amount or usual rate for the service. If the provider charges more than the allowed amount, you have to pay the extra. You also have to pay part of the allowed amount.

Before you see an out-of-network doctor, ask your PPO how much it will pay.  And ask the doctor's billing staff what the charge will be.