A Preferred Provider Organization (PPO) is a network that includes doctors and other types of health care providers along with hospitals that work with a health insurance company or some other kind of third-party administrative organization for the purpose of providing a managed health care plan. The providers that belong to the network provide health care and medical services to individuals and families who purchase the insurance company’s health insurance plan at reduced rates compared to what individuals without the insurance pay.
PPO plans are similar to HMO plans in some respects. They both cover the full costs of health care visits made to network doctors and administrators. Where PPOs difference from HMOs is in the fact that the PPO also offer their policy holders some flexibility in terms of being able to select a primary care doctor. Under PPO plans, policy holders can elect to not have a primary care doctor. With PPO plans, you can also see specialists without getting a doctor referral. With an HMO a doctor referral is required for specialist visits.
Another way in which PPO plans are different than HMO plans is that with PPO plans, policy holders can visit specialists and doctors who do not belong to the network. However, for non-network visits policy holders will have to pay part of the expenses, as the insurance only covers a portion of the costs.
Another advantage that PPO plans have is that there network extends further, providing wider geographic coverage than most HMO networks. Most HMOs do not provide out-of-state coverage, but many PPOs do provide this.
However there is a price to be paid for the increased flexibility. PPO plans usually cost more than HMO plans. PPO policy holders will usually end up paying higher insurance premiums as well as covering some of the costs that are incurred when visiting non-network health care providers. These costs are usually co-pays and usually have to be paid to the non-network provider at the time of the visit.
A typical PPO plan will cover all or part of these costs:
- Network primary care doctor visits
- Network specialist visits
- Prescriptions
- Diagnostic lab tests
- Hospital procedures including essential surgery
- Emergency treatment
- Partial reimbursements for the costs of non-network providers
- Some plans offer dental services
Most PPO plans don’t coverage alternative therapies and treatments like aromatherapy, homeopathy and acupuncture. Surgery that is elective, for example cosmetic surgery, is also not covered.
PPO plans are available for individuals, families and businesses. HMO plans can usually only be obtained through employers, but families and individuals can obtain PPO health coverage without having an employer.
PPO plans are well suited for individuals and families who are looking for inexpensive health care but still want additional flexibility to what HMO plans provide. Families and individuals who require care from specialists will find that a PPO is more beneficial than an HMO. This is due to the fact that a PPO does allow policy holders to visit specialists without requiring a referral from a primary care doctor and they also pay part of the expenses of non-network visits. PPO plans are also beneficial for people who frequently travel out of state due to the fact that PPOs do provide out of state coverage.
