What is a PPO health insurance plan?
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UPDATED: Mar 19, 2020
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- PPO (Preferred Provider Organization) is a health insurance model that gives you more choice than HMOs
- PPOs are good for people who want to make their decisions regarding their health care
- You are allowed to go out-of-network with a PPO to find the doctors you prefer
- PPOs allow a trade-off between choice and costs if you don’t mind exchanging higher cost for the ability to choose your own doctors and specialists
You may have heard about PPO plans in health insurance, but perhaps you’re still not clear on what they are. We’ll discuss this type of service plan in this blog, but first, let’s take a quick look at the other types of delivery models so you can see how it compares.
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Types of Health Care Delivery Models
Below is a list and descriptions of the most popular types of health care delivery systems to help you decide which one is right for you, with a focus on PPOs.
First of all, HMOS (health management organization) systems take the approach that saving money is more important than having control over your choices. In an HMO, your cost will be the lowest of any plan (other than a government subsidized one such as Obamacare). But with HMOs, you will always be limited to the network that is within the HMO.
This is because the system is funded and invested in by a network of doctors, nurses, specialists, and all sorts of other types of health care professionals who have decided to dedicate themselves to their practice within the HMO model.
HMOs are best for those individuals who are rarely sick and who don’t mind losing their freedom of choice of who their doctors, dentists, and other providers will be. There are quite a few doctors who choose to honor HMOs, but not all of them will do this, so check around.
If you go outside of this network, you will not be covered. It will be 100 percent out-of-pocket expense for you.
Many people try HMOs but do not like it for this reason and move to a more flexible model. That’s where PPOs come in.
PPOs (also known as a “Preferred Provider Organization”), offers more choice by allowing you go to outside of the network of preferred providers. But, when you do step outside the network, you will end up paying more for the services.
You can pay higher premiums within the PPO systems as an option to be able to go outside the network if you have a particular specialists or physician that you prefer.
So people who don’t mind paying more but who value choice will appreciate the option to do this.
A lesser known service delivery model for health coverage is the EPO system. An EPO is an “exclusive provider organization.” As its name implies, the list of exclusive providers is the only list you can work from for your health care needs if you want to reap the benefits of this plan.
Investopedia has an impressive view of EPOs and says that they believe EPOs are nothing more than HMOs which have been revamped and reorganized under a new name with the advent of the Affordable Care Act enacted by Obama in recent months.
Whatever the case, EPOs are quite similar to the original HMOs because they maintained control of health care of individuals and families by requiring three things:
- You must stay in network to get coverage.
- You must have a primary care physician.
- The PCP must do all referrals to other specialists.
When you think about the level of control this entails, it is somewhat alarming. It’s okay so long as you like and respect the reputation of the doctors within the network. But what if you don’t? The only real control you have within an HMO is to change your primary care physician to someone you like better who is (hopefully) within the network.
But back to the discussion on EPOs, this model allows you to get similar care to HMOs, but you cannot go out of network. The only difference between HMOs and EPOs (according to Investopedia) is that EPOs have more accountable to provide “better but not more” health care to their patients.
The other health care delivery model is a POS plan. This system is referred to as a hybrid between the HMO and PPO plan. The Point of Service model allows you to stay within the network to save money or go outside the network and pay more. For those who like the choice and don’t mind paying more, this might be an option.
But, PPOs seem to offer the greatest degree of flexibility in your health coverage. PPOs allow you to stay within the network and do not require a primary care physician as some of the other systems do. Also, you do not have to be referred by any other doctor to see a specialist. You can simply choose to go to a doctor or specialist of your choice if you feel you need one.
Enrolling in a PPO plan gives you the control by allowing you to go over the head of your main doctor if you don’t agree with his findings or want a second opinion.
Many people resent the level of control some doctors take over a person’s healthcare. They rely on their doctor to make wise decisions on referrals and procedures concerning their health conditions. But what if the doctor is wrong? They are human, and they make mistakes.
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Advantages of a PPO Plan
When you compare the various types of health care plans, one thing to keep in mind is how they differ and the level of importance you put on choice regarding your health care and the care of your family. Here are some advantages of the PPO type system.
- No primary care physician required.– One of the greatest advantages of having a PPO system is that you are not required to have a primary care physician. This means that you can choose whatever doctor you want for every incident. No one person is responsible for the choices made on your health care. This is very important to some people who value choice in their health plan.
- No need to get a PCP for referrals.– Since there is no requirement to get a primary care physician on record, you also do not need a primary care physician (or your home doctor’s permission) to get a referral. If you think you need the services of a medical specialist, that is your choice. Further, you can still choose to use one of the network doctors in the PPO plan and not pay a higher rate. Likewise, if these doctors are not what you prefer, choose one of the out-of-network doctors for a higher fee or premium.
- You can go outside the network.– Just the fact that you can go outside the network for your medical care is incentive enough for many to choose this plan. Having control is extremely important when it comes to your health and the health of your children and spouse. By choosing a PPO, you will have that choice. The cost you pay will be higher costs in services but to many, it is worth the trade-off.
Disadvantages to a PPO
When we look at the advantages of a system, we should also look at the disadvantages. PPOs are not for everyone. There is more choice of health care delivery, but you end up paying more when you go outside the network. Here are a few of the disadvantages of a PPO.
- You are penalized for going outside the network with higher bills.
- Your premiums may be increased by going outside the network.
- You have to “pay for” your right to make your choices in your health care.
- It is higher than HMOs and EPOs, which offer the same care for less.
Look at these points carefully and ask yourself if a PPO is right for you. Do you value low-cost insurance? Are you rarely sick or in need of medical care? If so, an HMO or EPO might do for you.
If you do not care about the level of freedom to choose your health care providers, just stay in an HMO and let them decide for you.
But if you want that choice regarding your health care, a PPO is probably best for you. This is especially true is you have a need for medical specialists for an ongoing medical condition or if you have children with special care needs.
This allows you to choose for yourself the kind of care and the people who will be involved in your health plan, rather than leaving it to the whims of an HMO system.
Private Insurance Plans
If you want to have more flexibility in your health care insurance plan and don’t want to settle for government-based insurance such as Obamacare, you do have a choice! Talk to a private insurance agent and let them help you decide which type of plan is best for you.
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