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Preferred Provider Organization (PPO)

A Preferred Provider Organization (PPO) is an independent network of providers that contracts with a health insurance company, an employer or a group of employers to provide health services at a discounted rate. A PPO cannot market insured health insurance policies on its own unless it obtains a license as an insurer or health care center.1 PPO members may be able to seek care from a doctor or hospital that is not a preferred provider, but will probably have to pay a higher deductible or co-payment. 2

Eligibility

Any resident of Connecticut under the age of 65 is eligible for a PPO plan. Eligible dependents include a spouse and unmarried children (biological or adoptive) under 26 years of age. Disabled dependent children, regardless of age with proper documentation, are also included.

PPO Insurance is a Reimbursement Program

Members usually pay for their health care services up to an annual deductible and are then reimbursed by the health insurance company. The doctor sends the bill to the health insurance company on behalf of the member. Reimbursement for the member or their doctor depend on the policy's co-payment and deductible, which are then subtracted.

How a PPO Works

PPO managed care plans give members access to quality care at a lower cost with the ability to make flexible health care decisions. In general, here is how a PPO works:

  1. Low Cost Care and No Claim Forms: When members need care, they are free to visit any network provider listed in the PPO directory. Members pay lower out-of-pocket costs when getting care because of negotiated discounts with network providers. The plan reimburses other costs at the highest level and the provider fills out the claim forms for the member.
  2. Freedom to See Other Providers: Members have the option of visiting providers that are not listed in their directory, but the plan reimburses costs at a lower level, and the member pays more out-of-pocket towards the cost of care. In this case, the member must also fill out the claim forms.
  3. Approval Required in Special Cases: When a doctor recommends certain types of treatment, the member must call the medical advisors at Patient Advocate for approval. If they do not call, or treatment is not approved through the plan, benefits will be paid at a lower level. 3


Advantages of PPO Plans

Disadvantages of PPO Plans

Choice of Doctor
PPO networks tend to be much broader than with HMO networks. If members see a non-network provider, the majority of PPO plans will still cover a portion of the cost (it will still be less than they would pay for an in-network provider).

Cost
PPO plans are generally more expensive than HMO health insurance plans because they provide more flexibility.

No Primary Care Physician Restrictions
Members will not likely have to designate a Primary Care Physician (PCP) or obtain referrals before visiting a specialist if they are members of a PPO.

More Paperwork
PPOs often require more paperwork than comparable HMO plans. Customer service and billing problems are often more frequent with PPO plans as well. 4

Better Coverage for Chronic Conditions and Non-traditional Medicine
People with chronic conditions like back pain, allergies, and arthritis tend to be more satisfied with PPO plans. A PPO may also cover non-traditional treatment such as chiropractic care or acupuncture.

Out-of-Network Costs
If members see an out-of-network doctor, they may be required to pay the entire bill and then submit it for reimbursement.

Members might have to pay a deductible if they choose to go outside of the PPO network, or pay the difference between what network doctors and out-of-network doctors charge.

Lower Co-Payments
PPOs provider members with a financial incentive. PPOs offer reasonable co-payments (also called co-pays) as an encouragement to stay within the group's network of practitioners.

Standard co-payments are $10 for a routine office visit during regular hours.

Higher Deductibles
The PPO deductible is often the highest among small to mid-size employers and becoming more costly every year. The median deductible for individual coverage for PPO plans was $1,000 in 2008, for example, up from $500 in 2007 and $250 in 2000, according a national survey of health plans by Mercer, a human resources consulting firm.

 

 

No Referrals Necessary
Members may go to any specialist without permission, as long as the doctor participates in the network.

PPO plans may charge higher co-payments if the physician charges more than what the PPO deems “reasonable and customary.”5

1Connecticut Insurance Department, Glossary http://www.ct.gov/cid/cwp/view.asp?Q=390158&cidNav=|48775|#P

2Connecticut Insurance Department, “Health Insurance Product Information” http://www.ct.gov/cid/cwp/view.asp?q=390270

3Health Reinsurance Association (CT), “2009 Individual PPO Plan Brochure” http://www.hract.org/hra/Brochures/2009/Individual/brochures_ind_2009.htm

4U.S. Insurance Online, “PPO Insurance” http://www.usinsuranceonline.com/health-insurance/plans/ppo.php

5Insure.com, “Health Insurance Basics” http://www.insure.com/articles/healthinsurance/basics.html

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