Many Americans covered by private medical insurance are members of managed care networks. There are two basic types of managed care plans: HMOs and PPOs. Many people are under-informed about the differences between these two types of insurance plans, causing them to choose a plan that is not their best option. Becoming familiar with the features of a managed care insurance will allow for better decisions and more efficient use of time and money.
Identification
A Preferred Provider Organization, or PPO, is a type of managed care health insurance plan that utilizes a network of physicians and facilities contracted by the insurance carrier to provide services within negotiated price boundaries. When an insured member receives treatment from a participating provider, the only costs that member is responsible for paying is pre-determined co-payments. This type of plan allows for predictable out-of-pocket expenses for the member. The insurance carrier pays the remainder to the provider without further involvement of or obligation to the insured member.
What makes a PPO different from an HMO is the ability of the insured member to receive treatment from providers outside the network of physicians and facilities. A member is not limited to the carrier's resources. However, if a member is treated by a non-participating provider, the out-of-pocket expenses may be significantly higher. Insurance companies make every effort to contain costs and urge members to seek services within the network. When services are performed by an out-of-network physican or facility, there is the possibility that the generated bill willl be higher than what the carrier is comfortable paying. For this reason, members utilizing non-participating providers are typically obligated to fulfill a deductible before the insurance company will pay anything, and are also responsible for a larger portion of the remaining balance due.
Benefits
The most powerful aspect of a PPO health insurance plan is the member's ability to seek treatment from any provider. Countless reasons exist that could cause a person to choose services from a physician or facility not contracted with the health insurance carrier. There is comfort in the knowledge that the insured member has complete control over the people and places attending to their medical needs.
Another desirable feature of a PPO is the ability to visit specialists without the need for a referral from a member's primary care physician. One of the most common complaints from people covered under an HMO plan is the carrier's requirement that they visit their family doctor before seeking treatment from an specialist. Members insured under a PPO plan do not have these same issues.
Effects
Those people insured within a PPO policy enjoy a greater sense of freedom and control than those covered under other types of programs. PPO membership also results in a dramatically lower administrative workload for the insurance carrier since there is no need to generate referral documents or schedule unnecessary office visits.
Considerations
When comparing HMOs and PPOs, potential members should review the insurance carrier's list of participating providers. Whether or not a potential member's current physicians and specialists are in-network could be the deciding factor. Most people are loyal to their family doctors and resist change. If the current doctors are not participants in the insurance carrier's network, a member must calculate the additional costs involved with retaining the physicians and determine whether or not the comfort of continuing to visit a familiar office is worth the extra premium.
Additionally, the notion of scheduling appointments with specialists without first having to visit one's family doctor may be a powerful feature to some potential members. A PPO policy offers this flexibility and control, but the cost for such benefits can be much higher.
Expert Insight
Many people purchase PPO plans over HMO plans because they fear the need for medical treatment while outside the range of their carrier's network. Knowing that the insurance company will pay a sizable percentage of treatment, regardless of the provider, is a comfort level that many people want. Most people are unaware that all plans provide for coverage in the event of an emergency, regardless of geographic location.
The chances that a person's family doctor and specialists are not participating providers with a major health insurance carrier are small. It is often in doctors' best interest to become a participating provider because their practice will be exposed to potential patients who would otherwise seek treatment elsewhere.
Tags: insurance carrier, insured member, managed care, treatment from, family doctor, health insurance, carrier network
