PPO--Preferred Provider Organization

PPO is a combination of traditional fee-for-service and an HMO, which is more flexible and comes with a slightly higher premium than an HMO. Comparing with HMO, it has following advantages:

Limitation to out-of pocket costs

Healthcare costs paid out of your own pocket, for example, deductibles and co-payments, are limited. For individuals out-of-pocket cost are no more than $1,200s in network care ,and for families,$2,100 is enough.

Free choice of healthcare provider

PPO members are not required to take care from a primary care physician (PCP) or consult the PCP before seeing a specialist. You may go to any specialist without permission, if only the doctor participates in the network. You can make your own choice of staying within the network or seeking care outside the group. When doctors and hospitals used are part of the PPO, the insurer covers a larger part of medical bills. Using other doctors is allowed, but results in higher costs for the insured. If you stay within the network, 90–100% of the cost is normally covered, while if you go outside the network you submit the claims, similar to an indemnity policy, and typically get 70% of the cost covered.

PPO is actually a group of doctors or hospitals that provides medical service to a specific group or association. The PPO may be set up by a particular insurance company, by one or more employers, or by some other type of organizations. PPO physicians provide medical services to the policyholders, employees at discounted rates and may carry out utilization control programs to help reduce the cost of medical care. In return, the insurer attempts to increase patient volume by creating a motive for employees or policyholders to use the physicians and facilities within the PPO network.

Rather than prepaying for medical care, PPO members pay for services as rendered. The cost for each type of service is negotiated in advance by the PPO sponsor and the healthcare providers.

As much choices as PPO offers, it still has some disadvantages:

More paperwork

Being a PPO member, to be compensated for your medical treatment, you may have to fill out lots of paperwork to make a claim.

More expensive than HMO

Compared with HMO, most PPO has larger co-payment amounts therefore you may have to pay a deductible.

Less provided coverage out of PPO

Members may receive 90% reimbursement for care obtained from network physicians, but only 60% for treatment provided out of PPO. Thus, if your doctor is outside of the PPO network, it will cost you more to choose to continue seeing him or her.