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Preferred Provider Organization Plans

Preferred Provider Organization (PPO) is a managed care organization that aims to cut costs of medical care but simultaneously offers a greater range of choice. This fast growing plan consists of medical practitioners, hospitals, and other health care providers who have covenanted with an insurer or a third-party administrator to provide health care at reduced rates to the insurer's or administrator's clients. If measured on a health insurance "scale", Preferred Provider Organization is positioned in between Health Management Organizations (HMOs) and pure fee-for-service plans. In PPO, your health care is managed and therefore restricted, but you get a wider measure of choice as well.

A PPO plan is similar to an HMO in the sense that in return for a fixed monthly premium, you receive basic health care benefits from the insurer and its health care network. However, it is also different from HMO as PPO does not require a primary care physician (PCP) for referral to a specialist. The amount of co-payment will go up if you wish to have health care from outside the network, than what you would have paid if the provider belonged to the PPO network. So it boils down to a choice between a costlier indemnity plan with total freedom of choice over care and a low-cost HMO plan that restricts your care to within a network.

A PPO plan has a number of advantages: health care is cheaper if you use the PPO networks; you are free to consult any specialist, including those outside the plan; it is not mandatory for you to visit a primary care physician and out of pocket costs are limited. Among its disadvantages are: treatment outside of network is more expensive; co-payments are larger when compared to other managed care plans and you may be required to satisfy a deductible.

You should keep in mind that PPO insurance is the costliest among all managed care plans. Even if the premium is reasonable, the other fees can raise the cost of PPO considerably. For example, in addition to premium, you may have to pay coinsurance (the amount goes higher if you use non-network providers). As far as preventative services are concerned, co-insurance is generally waived and replaced with a low co-payment.

If you opt for non-network care, you have to satisfy a deductible before the insurer begins contributing. Once the deductible is met, you must pay a higher percentage of the cost and may also have to cough up the difference between what the health care provider charges and what the plan considers "reasonable and customary" for the service. Still a PPO plan remains popular because premiums alone are not an accurate indicator of your potential annual medical costs.

While choosing a PPO plan, you should be aware of how many doctors are available, the locations of offices and hospitals in the network, the manner of handling referrals to specialists, its emergency care services, hospitals available under the plan, health care and preventive health care services covered, the amount of premium, the additional amount to be paid for using non-network physicians, the deductible and coinsurance for non-network care and certain other aspects.



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