A preferred provider organization (PPO) is a specific type of health insurance dictated by a flexible network of medical providers for a participant. Employees and individuals looking into PPO as a form of managed care need to understand this form of insurance from the perspectives of doctors, insurers and consumers. Healthcare in the United States is becoming more and more costly and health insurance is very necessary for every United States citizen.
The essence of the trend toward PPOs instead of health management organizations (HMO) is a concern over the flexibility of health care. Workers who switched jobs, moved across country and dealt with alternating economic statuses were unable to maintain steady coverage from the same insurer. PPO insurers have countered the inflexibility of a traditional HMO by negotiating discounted billing rates with hospitals, clinics and health care providers in all 50 states. The result of these negotiations has been a wide network of providers available to a PPO holder who is traveling or moving frequently for work.
PPO networks can take a variety of shapes depending on the unique health care environment of a particular region. Insured professionals in the Northeast and Southwest can use the flexible resources of a PPO insurer to take advantage of neighborhood clinics instead of massive emergency rooms for preventive care. Individuals in rural areas can access health care through a small doctor's office that is part of a preferred provider organization.
The majority of services provided through a PPO come from the largest health care providers in the United States. Massive health care organizations work with insurers to develop extensive fee schedules to ensure that individuals within a prescribed network are receiving the right benefits. An insurer with a nationwide reach provides access through a PPO to thousands of hospitals for busy professionals on the move.
An insurance applicant using a traditional HMO needs to declare a primary care physician before they receive care. Insurance companies offering an older style of health care want to know the primary care physician as a way to create an accurate premium. One of the major benefits for PPO participants is the lack of a primary care physician requirement on application materials. The flexibility of PPOs means that a professional can see any physician within the established network of providers without consulting a primary physician.
The reason why a primary care physician is an obstacle in other forms of health care is the necessity for referrals in order to get covered services. Insured professionals in this scenario need to get notification from their doctor that specialized services from therapists, podiatrists and others are necessary for current medical issues. A PPO participant can bypass this cumbersome process by finding a hospital or clinic with a specialist covered by the insurance policy. Health insurance companies pre-negotiate the specialists who are available to consumers based on pre-existing conditions and the complicated calculus of discounts created at the beginning of the PPO arrangement.
Consumers need to know why a PPO is beneficial to their insurance companies and health care providers to make an informed decision. The doctors and hospitals that form a preferred provider organization get the benefit of increased use of their services. An insurance holder participating in a PPO feels comfortable heading into the doctor's office for preventative care as well as emergency care. The discounts available on prescriptions, checkups and surgeries may decrease a hospital's revenue with one patient but increases revenue through optional services for a thousand patients.
The benefits of the PPO are not exclusive to the health care provider. Insurance companies created the PPO concept several decades ago to cut down on the costs to patients while maintaining a significant percentage of health care revenue. Insurance companies meet with the board of directors and clinic directors to run through discounts offered on services ranging from a simple checkup to a multi-stage surgery. While the clinics involved get a large chunk of the revenue to take care of overhead costs, insurance companies receive a percentage of each covered procedure to continue providing services to insurance holders. The benefit of increased traffic works for insurance companies as well as health care providers with the looming baby boomer generation creating a bonanza for preferred provider organizations.
All insurance companies participate in some form of utilization review when dealing with participating doctors and hospitals. A utilization review involves an insurance representative reviewing procedures and medications used in caring for an insured individual. This review features an exhaustive look at a patient's past medical history, the available resources at a covered medical facility and alternative treatments for an ailment. PPOs and health care providers battle over utilization reviews due to the intense pressure created to micromanage all aspects of individual care.
An example of how PPO utilization review can be found with ailments as simple as appendicitis. Insurance companies review the typical practice of testing bodily conditions and removing the appendix in order to create a control for their utilization studies. Doctors who want to run a large number of tests to rule out other medical problems in addition to appendicitis may run into problems in justifying insurance coverage. A consumer who understands utilization review will appreciate the reasons why PPO costs are relatively low. Insurance companies who arrange PPOs manage to keep medical bills inexpensive with thorough reviews of best medical practices.
One of the criticisms used against PPO networks is the pre-certification requirements that are mandatory for dozens of medical procedures. Critics conflate the truth when they say that the insurance provider needs to prove emergency and time-sensitive services to cut down on costs for patients. PPO insurance policies require pre-certification of covered services for outpatient and non-emergency procedures to ensure that the services are legitimate and necessary.
Insurance representatives work with health care providers to review each patient's procedures in a timely manner. Patient files and doctor's notes are traded through secure electronic networks to ensure the integrity of a patient's personal information. The main reasons for delays in pre-certification are high volumes of procedures from the same hospital, an impromptu audit of a doctor's notes based on past experience and red flags used by insurance companies to identify common areas of fraud.
There are a number of procedures that require pre-certification requirements before full coverage is provided. A patient who requires plastic surgery for emergency health reasons does not need certification by the insurance company but nose jobs, liposuction and other cosmetic surgery covered by an insurer need to be approved. The difference between an emergency procedure covered without prior notice and a non-emergency procedure requiring certification is timeliness. In the plastic surgery example, a facial surgery after an auto accident cannot be pre-certified without serious jeopardy to the patient.
The insurance industry has continued to develop the PPO idea with passive networks that allow benefits for insurance holders outside of the prescribed PPO area. These passive organizations are typical in areas where a regional or national health care provider offers a significant percentage of the health services. In a passive PPO, a patient is able to access medical and dental care from in-network providers at a regular discount as well as out-of-network providers on a sliding scale of discounts. The reason why insurance providers are able to make a passive PPO work is that the insurance discounts from network and non-network doctors are collected through quick claims.
The example of a patient looking for dental service will be illustrative about the role of passive PPOs. An insurance holder with a $500 deductible who must pay for 30% of health costs after paying the deductible can find relatively inexpensive health care within his network. This insurance holder may end up going on vacation to a city outside of his PPO's range and encounter a dental emergency. A friend can call local dentists to find one who is affiliated with a medical provider connected to your insurance company. The 30% payment of health costs inside of the network may change into 50% and there may be a fee for visiting the dentist's office during off-hours. The goal of a passive PPO is to provide a minimal amount of services to insurance holders despite geographical boundaries.
The most common way for consumers to search for a PPO is through a local insurance company. Individuals who do not have access to affordable insurance through an employer will head into an insurance office to inquire about PPO coverage. This situation can be advantageous for policy holders looking to switch to a PPO since a face-to-face meeting with an insurance agent can help you research all of your options.
Many professionals have access to an affordable PPO through their employer. Insurance policies and PPOs aren't created equal which means that an employee cannot place his entire trust into the health care offerings in the workplace. Professionals need to conduct as much research as self-employed workers, retirees and others with PPOs in order to find the best way to invest biweekly paychecks.
Consumers can conduct an extensive search for PPO insurance without an extensive sales pitch by using online comparison tools. There are dozens of websites that offer the latest quotes on insurance premiums by PPO companies to help professionals harness the competitive market of health care coverage. It is important to delve into the legitimacy of the quotes as well as the security used in each transaction of information through a third party website for the best research experience.
Customers need to have three expectations from their PPO provider in order to get the best value for their health care money. The main expectation is transparency in medical costs, negotiations and other dealings that influence insurance premiums. You should expect a report from your insurance company about new developments in the PPO as well as premium changes well ahead of the next billing cycle to anticipate major changes in your policy.
Another expectation from your PPO insurer is continued efforts to develop a wider network of health care providers. An insurance company that stands pat with its current network of hospitals and clinics will be passed eventually by competitors who are seeking out new venues of health care for their policy holders. A frequent check of policy updates as well as the online search feature for your insurance company will demonstrate the company's commitment to expanded service.
It is important for customers to expect exemplary customer service from their PPO insurer. A multi-tiered claims and communications process with online chats, phone service and quick response teams will help you solve billing problems quickly. Consumers who take this aspect of PPO insurance for granted may encounter problems in the future when a claim has been filed incorrectly.
There are a variety of health care costs that a consumer must identify in a PPO before they commit to a specific policy. The initial cost of PPO coverage can be found in the premium which can be paid on a monthly or quarterly basis depending on the insurance provider's billing options. You can play around with premium costs by changing the deductible, co-pay and office visit costs for your PPO.
The deductible is the amount of money paid by an insurance holder for discounted services before co-pay and other insurance benefits kick in. The co-pay is the amount that an insurance holder needs to pay for each service provided above and beyond the deductible. In PPO policies with office visitation coverage, an insurance holder pays a specific amount with each visit to cut down on paperwork of claiming each visit against the insurance policy.
One of the trends in PPO coverage over the last decade has been the use of health savings accounts (HSAs) to help insurance holders prepare for future medical costs. PPO policies with health savings accounts feature higher deductibles and lower premiums to help balance the increasing costs of health care. There have been many debates over the effectiveness of HSAs due to the increasing inflation of medical costs in the future compared to the static position of health savings.