Introduction to preferred provider organization (PPO)
A PPO is a medicare arrangement where availing medical services like consultations, hospitals and medicines are all provided for a cost lesser than it usually is under this plan. It is usually offered by a private insurance company and the participants of this network are called preferred providers.
Understanding Preferred Provider Organization
- Subscribers of healthcare plans get to choose between Preferred Provider Organization (PPO) or Health Maintenance Organisation (HMO). In a PPO, medical services are provided to the subscribed on demand at a reduced rate, as agreed during subscribing it. The subscribers pay a certain fee to avail this network of provisions. PPO plans are large and most comprehensive, webbing across cities and states, thereby boasting easy and up-to-date flexibility at the time of need. This makes it convenient for the users to avail services.
- In comparison to HMO, these plans are more expensive for the wide range of benefits they provide. In HMO, the plan assigns a primary care doctor, without whose referral and prescription, other services in the plan may not be available. That isn’t the case with PPO. As a result, the premium charged for these features is higher than HMO.
Highlights of Preferred Provider Organization
Where HMO is preferred for its affordability, PPO is preferred for its convenience and comprehensiveness. PPOs have geographical advantage and flexibility over HMOs.
Out of network services and care is also available as a part of the insurance, though altogether with the premium amount for the subscription of PPO and the insurance, the cost for those services is higher. Coverage under the plan might not apply.
PPOs make money by making the insurance companies pay to avail the charges for a reduced rate for the subscribers.
The earliest PPO network came about in the 1980s and by 1983, more than 40 plans of such variety were in circulation in the United States.
