Preferred Provider Organization


Description:

A PPO or preferred provider organization is the same as a HMO except that it is where a group of doctors and/or hospitals that provide health care at a reduce rate for a certain group of people.

With a PPO, the user only pays for services rendered instead of the scheduled fee. All the policy holder has to do when they see a doctor is submit a claim and they will be reimbursed next time minus the co-payment. The rise of the PPOs was credited to the rise if medical inflation as well as its financial benefits. PPOs themselves earn money by charging a little fee to have access to their network.

Applications:

There are many applications for this. One is that it limits the out-of-pocket spending for the policy holder. All the holder has to do is pay the co-payment and maybe a small fee. A feature of the PPO is called the utilization review. The utilization review is where the insurer goes over the records to make the policy holders are getting the right treatment. They do this to make sure the policy holders are not getting a more expensive treatment in order to collect a bigger reimbursement. Another feature is the pre-certification requirement and this is where scheduled hospital visits as well as some outpatient surgery must have prior approval from the insurer and holder in order to advance. A PPO offers more flexibilty because it still allows users to go to doctors outside of the network. It is just a larger expense to the policy holder. When a policy holder sees a doctor that is in the network, all the user has to do is pay a small fee. Usually it is employers urging their employees to join this because it saves the company money.

Web Resources:

investor words-PPO

Related Terminology:

Health Maintenace Org - HMO

Citations/References:

Wikipedia-PPO
agency info-PPO
Kiplinger-PPO

Graphics: