How do ppo networks work

Measure content performance. Develop and improve products. List of Partners vendors. Are you considering signing up for a PPO health insurance plan? Make sure it will suit your needs by understanding how it works. Are you already enrolled in a PPO? Understanding how it works will help you use your health insurance effectively and avoid expensive mistakes. PPO stands for preferred provider organization. PPOs got this name because they have lists of healthcare providers that they prefer you to use.

If you get your health care from these preferred providers, you pay less. PPOs are a type of managed care health insurance plan like their distant cousins, health maintenance organizations, or HMOs.

All managed care health plans have rules about how you have to get your health care. These include things like whether you have to stay in-network, whether you need a referral from a primary care provider , and whether you need prior authorizations for certain services. Managed care health plans have these rules in order to keep health care costs in check. The rules generally do this in two main ways:.

PPOs work in the following ways:. Cost-sharing : You pay part; the PPO pays part. A PPO uses cost-sharing to help keep costs in check. Instead of doing the same thing year after year, our clients did something different and it worked.

It has been seven years since our first client exited the managed care world. Subsequently more clients have embarked on the same journey, most with equally good results. None have returned to the world of managed care. The graph below shows one example from a school district. Click on the image to see other similar examples. Click here for additional examples. This is a BETA experience.

You may opt-out by clicking here. More From Forbes. Jul 31, , am EDT. Jul 24, , pm EDT. Jul 10, , am EDT. Jul 9, , am EDT. Jul 7, , pm EDT. Jul 6, , pm EDT. Edit Story. Sep 5, , am EDT. Dave Chase Subscriber. Tweet This. Follow me on Twitter or LinkedIn. Check out my website or some of my other work here. In most plans, the yearly deductible does not apply to preventive services. You may pay a separate yearly deductible for prescription drugs.

Out-of-Pocket Maximum This is the total you have to pay each year for most of your services. However, you may still pay co-pays or co-insurance for some services, such as prescription drugs or medical equipment, even after you meet your yearly maximum.

Hospital Costs The co-insurance or co-pay for a hospital stay can cost a lot. If you pay a co-insurance, you pay a percent of the hospital costs. This can be very expensive. The fee the PPO charges each month to maintain your coverage. The flat fee that you pay each time you see a doctor or get services. Many PPOs charge you a co-insurance instead of a co-pay. Some PPOs have a yearly deductible.

This is the total you have to pay each year for most of your services. Preferred Provider Organization PPO A Preferred Provider Organization PPO is an independent network of providers that contracts with a health insurance company, an employer or a group of employers to provide health services at a discounted rate.

PPO Insurance is a Reimbursement Program Members usually pay for their health care services up to an annual deductible and are then reimbursed by the health insurance company. How a PPO Works PPO managed care plans give members access to quality care at a lower cost with the ability to make flexible health care decisions. Members pay lower out-of-pocket costs when getting care because of negotiated discounts with network providers. The plan reimburses other costs at the highest level and the provider fills out the claim forms for the member.

Freedom to See Other Providers: Members have the option of visiting providers that are not listed in their directory, but the plan reimburses costs at a lower level, and the member pays more out-of-pocket towards the cost of care.

In this case, the member must also fill out the claim forms. Approval Required in Special Cases: When a doctor recommends certain types of treatment, the member must call the medical advisors at Patient Advocate for approval.