How Does a PPO Work?
A PPO health plan contracts with doctors, hospitals and other health care providers to offer medical services to its members. The health care providers who belong to the PPO are called the PPO network. PPO members usually get their care from the plan’s network of doctors and hospitals but members have the option to get care from providers who do not belong to the PPO. When members use providers who are not part of the PPO network most often the member pays more for the service.
Most PPOs do not require members to choose a personal doctor -- a Primary Care Physician. The member can schedule a visit with any doctor in the PPO network without the need to get an “ok” or a referral. Though many PPO members prefer to use a regular personal doctor like a family practice or internal medicine physician, other PPO members get regular care from a specialist like a cardiologist or gynecologist and use that doctor as their main physician.
PPOs offer many different insurance products—the medical services that are included and the amount that you pay can differ a lot depending upon the PPO insurance product.
All PPOs charge a monthly fee, called a premium, for the insurance plan. For working people, typically the employer and the employee share this premium cost; often the employee’s share of the cost is deducted from their paycheck. Self-employed people and others who buy the PPO insurance directly pay the full premium cost.
Your costs can differ a lot depending upon the PPO insurance product – one way that these health plans control costs is to require the member to pay a larger share of the provider’s
fee for the medical service. PPOs charge members a co-payment (co-pay) or co-insurance each time they get health care services. A co-pay is a fixed fee for a specific service such as $20.00 for an office visit. Co-insurance is a percentage of the cost of the service, such as 20 percent of the cost of an office visit. One PPO product may have a higher co-pay or co-insurance for the same service than another PPO product – and, these different products can be offered by the same insurance company or by competing companies.
Your costs in a PPO often include a yearly deductible. The deductible is the amount a person pays each year before the PPO begins to pay any part of the cost of services.
A PPO contracts with doctors and hospitals using a fee schedule – to set a price for each service like an office visit, a surgery or a hospital stay. PPO providers agree to these prices and cannot charge the PPO member more. PPO members spend less when using a doctor or hospital that belongs to the PPO:
- The PPO pays a greater share of the cost, and the member pays less, for services provided by a PPO provider. If a PPO member uses a doctor or hospital that is not part of the PPO the member pays more of the cost.
- A provider who is not part of the PPO network is not limited by a fee schedule and can set the price for their services. The PPO does not pay more than its fee schedule amount so the member pays more if using a doctor or hospital that is not part of the PPO.