PPO health insurance plans offer the greatest flexibility.
Health insurance carriers offer a variety of policies to suit the needs of employees and individuals, and specific characteristics of each plan can be customized to fit within budget constraints. Preferred provider organization plans, or PPO’s, cover approximately 50 percent of the insured people in the United States, and such plans are often considered the most advantageous types of policies.
Managed Care
PPO insurance plans are a form of managed health care, and they represent one of several plan types designed to reduce unnecessary expenses and to keep premiums reasonable. Managed care health insurance policies operate on a network infrastructure of existing groups of physicians and facilities that see the policies' patients. Prenegotiated costs and fees typically make treatment by providers in the network the least expensive and most efficient option for patients. But members are still covered for treatment from roviders who aren't in the network.
In-Network vs. Out-of-Network
Customer expenses for medical treatment are constrained to the limits set forth in their PPO health insurance plan. They are divided into two major categories--in-network and out-of-network. The patient's payments for services by doctors or facilities in the network will be at the lowest levels; typically the co-pay or an office visit ranges from $10 to $50. Visits to out-of-network providers, those not currently contracted with the health insurance carrier, will still be paid by the carrier, but at rates set below those for in-network physicians. The result is a higher cost for members who receive treatment outside the established circle of providers.
Deductibles
Although the majority of the cost for treatment from non-network physicians will satisfied by the insurance company, no benefits are paid until the member fulfills a deductible. At the time out-of-network services are rendered, the patient is responsible for the entire cost of treatment until this predefined threshold has been met. Only after the customer has paid the deductible will the insurance carrier pay its portion of the bill. Deductibles have typically existed only for out-of-network services, but recently they have started becoming part of in-network services as well, acting as another method of premium reduction. Common deductible amounts range from $500 to $5,000.
Co-Insurance
Out-of-network services received by members of a PPO insurance plan are also subject to co-insurance limitations with regard to the maximum benefit payable by the carrier. Even after the patient has fulfilled the required deductible, the carrier might not pay the entire balance due for services provided.
The insured member’s plan specifically details a "co-insurance" amount, short for "cooperative insurance," that describes how the carrier and member will share in all costs for out-of-network treatment. Any balance remaining after the deductible amount has been paid will be split between the patient and insurance company, leaving the customer responsible for another portion of the bill. Common co-insurance amounts range from 70 percent to 90 percent, requiring contributions from patients ranging from 10 percent to 30 percent.
Maximum Out-of-Pocket
Medical bills can result in financial devastation without the presence of some type of stop-loss system. PPO policies are designed to protect the customer from overwhelming debt from out-of-network services, through a maximum out-of-pocket amount. This amount represents the absolute financial ceiling a PPO member should pay for medical services. If, during the course of the insurance plan year, a customer’s spending meets or exceeds the maximum out-of-pocket amount, all treatment costs from that point forward become the responsibility of the carrier.
Referrals
Freedom and flexibility represent an important characteristic to many health insurance customers, and PPO policies offer members the most unrestricted access to care compared to other managed care plan designs. PPO health insurance plans allow members to visit any physician at any time, without the need to first visit a primary care physician for approval and referral. This flexibility reduces expenses for members by saving them the normal co-pay for office visits, and it means serious ailments can be treated more quickly and more efficiently.
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