With the imposition of the Affordable Care Act, the health insurance marketplace opened its doors for the public on October, 2013. The marketplace provides individuals with a slew of healthcare options varying in coverage, convenience and price. So, now most Americans annually have to make the consequential decision of opting for a health insurance plan.
With the rise of costs associated with health insurances, it has become increasingly dire to settle with the most apt plan that complements your preferences and lifestyle. While there are quite a lot of options for an employee to choose from, today we will be discussing the PPO plan in detail to enable you to make a well-informed decision.
Understanding Preferred Provider Organizations (PPO)
If you know how HMOs work then it’d be quite easy for you to get a grasp of PPOs. Simply put, preferred provider organizations or PPO in general consists of a list of healthcare providers that you can avail services from. So, when you do pick a care provider and choose to stick to that list, you end up paying less.
Whether it is HMO or PPO you are opting for, every healthcare plan has rules that you need to abide by to obtain healthcare.
If you don’t, you’d be penalized either by not getting a return for the services you availed or by right out getting fined.
Ways through which managed health care plans cut down cost
In order to keep an eye on the costs, all managed health care plans have a set of rules. These rules typically lead to favorable outcomes by employing these two main strategies:
- They restrict your healthcare options to only the services that are absolutely crucial or the services that generally decrease the accumulated cost of healthcare for you. An example of this is preventive care.
- They restrict the healthcare providers you can consult, providing you with only a number of choices which you can opt for. The healthcare practices that you are allowed to visit more often than not provide a discount, based on which PPOs keep costs down.
How does the PPO operate?
- Cost sharing
PPOs basically work in a way that both the employer and the employee has to pay for the service availed. Both parties cover a portion of it and when the employee sees a doctor, he pays up in the deductibles, coinsurance or copayments.
PPOs use the cost-sharing principle to ensure that employees don’t misuse the facility. It is based on the assumption that if an employee has to pay for a service, regardless of how small it is, he’d think twice before availing it.
Cost sharing also enables employees to lower their premium charges. This is done when the employee contributes more towards the cost of the service which in turn reduces the amount insurance companies have to pay. This phenomenon significantly reduces the premium charges a patient has to pay up at the end.
- Using PPOs network of providers enables you to pay less
By opting for a PPO plan you are provided with a network of healthcare providers that you have to choose from for any care needs. However, if you go for a service provider outside this network, you will incur a higher cost than you would with the network of prescribed doctors. In addition to that, you’d also be responsible to file the claims yourself. However, one thing you should bear in mind is that unlike HMO, PPO does pay a small amount if you acquire care from an out-of-network care provider. This is actually one of the reasons why people opt for PPOs rather than HMOs.
- You have to get a preapproval
Another way PPOs ensure that they are only paying for medically important services is by making it mandatory for the employees to get a pre-approval before they get any procedure, major or minor done. It’s basically a way of making sure the money isn’t being spent in vain or if a cheaper treatment can be availed to keep the employee from opting for an expensive. For example, if your doctor recommends you for an eye surgery, your PPO would want you to take other, cheaper measures to tackle the problem first. So, if you do end up opting for other methods to fix the issue, and it doesn’t work out, then your PPO will give you a go-ahead with the eye-surgery.
Another plus side of the PPO plan is that, as opposed to the HMO plan, you don’t have to hire a primary care physician or a PCP. This makes matters easy for you by a tenfold. You wouldn’t have to consult a PCP every time something comes up to seek his referral. However, depending on the kind of care you need, you might have to seek approval from your insurance company. So be sure to get in touch with your PPO to avoid any miscommunications.
- The out-of-pocket maximum
Although with PPO you have to pay an out-of-pocket cost, there is a set annual limit on it, which you can’t exceed. So even though it might seem like an extra expense, with the restriction in place, you don’t end up spending beyond your capabilities and more than what you can afford.
With a variety of health-insurance plans to choose from, it gets tough to pick one from the rest. The bottom-line is to not get overwhelmed and opt for the healthcare insurance which seems to be most pertinent to the needs of the employees. If you sense that your employees are leaning towards an insurance plan that has a low cost associated to it then you should either go for the HMO or the EPO plan. On the other hand, if your employees would much rather go for an insurance plan that provides them with flexibility and wider options of healthcare providers, then its best to go for either PPO or PSO. Take a look at in-depth information about different kinds of insurance plans.