PPOs

Most Americans who have health insurance through their employer (or who are self-insured) are enrolled in some type of a managed care plan - either an HMO or PPO. The most common types of managed care plans are health maintenance organizations (HMOs) and preferred provider organizations (PPOs). Less common are point-of-service (POS) plans that combine the features of an HMO and a PPO.

All managed care plans contract with doctors, hospitals, clinics, and other health care providers such as pharmacies, labs, x-ray centers, and medical equipment vendors. This group of contracted health care providers is known as the health plan's "network."

In some types of managed care plans, you may be required to receive all your health care services from a network provider. In other managed care plans, you may be able to receive care from providers who are not part of the network, but you will pay a larger share of the cost to receive those services. 

Preferred Provider Organizations (PPOs)

A preferred provider organization (PPO) is a health plan that has contracts with a network of "preferred" providers from which you can choose. You do not need to select a PCP and you do not need referrals to see other providers in the network.
If you receive your care from a doctor in the preferred network you will only be responsible for your annual deductable (a feature of some PPOs) and a copayment for your visit. If you get health services from a doctor or hospital that is not in the preferred network (known as going "out-of-network") you will pay a higher amount. And, you will need to pay the doctor directly and file a claim with the PPO to get reimbursed.

Features of PPOs

• You can choose doctors, hospitals, and other providers from the PPO network or from out-of-network. If you choose an out-of-network provider, you most likely will pay more.
• You can receive care from any doctor you choose. But remember, you will pay more if the doctors you choose are not "preferred" providers.
• You do not need a referral to see a specialist. However, some specialists will only see patients who are referred to them by a primary care doctor. And, some PPOs require that you get a prior approval for certain expensive services, such as MRIs.
• If you get your healthcare from a network provider you usually do not need to file a claim. However, if you go out of network for services you may have to pay the provider in full and then file a claim with the PPO to get reimbursed. The money you receive from the PPO will most likely be only part of the bill. You are responsible for any part of the doctor's fee that the PPO does not pay.
• In most PPO networks you will only be responsible for the copayment. Some PPOs do have an annual deductable for any services, in network or out of network.
• If you choose to go outside the PPO network for your care, you will need to pay the provider and then get reimbursed by the PPO. Most likely, you will have to pay an annual deductable and coinsurance. For example, if the out-of-network doctor charged you $100 for a visit, you are responsible for the full amount if you have not met your deductable. If you have met the deductable, the PPO may pay 60%, or $60 and you will pay 40%, or $40.