What does ppo stand for in health insurance

The difference between them is the way you interact with those networks. With an HMO plan, you pick one primary care physician.

All your health care services go through that doctor. That means that you need a referral before you can see any other health care professional, except in an emergency. Coordinating all your health care through your primary care physician means less paperwork and lower health care costs for everyone.

PPO plans give you flexibility. You can go to any health care professional you want without a referral—inside or outside of your network. 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. When you see the healthcare provider or use healthcare services, you pay for part of the cost of those services yourself in the form of deductibles, coinsurance, and copayments.

Cost-sharing helps offset the cost of your care. The more you pay toward the cost of your care, the less your health insurance plan pays, and the lower it can keep monthly premium charges. A PPO limits from whom or from where you receive healthcare services by the use of a network of healthcare providers with whom it has negotiated discounts.

And the out-of-pocket maximum is usually at least twice as high if you're receiving care outside the network. In some cases, there's no out-of-pocket maximum at all for out-of-network care, meaning that the patient's charges can continue to grow, without a cap the ACA's limits on out-of-pocket costs only apply to in-network costs.

Additionally, out-of-network providers can balance bill you after your PPO pays a portion of the claim, even if you're already paid the cost-sharing required by your health plan. This is because the out-of-network provider doesn't have a contract with your insurer and isn't required to accept the insurer's reimbursement rates as payment in full.

Still, although you pay more when you use out-of-network healthcare providers, one of the perks of a PPO is that, when you use out-of-network providers, the PPO does contribute something toward the cost of those services.

Prior authorization : In many cases, a PPO will require you to get non-emergency services pre-authorized. So it's important to read the details of your policy in order to understand whether you need prior authorization before getting certain medical services.

When you or your healthcare provider asks the PPO for pre-authorization, the PPO will probably want to know why you need that test, service, or treatment. For example, when your orthopedic surgeon asks for pre-authorization for your knee surgery, your PPO might require you to try physical therapy first. You're free to go directly to a specialist, without a referral from a PCP. With a PPO, you do not need to maintain a primary care physician, and can see a different doctor of your choice at any time, including specialists.

This also means when you are traveling, you can receive care wherever you are. Additionally, PPO plans offer more options for laboratory service providers. When you need lab work done, you can choose the most convenient location under a PPO network. If you need a lower monthly fee, consider an HMO plan.

If you travel frequently and are more likely to need care while away from home, especially if you are living with a chronic condition, or enjoy high-risk hobbies such as certain sports, you may need a PPO to provide the best coverage for your needs.

If you need a lot of specialist care, say you are managing a rare or chronic condition, you may also prefer the ease of choosing specialists and seeing them right away that you get with a HMO plan. If you mostly get care in your home city or mostly from your family physician, an HMO is more likely to provide the right coverage for you.

If you would like to keep your doctor, you can determine whether he or she is in-network under an HMO plan, a PPO plan or both. Choosing the right health plan can give you peace of mind, knowing that your insurance plan has your health needs covered.

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