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When you are determining which health care benefits are best to offer to your employees, there are a few options to choose from. Over the course of the next few weeks, we are going to explore the advantages and disadvantages of each medical benefits solution to help you provide the best group health benefits, meeting both the needs of your organization and those of your employees.
Today, we are exploring the advantages and disadvantages of PPO insurance.
What is a PPO?
A Preferred Provider Organization is a network of physicians, hospitals and health care facilities that contract with specific insurance companies to offer a manager health care plan. All providers agree to a set rate under a PPO. A PPO offers discounts to visit providers within their network.
How a PPO works
A PPO allows plan members to visit any doctor or hospital without a referral from a primary care physician — the opposite of an HMO which requires referrals. With this flexibility, however, come some limitations — visits outside the network of providers are not fully covered and require higher payments from the participant.
Advantages of a PPO
As stated above, PPOs allow participants to see any doctor facility in their network without a referral. As well, out-of-network benefits also allow participants to see providers not within the network, but at a cost. Participants are also able to choose specialists without consulting a primary care physician and can be admitted to any hospital or facility of their choosing. Compared to HMOs, PPO networks are much larger than HMO networks.
Disadvantages of a PPO
While the flexibility of choosing a provider is appealing, the full rate for physicians and hospitals outside the network can be quite costly. It is important to research the PPO network to ensure the providers that are covered are adequate. If the network is not up to par, participants may feel forced to go outside the network, which results in high deductibles and coinsurance. Finally, some PPOs limit out-of-network coverage to specific conditions or have artificially low limits on maximum payments. Be sure to look for coverage with at least a $1 million maximum payout.
PPOs are often appealing to many employees, despite the disadvantages, so it may be worth it to consider a PPO as a part of your health benefit package. Talk to an employee benefit solutions specialist to find out if a PPO is the right offering for your organization, employees and group benefits strategy.