Pros & Cons of PPO Insurance Programs

Some physicians avoid PPOs in favor of private pay patients.
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PPO stands for preferred provider organization, and it is one of the two most prominent types of group health insurance programs. The other is health maintenance organization, or HMO. PPO insurance programs are three-way agreements between the insurance company, the insured and a network of medical providers.

No Referrals

One of the major reasons people like PPO insurance programs is the lack of referral requirements. You do not need to get a referral from your primary physician to see a medical specialist. This can save you an extra office visit and co-pay. You may also be able to get in to see a specialist more quickly when you have an urgent care need. For people who need to see specialists for a variety of reasons, this plan benefit is significant.

No Claims

Another advantage of a typical PPO structure is that you do not have to file claims. Because the insurer and providers have a contractual arrangement, they collaborate on the payment process. You receive service and typically pay your portion on the day of service. The provider submits the service claim directly to the insurance company. Barring any issues, the claim is approved and paid without your participation. You receive an explanation of benefits showing the results. Providers are usually hooked into insurance companies through a computer network. This allows them to quickly process your insurance and let you know what you owe on the day of service.


The value of benefits in a PPO insurance plan vary by employer group and policy. Typically, though, you will have regular payments to make when you receive services. Co-payments are common when you make office visits or go to the emergency room. These may be as low as $10 or $20, but they add up over time. Some plans have coinsurance, requiring the policyholder to pay a certain percentage for services and treatment. For instance, an 80-20 coinsurance setup means you pay 20 percent for certain types of care. Before you receive any benefits, you often have to pay a minimum amount as a deductible.

In-Network Limitations

PPOs succeed based on contractual arrangements between the insurer and network providers. The providers usually agree to lower contract rates on services to participate in the network. In exchange, they get promotion through the insurer's provider directory. As the covered party, you face some common limitations in this type of network. The insurer wants you to use in-network providers because it costs them less. Therefore, your co-pays and fees are higher if you choose to use providers outside of your network. When you look for a new doctor, start with your list of in-network providers.

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