Editing Preferred provider organization

{{Short description|Type of health insurance plan}}
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In [[Health insurance in the United States|U.S. health insurance]], a '''preferred provider organization''' ('''PPO'''), sometimes referred to as a '''participating provider organization''' or '''preferred provider option''', is a [[managed care]] organization of [[medical doctor]]s, [[hospital]]s, and other [[health profession|health care providers]] who have agreed with an insurer or a third-party administrator to provide [[health care]] at reduced rates to the insurer's or administrator's clients.

== Overview ==
A preferred provider organization is a subscription-based medical care arrangement.<ref>{{cite book|title=An Introduction to: Preferred Provider Organizations (PPOs)|first=Linda Krane|last=Ellwein|date=15 June 1982|publisher=InterStudy|ol = 14736792M}}</ref> A membership allows a substantial discount below the regularly charged rates of the designated professionals partnered with the organization. Preferred provider organizations themselves earn money by charging an access fee to the insurance company for the use of their network, unlike the usual insurance with premiums and corresponding payments paid either in full or partially by the insurance provider to the medical doctor. They negotiate with providers to set fee schedules and handle disputes between insurers and providers. PPOs can also contract with one another to strengthen their position in certain geographic areas without forming new relationships directly with providers. This will be mutually beneficial in theory as the PPO will be billed at the reduced rate when its insureds utilize the services of the "preferred" provider, and the provider will see an increase in its business as almost all insureds in the organization will only use providers who are members. PPOs have gained popularity because, although they tend to have slightly higher premiums than [[HMO]]s and other more restrictive plans, they offer patients more flexibility overall.<ref>{{cite web |url=http://healthharbor.com/health-insurance-101/plan-types |title=Health Harbor - Health Insurance Plan Choices |access-date=2011-01-27 |archive-url=https://web.archive.org/web/20110111113612/http://www.healthharbor.com/health-insurance-101/plan-types |archive-date=2011-01-11 }}</ref>

== History ==
In 1980, an early PPO was organized in Denver at [[St. Luke's Medical Center (Denver)|St. Luke's Medical Center]] at the suggestion of Samuel Jenkins,<ref name="Katz">{{Cite journal|last=Katz|first=Cheryl|date=June 1983|title=Preferred provider organizations|journal=Postgraduate Medicine|volume=73|issue=6|pages=143–146|doi=10.1080/00325481.1983.11697868|pmid=6856523|issn=0032-5481}}</ref> an employee of the [[The Segal Group|Segal Group]] who consulted with hospitals for [[Taft–Hartley Act|Taft-Hartley]] trust funds.<ref>{{Cite book|url=https://books.google.com/books?id=1OzvaySLgVAC|title=Managed Care: What It Is and How It Works|last=Kongstvedt|first=Peter|date=2009-10-07|publisher=Jones & Bartlett Learning|isbn=9780763759117}}</ref>{{Rp|6}} By 1982, 40 plans were counted and by 1983 variations such as the exclusive provider organization had arisen.<ref name="Katz" /> In the 1980s, PPOs spread in cities in the [[Western United States]], particularly California due to favorable state laws.<ref name="Katz" />

== PPO ==
Other features of a preferred provider organization generally include utilization review, where representatives of the insurer or administrator review the records of treatments provided to verify that they are appropriate for the condition being treated rather being largely, or solely, being performed to increase the number of people due. Another near-universal feature is a pre-certification requirement, in which scheduled (non-emergency) hospital admissions, and in some instances, outpatient surgery, must have the prior approval of the insurer and must often undergo "utilization review" in advance.<ref>{{Cite book|last=Haas|first=Marjorie Segel|url=https://books.google.com/books?id=bBa07Z9sFdAC&q=%22Preferred+provider+organization%22+-wikipedia|title=Preferred Provider Organization|date=1991|publisher=U.S. Department of Labor, Bureau of Labor-Management Relations and Cooperative Programs|language=en}}</ref>

== Comparison to exclusive provider organization (EPO) ==
A PPO is similar to an [[exclusive provider organization]] (EPO) in structure, administration, and operation. Unlike EPO members, however, PPO members are reimbursed for using medical care providers outside of their network of designated doctors and hospitals. However, when they use out-of-network providers PPO members are reimbursed at a reduced rate that may include higher deductibles and co-payments, lower reimbursement percentages, or a combination of these financial penalties.<ref>{{Cite web | url=https://www.831b.com/blog/in-todays-insurance-market-traditional-carriers-are/| title=Deductible Reimbursement| accessdate=2020-02-11}}</ref> EPO members, on the other hand, receive no reimbursement or benefit if they visit medical care providers outside of their designated network of doctors and hospitals. EPOs do allow reimbursement outside of the network in emergency cases, per the [[Patient Protection and Affordable Care Act|Affordable Care Act]].<ref>{{Cite web|url=https://www.healthcare.gov/using-marketplace-coverage/getting-emergency-care/|title=Getting Emergency Care|website=Healthcare.gov|access-date=2020-01-19}}</ref>

== Comparison to health maintenance organization (HMO) ==
A PPO is similar to a [[health maintenance organization]] (HMO) in structure, administration, and operation. Unlike PPOs, however, HMOs often require members to select a [[primary care physician]] (PCP), a doctor who acts as a [[gatekeeper]] to direct access to non-emergency medical services, and are required to first obtain a referral from their PCP in order to be reimbursed for the cost of medical services inside of their network of designated doctors and hospitals. HMO plans generally have lower cost and lower monthly premiums than PPO plans and HMO members can usually expect to pay less out of pocket to cover medical costs than PPO members.<ref>{{cite web|url=https://www.humana.com/medicare/medicare-resources/hmo-vs-ppo#:~:text=HMO%20plans%20typically%20have%20lower,pay%20less%20out%20of%20pocket.&text=PPOs%20tend%20to%20have%20higher,higher%20with%20a%20PPO%20plan.|title=HMO vs. PPO: Which is right for you?|publisher=[[Humana|Humana, Inc.]]}}</ref>

== See also ==
* [[Dental plan]]
* [[Health maintenance organization]]
* [[Independent practice association]]
* [[Point of service plan]]
* [[Silent PPO]]
* [[Single-payer health care]]

== References ==
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== External links ==
* [http://healthinsurance.about.com/od/understandingmanagedcare/a/HMOs_vs_PPOs.htm Healthinsurance.about.com: HMOs vs. PPOs – What Are the Differences Between HMOs and PPOs?] (2010)
* [https://web.archive.org/web/20141110115725/http://topsourcehealthcare.com/healthcare-payer-solutions/ Healthcare Network Information]

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[[Category:Health insurance in the United States]]
[[Category:Managed care]]