A PPO is a form of managed care closest to an indemnity plan. A PPO negotiates arrangements with doctors, hospitals, and other providers of care who accept lower fees from the insurer for their services. As a result, your cost sharing will be lower than if you go outside the network of providers.

If you go to a doctor within the PPO network, you will pay a co-payment (a set amount you pay for certain services -- say $20 for a doctor or $10 for a prescription). In addition, your coinsurance will be based on the lower charges for PPO members. For example, the insurer may reimburse you for 90 percent of the cost if you go to a provider within the network. If you choose to go a provider out of the network, the insurer might only reimburse you for, say, 70 percent of the cost. In addition, with an out-of-network provider, you may have to pay the difference between what the provider charges and what the plan will pay.

Another characteristic of PPO’s is the ability to make self-referrals. In essence, plan members can refer themselves to doctors of their choice, including specialists inside and outside the network. However, as described above, plan members may incur additional charges for using out-of-network providers.

A PPO is very similar to an indemnity plan. PPO’s negotiate contracts/arrangements with doctors, hospitals, and other healthcare providers of care (all of which known as in-network providers) who accept lower fees from the insurer for their services. This results in a lower share of cost for the patient as long as they use network providers.

Patients with PPO coverage will have a co-payment (a set amount you pay for certain services) when visiting an in-network physician. Also, coinsurance charges are lower when you visit an in-network provider. For example, many in-network providers are reimbursed at a rate ranging from 80 – 90% of charges billed. An out-of-network provider will generally be reimbursed at 70% or lower of all charges billed.

A large difference between PPO’s and HMO’s is the ability for the patient to make self-referrals. For instance, PPO plan members can refer themselves to a specialist either in or out of network. HMO plan members must have a physician referral for specialist services.

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