Preferred Provider Organizations (PPO's)
Preferred Provider Organization, or PPO, healthcare coverage is based upon a managed care model. In these types of plans healthcare providers are part of a contracted network that belongs to the PPO. There is a principal contact, sometimes called the gatekeeper, who is in charge of administrating these networks.
If you have PPO coverage you are entitled to get good health care for an affordable price, delivered by a caregiver that is a participant in the PPO. If you use a provider outside of the PPO you are going to be liable for extra costs, and possibly the whole bill. PPOs often form alliances or extended networks with other PPOs, this can be a plus to people that may be switching from one PPO to another, as there is a chance that these two PPOs are aligned with each other. If this is the case you may not be penalized for carrying over existing care givers to the new plan.
The two types of coverage that are most common in this type of plan are the PPO and the HMO.
An HMO is usually much more rigid in its management system. They also typically cost more than PPO coverage. HMOs do not allow you to see providers outside of their network, unless you pay the entire bill out of pocket.
A PPO is usually more flexible than an HMO and usually cost less than an HMO as well. One benefit that PPO members enjoy is the ability to see providers outside the network. The PPO will pay for costs up to what they would cover for their network providers and you will usually have to cover the rest.
An SDHP, or Self Directed Health Care Plan, puts the decisions and administration of the plan into the hands of the insured party. In an SDHP you handle all the administration duties like choosing your physician, deciding on whether or not to see a specialist and other decisions. There are limitations to these plans, but the plans remain popular nevertheless. SDHPs are also subject to other limitations like rigid upper limits to certain types of coverage that puts the full responsibility of payment back on you after maximum payout has been reached.
PPOs offer care givers a defined quantity of business. As a result of being guaranteed the volume of patients, the healthcare providers, in turn, agree to offer their services for a reduced cost. There have been concerns that this volume-based approach can lead to a reduction in the quality of care provided. If you get insurance through your employer it is likely to be via either a PPO or an HMO, as these are the most typical types of healthcare coverage provided by companies to their employees.