In the United States, most health care operates under a managed care system. Patients have a primary physician. The specific type of system determines whom the patient can see without a referral from this primary physician. Participation in a PPO network is one option typically available. A PPO is a preferred provider organization. PPOs are categorized as gatekeeper and non-gatekeeper PPOs.
A PPO is an alternative to the HMO or health maintenance organization. They appeared in the late seventies to help companies manage rising health care costs. With a preferred provider organization, a group of physicians and other health care providers sign contracts in which they accept reduced fees in exchange for patients directed to them. PPOs list their participating physicians in a provider directory, delivered online or through the mail to plan participants. These physicians and others are called preferred providers.
A gatekeeper PPO is a PPO, or point of service plan, that requires that a plan participant designate a primary care physician. Most also require then that a participant first seek medical care and counsel from her primary care physician. The primary care physician will provide a referral if he thinks the problem warrants it. If the patient goes directly to a specialist without the “gatekeeper’s” express approval and referral form, the insurance company may not pay any of the specialist’s fees. Instead, she may have to pay the specialist 100 percent out-of-pocket. Hence, a gatekeeper PPO acts more like an HMO with regard to specialist referrals.
Co-pays and Deductibles
With PPOs, whether gatekeeper or non-gatekeeper, employees and their eligible dependents typically only pay a small co-payment when they visit preferred providers. Many PPOs waive or drastically reduce deductibles and co-insurance requirements when plan participants use preferred providers and facilities, including hospitals. PPOs tend to be more flexible than HMOs in that they provide some coverage when participants want to go outside of the network. Often, participants must pay any deductibles in full and pay any co-insurance when using physicians and facilities outside the network.
For all other medical care, gatekeeper PPOs operate the same as non-gatekeeper PPOs. Once the patient has a referral to a specialist, she can select any specialist on the preferred provider list to receive the in-network rate. She can select from any hospital or test facility shown on the list. If she chooses one not on the list, she will be subject to higher deductibles and fees.
Tiffany C. Wright has been writing since 2007. She is a business owner, interim CEO and author of "Solving the Capital Equation: Financing Solutions for Small Businesses." Wright has helped companies obtain more than $31 million in financing. She holds a master's degree in finance and entrepreneurial management from the Wharton School of the University of Pennsylvania.