Preferred Provider Organization plans (PPO) with preferred provider networks differ from Health Maintenance Organizations or HMO's. HMO plans are often referred to as managed care plans because members of these plans must select a primary care doctor who will manage, or coordinate and oversee, all necessary healthcare services. With a PPO plan, the health plan members can elect to have a primary care doctor or not and are free to use other health services as they wish but are steered towards the plan's preferred providers.
What is a Preferred Provider?
A preferred provider is a provider of medical services, be it a doctor or a medical facility such as a hospital, that is specifically contracted with a health insurance company to deliver health services to the insurer's members. Some health insurance plans have an open network of preferred providers, meaning the plan's members can see any of the preferred providers, but if the plan has a tiered network some preferred providers will have an additional cost. These cost difference will vary depending on the number of tiers the health plan has and which tier the provider falls under. Any doctor or facility, including hospitals and emergency rooms, that are not contracted with the health plan are known as out-of-network providers.
The Benefits of Using a Preferred Provider
The primary benefit of selecting a preferred provider is that a preferred provider is contracted with the insurance plan to provide medical services at a discounted rate. In some cases, such as preventive services, scheduling an appointment with a preferred provider may be free, or come with a small copayment. If there are any costs, the amount will be determined by the type of plan the member has. These costs can include a simple one-time fee, known as a copay, or a more complex bill involving a deductible and coinsurance.
Additionally, the insurance plans have a billing relationship in place with providers who are network providers. This simplifies the billing process and eliminates much of the legwork for patients. Network providers will submit claims to the health insurance provider on behalf of the patient. This relationship also means that members will not have to worry about balance billing. Seeing an out-of-network doctor or using an out-of-network facility often amounts to a considerable difference, with the patient shouldering both the added costs and paperwork.
Where to Find Your Preferred Providers
Most insurance plans these days have web portals to allow members to search for the preferred providers in their geographic region. Member's insurance cards will have a contact phone number, as well, that is generally toll-free and is a great starting point for any questions, including help finding in-network doctors and facilities.
It is important to keep in mind that doctors and hospitals contract with insurance companies independently. What this means is that a specific doctor may not be a preferred provider even if they work at a hospital that is in-network with the plan. The insurance company can also advise members if the plan uses a tiered system of network providers, and what those cost differences would be.
Are Preferred Providers the Same as Network Providers?
Yes, the term network providers are often used interchangeably with preferred providers. Insurance plans develop a "network" of providers to provide medical services at a discount. Network providers and preferred providers are both contracted, in-network providers available to the members of the health plan.
Preferred Provider vs. Participating Provider
There are some similarities between preferred providers and what are known as participating providers, but participating providers fall into a specific subset of contracted providers. Participating providers are still considered in-network, but there is one important distinction between the two types of providers. Participating provider services are not offered at the same discounted rates as preferred providers. The difference in cost between participating providers and preferred providers, depending on the specific circumstances and type of care, can be significant. A participating provider would still cost considerably less than an out-of-network provider.