PPO stands for “Preferred Provider Organization”. These plans are usually the more expensive but popular choices. Insurance companies and health plans sign contracts with doctors, hospitals and other medical providers. The providers give discounts in exchange for being listed in the network book and patients can obtain a higher level of benefits when they use the network. 

There is a variance of benefits for out of network providers, just like in a POS plan. The difference between a POS Plan and a PPO plan is that a PPO plan allows you to use any provider in the network at any time without having to get a referral from a Primary Care Physician (PCP). 

Another difference from an HMO or POS is that there are usually deductibles both inside and outside the network, but you may only have co-payments for certain services, like office visits and annual physicals. 

Most doctors today participate in several PPO, POS or HMO panels, and it is rare for a hospital not to participate in most plans. You should always check with your health plan as to whether or not a hospital is participating because the penalty for non-participating hospitals can be enormous. (Some plans only pay $600 for a non-participating hospital.) Hospitals themselves may tell you they “take” your plan when they are not providers, so it is best to check with your plan booklet or call your agent or customer service.

POS or “Point of Service” plans are very similar to HMOs when you are using the panel providers. You must go first to your PCP (Primary Care Physician) for medical treatment or referrals, and the benefits are very similar to those of an HMO with co-payments and no deductibles for most services. 

Unlike an HMO, you may see any doctor or medical provider outside of the network and still have some coverage. You may have a deductible outside the network. Be sure to check your policy or certificate to see if the benefits are based upon the actual bill by the outside provider, or whether it is based on a discounted scale. The best POS coverage pays benefits outside the panel based upon “usual, customary and reasonable” (UCR) charges. Others will state that payment is based upon “negotiated rate” which is the amount that would have been paid to a panel provider. Some plans still exclude or pay very little for non-panel hospitals. 

Because there are many variances among POS plans, you should read your coverage booklet or policy very carefully. Ask your insurance agent or employer if you are not sure about the benefits. Because there is coverage outside of the panel, your misunderstanding will usually not be sufficient reason for the plan to pay the higher level of benefit. POS plans are becoming popular as the “best of both worlds”.