While HMOs are feeling the wrath of persons denied care and arguments about whether the insurance companies are making decisions based on money instead of medicine, PPOs have quietly become an attractive option both for employers and employees.
PPO growth is continuing very strongly, says Bradford Kirkman-Liff, a professor in the School of Health Administration and Policy at Arizona State University. There was a time when PPOs were looking more like an HMO, but they are now offering themselves as the better access alternative. PPOs offer more choices.
HMOs control costs by restricting choices. Patients have to go through their primary care physician to have referrals approved, and even the primary care doctor has to be chosen from a list of plan-approved doctors. Anyone going outside the HMO network typically has to pay for expenses out of their own pocket.
A PPO is similar to an HMO, but offers more choices. To receive full reimbursement, patients must use network approved doctors, facilities and procedures much as they would in an HMO, but if a patient chooses to go out of network, the insurance will pay for part of the expense. As a result, PPOs are typically more expensive as much as 30 to 40 percent more than HMOs.
PPOs and other forms of health coverage which contain more choices for members are capturing more and more of the indemnity market and are attracting patients from HMOs who are willing to spend more money for more choices, says Kirkman-Liff. They will result in an increase in the overall cost of health care, but with higher levels of consumer satisfaction.
With prices on the rise this year, managers have to decide whether they can offer the more expensive PPO to their employees who are demanding better care and more choices. The health care market is consolidating at a rapid pace, and as a result, there are fewer competitors keeping price pressures low.
If PPOs are unaffordable, shop for a high quality HMO. Some are now offering PPO-like benefits such as partially reimbursed payments to out-of-network physicians. Others allow you to go directly to certain specialists, as long as they are approved by the insurer. These type of choices can make the difference between a health plan that keeps employees happy and one that ceases to be perceived as a benefit at all.
At a glance
- PPOs continue to grow in popularity.
- They often meet the needs of employers looking for cost savings while satisfying employees demand for choice.
- PPOs are more expensive than HMOs, sometimes by as much as 40 percent.