reimbursement: preferred provider organization (PPO)
PPOs are entities through which employer health benefit
plans and health insurance carriers contract to purchase health care services for covered
beneficiaries from a selected group of participating
providers. Typically, participating providers in PPOs agree to abide by utilization management and other procedures implemented by the PPO,
and agree to accept the PPOs reimbursement
structure and payment levels. The employer health benefit plans
and/or insurance carrier then establish financial incentives in the form of increased
benefits for their employees to use the participating preferred hospitals and physicians.
In contrast to typical HMO coverage, PPO coverage permits
members to use non-PPO providers, although higher levels of coinsurance or deductibles routinely apply to services provided
by these non-participating providers. PPOs are often formed as a competitive
response to HMOs. Some PPOs are now emerging that require providers to share in
the financial risk, and others are employing the Gatekeeper
concept.*
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*Extracted from Family Physicians
and Managed Care: A View to the 90's: (paperback 1993) with permission from American Academy of Family Physicians
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