How do Medicare PPOs work?

PPOs are managed much like HMOs. The plan will give you a list of their providers and then also ask you to choose between them. PPO plans give patients the flexibility to see care givers outside of their provider network. However, the costs will be more to do so.

Why Would I want a PPO Instead of Original Medicare or an HMO?

PPOs offer a great alternative for many older Americans who have established relationships with one or two providers that work outside of the plan's network. Even though the provider will not be covered at the standard network rate, this is usually better than either Original Medicare or an HMO. Original Medicare premiums are generally higher than a PPO Plan. An HMO has the advantage of being a bit cheaper but the inflexibility of the having to see a primary care physician before seeing a specialist is something many people do not want to do. A PPO plan gives a Medicare recipient the advantage of both: They can have cheaper care and see doctors outside the network. When they do, it will cost more but that flexibility can be very valuable.

When a claim is filed it goes directly to the PPO Plan's insurance company. The insurance company and not Medicare decides how much they will pay. This is determined according to the rules and the regulations established by both the plan and Medicare.

How much you will end up paying under a PPO plan varies. Some of the things that can impact how much the plan will pay for care includes:

  • The type of PPO Plan and its rules and regulations.
  • The providers that you choose to see, in network and out of network.
  • How often you go to the doctor and what kind of care you need; your general health.
  • The costs of your monthly premiums, co-pays and coinsurance amounts. Generally, the higher your premiums the less you co-insurance and deductibles.
  • What kinds of extra benefits are included in the plan, how often you use these services and how much co-insurance you pay for them.

Auntie Lou says, "Add up those extras and make sure they pay off in your favor! Sometimes it is better to pay things like your gym membership and other bills out-of-pocket.

After you go to the doctor or provider a claim will be submitted to your plan. The insurance company then pays its portion. After that, both the plan and the provider will send you an accounting of the remaining amount and inform you of the amount that you need to pay. This remaining amount will generally be higher for providers outside of your network.