The Puzzling Popularity of the PPO. Health affairs.
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Jaydin Davis posted Jun 5, 2021 9:42 PMSubscribe
The commonwealth study ranked the United States las in administrative efficiency and access to healthcare (Schneider et al., 2017). However, over the last decade, there have been gains made to improve the issue of access. Several health insurance plans have ensured the citizens of the United States gain access to medical services. Preferred Provider Organization (PPO) is a medical arrangement where providers provide medical services to the subscribers. Health Maintenance Organization (HMO) is an insurance plan that provides medical insurance at annual fixed rates. Exclusive Provider Organization (EPO) is a hybrid health insurance plan that allows subscribers to receive services from providers and institutions from their network.
Preferred Provider Organization (PPO)
Preferred Provider Organization (PPO) has gained popularity over the years due to the flexibility of the insurance plan. PPO is defined as a network of providers and healthcare institutions like hospitals that provide medical services to subscribers. PPO offers freedom to choose healthcare providers, an advantage missing from the other insurance plans (Range, 1984). The growth of PPO can also be attributed to some of the undesirable features with the other plans like HMO, where there is the least amount of freedom in choosing a specialist (Hurley et al., 2004).
When using PPO, referrals are not necessary as the network of physicians will ensure the health issue well taken care of. There is excellent coordination of services among the providers improving the consumer experience of the plan (Range, 1984). However, the amount of paperwork involved while using the system is significant, especially when seeing out-of-network physicians. In everyday situations, the physicians will fill the paperwork for insurance purposes. The paperwork increases when seeing out-of-network physicians. This also points out the issue of administrative efficiency in the study of why the United States healthcare system lags behind other developed nations (Schneider et al., 2017).
Challenges with PPO
A single PPO plan would, on average would $7,880, while a family plan would cost $22,248 in 2020 (KFF, 2020). This is expensive compared to the HMO, where on average, a single plan would cost $7,284 and $20,809 for family cover (KFF, 2020). The increase in premium for PPO would deter most people from using the plan. Over half of the people in the United States are covered by their employers. Companies try to reduce costs, and with the benefits of PPO, companies would still shun the plan due to increased premiums.
The paperwork involved in PPO is enormous in comparison to the other plans. In a study on the rising popularity of PPO, Hurley et al. (2004) cited administration inefficiency as the biggest drawback of PPO. The inefficiency is concerned with the amount of paperwork involved when seeing out-of-network doctors.
Recommendations for PPO
The insurance plan may be rising in popularity due to the various benefits the consumers enjoy, but huge costs deter some people from using the plan. According to Pope et al., an adjustment of the premium would make the insurance even more popular. This will increase the number of people who have access to insurance coverage as more people will subscribe to the plan. Paperwork is one issue when seeking out network providers. Filling the claim paperwork is a tedious process that most consumers would rather forego. The plan should ensure that all the providers, even out-of-network providers, fill the claim paperwork.
Hurley, Robert & Strunk, Bradley & White, Justin. (2004). The Puzzling Popularity of the PPO. Health affairs (Project Hope). 23. 56-68. 10.1377/hlthaff.23.2.56.
KFF (2020). Employer Health Benefits. 2020 Summary of Findings. Retrieved from https://files.kff.org/attachment/Summary-of-Findings-Employer-Health-Benefits-2020.pdf
Pope, G. C., Greenwald, L., Kautter, J., Olmsted, E., & Mobley, L. (2006). Medicare preferred provider organization demonstration: plan offerings and beneficiary enrollment. Health care financing review, 27(3), 95–109.
Range RP. (1984). Developing a PPO: challenges and benefits. Health Prog. 1984 Dec;65(11):38-9, 54. PMID: 10269067.
Schneider Eric., Dana O. Sarnak, David Squires, Arnav Shah, and Michelle M. Doty. (2017). Mirror, Mirror 2017: International Comparison Reflects Flaws and Opportunities for Better U.S. Health Care. The Commonwealth Fund.