As implementation of the Affordable Care Act enters its seventh consecutive year, an increasing number of insurance providers are removing spending caps on out-of-network health care costs in their “preferred provider” health plans.Further, many people who are choosing these plans are unaware of the change—a knowledge gap that may leave thousands of Americans facing astronomical health care costs next year.
How PPOs Impact Health Care Costs
Traditionally, preferred provider organizations, or PPOs, have been a popular option for families who want flexibility in their choice of health care providers at a reasonable cost. Unlike less expensive health maintenance organizations, whichonly cover care that’s provided by a designated group of professionals, PPOs allow patients to visit any health care provider they choose. Doctors who are “in network” provide care for a fixed cost that has been negotiated with the insurer. The patient pays a set portion of that cost (for example, a co-pay of $20) and the insurance company pays the rest.
Out of network providers, on the other hand,do not negotiate with the insurer to charge a set fee; they charge any amount they choose. The insurer pays its negotiated cost,(the amount it pays in-network providers) and the patient pays the rest, up to a preset out of pocket annual spending cap (known as the maximum out of pocket expense, or MOOP.)
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