Define: "Participating Provider"
In health insurance, a preferred provider organization (or "PPO", sometimes referred to as a participating provider organization) is a managed care organization of medical doctors, hospitals, and other health care providers who have covenanted with an insurer or a third-party administrator to provide health care at reduced rates to the insurer's or administrator's clients.
The idea of a preferred provider organization is that the providers will provide the insured members of the group a substantial discount below their regularly-charged rates. This will be mutually beneficial in theory, as the insurer will be billed at a reduced rate when its insured utilize the services of the "preferred" provider and the provider will see an increase in its business as almost all insureds in the organization will use only providers who are members. Even the insured should benefit, as lower costs to the insurer should result in lower rates of increase in premiums. Preferred provider organizations themselves earn money by charging an access fee to the insurance company for the use of their network. They negotiate with providers to set fee schedules, and handle disputes between insurers and providers. PPOs can also contract with one another to strengthen their position in certain geographic areas without forming new relationships directly with providers.
PPOs differ from health maintenance organizations (HMOs), in which insureds who do not use participating health care providers receive little or no benefit from their health plan. PPO members will be reimbursed for utilization of non-preferred providers, albeit at a reduced rate which may include higher deductibles, co-payments, lower reimbursement percentages, or a combination of the above. Exclusive Provider Organizations (EPOs) are similar to PPOs, except that they do not provide any benefit if the insured chooses a non-preferred provider, except for some exceptions in cases of emergencies. Some state regulations limit how much and under what circumstances an insurance plan can lower the insured's benefit for using a non-preferred provider.
Seeing a participating provider has distinct advantages over visiting a non-participating provider. Participating providers agree to accept a pre-established amount as payment in full for service. Your out-of-pocket cost is limited to the co-pay (if any) specified in your health plan (some plans also carry a small annual deductible amount).
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Non-participating providers on the other hand set their own fee. You are responsible for the difference between the approved amount and the non-participating provider’s total fee. Some non-participating providers will still bill your provider for the approved amount, while others require payment-in-full from you. You are then responsible for submitting receipts to your provider for reimbursement of the approved amount.
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