Why does the RCA plan use PPOs (preferred provider organizations)?
PPOs are the most common type of medical insurance plan in the United States. In fact, the concept of preferred providers is at the heart of PPO, POS (point of service) and HMO (health maintenance organization) plan platforms. In 2002, 94 percent of employees in the United States were enrolled in one of these plans with “preferred providers.” The idea behind using preferred providers is volume purchasing. By contracting with particular groups of medical providers–hospitals and physicians–managed care plans or networks are able to obtain discounts. These discounts provide significant savings compared to plans with no network of preferred providers. PPO and POS plans provide coverage for services by providers outside the negotiated network, but participants pay a higher share of the cost. This higher cost-sharing helps offset the higher charges from the non-network providers. Some HMOs provide coverage for non-network providers, while other HMOs do not provide coverage outside the netw
