How do HMOs and PPOs differ from each other and from traditional health care providers?
What will be an ideal response?
PPOs are health care plans that contract with health care professionals at a reduced fee. They differ from HMOs in that they do not provide benefits on a prepaid basis. Often, the PPO does not require employees to use providers in the network, but it pays a larger share of the cost of services from PPO providers. For example, the employee might pay 10 percent of the cost of a test by an in-network provider and 20 percent if the employee goes out of the PPO network. PPOs are the most widely used health plan among U.S. employers.
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