PSI Ohio Insurance Practice Exam

Which statement is correct regarding Preferred Provider Organizations (PPOs)?

1. Patients must use in-network providers only.

2. Physicians work for a fixed salary.

3. Physicians are paid on a fee-for-service basis.

4. PPOs do not require an annual deductible.

The correct answer is: Physicians are paid on a fee-for-service basis.

Preferred Provider Organizations (PPOs) are designed to offer patients flexibility in choosing their healthcare providers while also managing costs. The statement that physicians are paid on a fee-for-service basis accurately reflects one of the key characteristics of a PPO structure. In this model, healthcare providers are reimbursed for each service they provide to patients, which can incentivize the delivery of more services. This fee-for-service arrangement allows for a broader spectrum of services to be billed separately, giving both the provider and the patient options in terms of receiving care. Patients within a PPO have the choice to go to any doctor or specialist, but they typically pay less if they choose an in-network provider. This principle distinguishes PPOs from other types of plans, such as Health Maintenance Organizations (HMOs), where patients usually need to use network providers exclusively. PPOs generally do have annual deductibles, and while they provide incentives for using network providers, they do not strictly prohibit the use of out-of-network providers, which is why the statements regarding the requirement to use in-network providers only and the fixed salaries of physicians do not accurately describe the structure of PPOs.