Which statement best contrasts a PPO with a traditional indemnity plan?

Which statement best contrasts a PPO with a traditional indemnity plan?

• A. PPO offers cost savings through in-network providers; indemnity permits any provider but with higher costs.
• B. PPO requires referrals for specialists; indemnity does not.
• C. Indemnity plans have lower premiums than PPO.
• D. PPO covers only in-network providers.

Answer: (A)

The main concept here is how cost sharing and provider networks differ between a PPO and a traditional indemnity plan. A PPO saves you money by using in-network providers, because those rates are negotiated and discounted; you can still see out-of-network providers, but at higher costs. An indemnity plan allows any licensed provider and reimburses you after service, but you’ll typically pay more out of pocket due to the lack of network discounts. So the statement that best contrasts them is that PPOs offer cost savings through in-network providers, while indemnity plans permit any provider but with higher costs. The other options don’t fit because PPOs usually don’t require referrals for specialists, PPOs are not limited to in-network providers, and indemnity plans generally don’t have lower premiums than PPOs.

The main concept here is how cost sharing and provider networks differ between a PPO and a traditional indemnity plan. A PPO saves you money by using in-network providers, because those rates are negotiated and discounted; you can still see out-of-network providers, but at higher costs. An indemnity plan allows any licensed provider and reimburses you after service, but you’ll typically pay more out of pocket due to the lack of network discounts. So the statement that best contrasts them is that PPOs offer cost savings through in-network providers, while indemnity plans permit any provider but with higher costs. The other options don’t fit because PPOs usually don’t require referrals for specialists, PPOs are not limited to in-network providers, and indemnity plans generally don’t have lower premiums than PPOs.