Why can a DHMO be less expensive than a PPO?

Why can a DHMO be less expensive than a PPO?

• A. DHMO plans are always the cheapest option
• B. DHMO requires preauthorization for all procedures
• C. DHMO plans are never require a deductible
• D. Not many dentists accept an HMO plan

Answer: (D)

DHMO plans keep costs down by using a tightly controlled network and fixed payments to dentists. Because you must stay within the network and often need a primary dentist with referrals, the plan can negotiate lower rates and reduce administrative costs, which lowers premiums for members. The reason this option fits best is that not many dentists choose to participate in an HMO network, so the approved providers are limited; that smaller network allows the insurer to secure lower fees with those dentists, passing savings on to you. The other statements aren’t reliable reasons for lower cost: plans aren’t universally the cheapest, not all DHMOs pin you with preauthorization for every procedure, and deductibles aren’t a guaranteed feature across all DHMO plans.

DHMO plans keep costs down by using a tightly controlled network and fixed payments to dentists. Because you must stay within the network and often need a primary dentist with referrals, the plan can negotiate lower rates and reduce administrative costs, which lowers premiums for members. The reason this option fits best is that not many dentists choose to participate in an HMO network, so the approved providers are limited; that smaller network allows the insurer to secure lower fees with those dentists, passing savings on to you. The other statements aren’t reliable reasons for lower cost: plans aren’t universally the cheapest, not all DHMOs pin you with preauthorization for every procedure, and deductibles aren’t a guaranteed feature across all DHMO plans.