Managed care
In terms of using such a plan, unlike an HMO plan, which has a copayment cost share feature (a nominal payment generally paid at the time of service), a PPO generally does not have a copayment but offers a deductible and a coinsurance feature. The deductible must be paid in full before any benefits are provided. After the deductible is met, the coinsurance benefits apply. If the PPO plan is an 80% coinsurance plan with a $1,000 deductible, the patient pays 100% of the allowed provider fee up to $1,000. The insurer will pay 80% of the other fees, and the patient will pay the remaining 20%. Charges above the allowed amount are not payable by the patient or insurer but written off as a discount by the physician.
Third-party administrator
This term is also now commonly used in commercial general liability (CGL) policies or so called "casualty" business. In these instances, the liability policies are written with a large (in excess of $50,000) self-insured retention (SIR) that operates somewhat like a deductible, but rather than being paid at the end of a claim (when a loss payment is made to a claimant), the money is paid up front by the insured for costs, expenses, attorney fees etc. as the claim moves forward. If there is a settlement or verdict within the SIR, then that is also paid by the insured up to the limit of the SIR, before the insurer steps in and pays its portion. The TPA acts like a claims adjuster for the insurance company and sometimes works in conjunction with the inside insurance company claims adjuster or an outside claims investigator as well as the defense counsel. The defense counsel in some situations is selected by the TPA. The point is that the larger the SIR, the more responsibility the TPA has over the control of the way the claim is handled and ultimately resolved. Some self-insured retentions are in the millions of dollars and the TPAs are large multinational non-insurance entities that handle all the claims. In contrast, some self-insureds choose not to outsource claims handling to a TPA, preferring instead to handle all claims in house. This is known as self-administration.