Certified Billing and Coding Specialist (CBCS) Practice Exam

In a Preferred Provider Organization (PPO) network, the tier that includes providers and facilities with the lowest costs is typically referred to as Tier 1. This tier generally consists of in-network providers who have agreed to provide services at reduced rates for PPO members. As a result, patients who choose these providers usually encounter lower out-of-pocket expenses for their medical care.

Using Tier 1 providers often means reduced copayments and coinsurance compared to those in higher tiers. The rationale behind this tiered structure is to incentivize members to use providers that have negotiated favorable terms with the insurance company, thereby promoting cost-effective care delivery and reducing overall healthcare expenses for both the patients and the insurer.

Other tiers in the PPO network, like Tier 2 or higher, usually involve higher costs because they encompass out-of-network providers or facilities that do not have such agreements or are less favored in terms of cost efficiency. Consequently, choosing providers from these higher tiers typically results in greater financial responsibility for the patient, as they would encounter larger copays and coinsurance amounts.