Preferred Provider Organization (PPO)
A managed care plan with a contracted network giving the insured incentives (lower copays, full coverage in-network) to use preferred providers, while retaining out-of-network coverage at higher cost-sharing and balance-billing exposure.
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Practice This Concept
Compared with an HMO, a PPO generally offers its members:
Greater flexibility to see out-of-network providers, typically at higher out-of-pocket cost — A preferred provider organization is built on a contracted network of physicians and hospitals, but unlike an HMO it does not require a gatekeeper and it permits members to use out-of-network providers. That flexibility comes at a price: out-of-network care usually involves higher deductibles, coinsurance, and balance billing exposure because the plan reimburses at a lower level. Comparing the flexibility and cost trade-offs of HMO versus PPO designs is part of the individual plan-type coverage under AH-III.A.1a.
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