Preferred Provider Organization | Meaning and Definition

What are Preferred Provider Organizations? (PPO)

Preferred Provider Organizations are a type of health plan that create a network of participating medical providers. Members of the PPO can receive care from any provider in the network but typically receive lower out-of-pocket costs if they use providers in the network.

Benefits members get from Preferred Provider Organization plans

The benefits of membership that PPOs offer is:

•   PPO plans are more affordable than traditional indemnity plans because members share the cost of care with the insurance company.
•   PPO members can choose any provider they wish, within or outside of the network.
•   No referrals are required to see a specialist.
•   Members also enjoy reduced paperwork because most services are pre-authorized, and claims are processed automatically.
•   With PPOs, there is usually no need to coordinate benefits between multiple insurance companies when treatment is received.
•   Lastly, members report greater satisfaction with PPO customer service than with traditional indemnity plans.

Difference between a PPO and an HMO health plan

The main difference between an HMO and a PPO health plan is how care is delivered. An HMO plan delivers care through a network of doctors and hospitals pre-approved by the insurance company. If you need to see a doctor not in the network, you will have to pay for the visit yourself. A PPO plan allows you to see any doctor or hospital you want, but you will have to pay more for care if you go outside the network.