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Preferred Provider Organizations (PPO)


   

Preferred provider organizations (PPOs) fall between the conventional insurance and health maintenance organizations, and are offered by conventional insurance underwriters. A PPO is a network of physicians and/or hospitals that contracts with a health insurer or employer to provide health care to employees at predetermined discounted rates.

The primary characteristics of PPOs are:

  • PPOs offer a broad choice of health care providers.

  • Although there is no requirement for employees to use the PPO providers, there are strong financial reasons to do so.

  • Because of the broader choice of providers, PPOs are more expensive than HMOs, but are less expensive than fee-for-service.

  • PPOs may have less comprehensive benefits than HMOs, but the benefits usually can meet almost any need.

  • PPO providers usually collect payments directly from insurers.

 

 

 

 

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