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.
