Preferred Provider Organization

A Preferred Provider Organization or PPO is a medical plan that offers the insured the ability to choose their care physician from a list of network providers.  Unlike a point of service (POS) or health maintenance organization (HMO), a preferred provider organization does not require the insured to select a primary care physician.

Preferred provider organizations offer the same level of services as other managed care plans including general, preventative and wellness care.

In a preferred provider organization, the employee has the option to seek help outside the PPO network of physicians.  When going outside network, the insured is usually responsible for paying both a deductible and a larger percentage of the medical services rendered or coinsurance payment.  For example, if the medical services outside of network were $2,000 and the deductible was $1,000 and the coinsurance level was 30%, the patient would be responsible for $1,000 + $1,000 x 30% or $1,300.

The added flexibility of not choosing a primary care physician and the ability to go out of network makes the cost of a PPO higher relative to a POS or HMO.