PPO Definition | OnlineHealthIns.com Glossary

PPO (Preferred Provider Organization)

Also known as: Preferred Provider Organization

A health plan that gives you a network of preferred providers for the lowest cost, but still lets you see out-of-network providers and specialists without a referral.

A PPO (Preferred Provider Organization) offers more flexibility than an HMO. You have a network of "preferred" providers who offer the plan's best negotiated rates, but you're generally free to see any licensed provider, in or out of network, without a referral from a primary care physician.

No referral is required to see a specialist.
In-network care costs less out of pocket than out-of-network care.
Out-of-network care is usually still covered, just at a lower reimbursement rate and higher cost to you.

Because of that flexibility, PPOs typically carry higher premiums than HMOs or EPOs. You're paying for the freedom to go outside the network when you want to, whether that's seeing a specialist directly or keeping a long-time doctor who isn't in the plan's network.

A frequent point of confusion is thinking out-of-network care is free or fully covered. It's usually covered at a reduced percentage, and out-of-network providers can also bill you for the difference between their charge and what the plan pays, known as balance billing.

Example

A member on a PPO wants a second opinion from a specialist outside the network; the visit is covered, but at a lower reimbursement rate than an in-network specialist would receive.

Good to Know

Higher flexibility usually means a higher premium, so a PPO isn't automatically the best value if you rarely need out-of-network care.

Related Terms

HMO (Health Maintenance Organization) — A health plan that covers care mainly through a network of contracted providers and usually requires you to pick a primary care physician and get referrals to see specialists.

EPO (Exclusive Provider Organization) — A health plan that only covers care from its network, like an HMO, but typically doesn't require referrals to see a specialist.

Network (In-Network / Out-of-Network) — The group of doctors, hospitals, and other providers that have agreed to accept a health plan's negotiated rates; using providers outside that group usually costs more.

Coinsurance — The percentage of a covered service's cost you pay after meeting your deductible, with your insurance plan paying the rest.