What is a PPO?

A preferred provider organization insurance plan, also called a PPO, allows you to use medical providers that are in your plan’s network or outside of it, but you pay more to use providers outside the network, including doctors, specialists and even hospitals. A PPO gives you more flexibility in your provider choices.

Deeper definition

When you sign up for a PPO plan, you are given a network of providers, including doctors and specialists. Unlike with other plans, such as a health maintenance organization (HMO), you are responsible for seeing to your care. This includes scheduling an appointment with a specialist who might focus on a specific medical problem you have.

PPO plans are known for their flexibility, though they generally carry a higher monthly premium than other plans. Employers may offer PPO plans as part of their medical benefits for their workers, and retirees can opt for PPO plans as part of their Medicare coverage.

In contrast to the added flexibility that a PPO affords you, it does not cover as much as other types of insurance plans. Sometimes the covered amount is as low as 60 percent of an emergency room visit, for example. When choosing a PPO plan, make sure you are OK with the coverage amounts.

Before signing up for a PPO, you’ll also want to consider other types of plans and compare the benefits with what you need.

The main difference between a PPO and an HMO is that an HMO requires you to have a primary care physician who coordinates your care while a PPO does not. Prices for a PPO tend to be higher than those for a comparable HMO.

A provider-sponsored organization, or PSO, operates much like an HMO, but allows for out-of-network care. The biggest difference between a PPO and PSO is that a PSO requires you to get a referral from your primary care physician to use someone outside your plan’s network. A PSO generally costs less than a PPO plan.

An exclusive provider organization, or EPO, combines the lower cost of an HMO with some of the benefits of a PPO, such as not having to choose a primary care physician. Unlike a PPO, an EPO does not allow you to see someone out of the plan’s network.

Example of a PPO

PPO insurance plans are popular because of their flexibility. You are encouraged to choose in-network doctors and other providers, but you don’t have to. In-network services, however, are covered at a higher benefit level. A PPO generally has a higher monthly premium, but it can be a good choice for those who want the freedom to choose almost any doctor or medical facility they want.

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