Preferred Provider Organization (PPO)

A PPO is a managed care health plan that gives its members multiple choices in health care and health care providers. Similar to a Health Maintenance Organization (HMO), you or your employer pay a monthly or quarterly premium for coverage and a copayment for each office visit or procedure.

However, a PPO plan is very different from an HMO as it offers more flexibility. PPOs do not require members to obtain a referral from their primary care physician (PCP) to see specialists. And a PPO’s network of physicians is often much larger than an HMO plan. Members are also able to be seen outside of the PPOs formal provider network.

For that flexibility, members usually pay higher premiums to be part of a PPO plan and often make higher out-of-pocket payments for office visits. Out-of-pocket spending can generally be lowered by using one of the PPOs network providers, but if a member prefers to stay with their long-standing physicians or specialists a PPO usually allows this flexibility.

In summary, a PPO offers more flexibility and an HMO is often better in terms of cost. HMOs are coordinated through a single primary doctor, whereas PPOs allow patients to visit a health care professional of their choice and specialists without a referral.

Be sure to review the Summary Plan Description (SPD), which is the part of the PPO policy that outlines the different benefits provided by your employer or insurance company.