Preferred provider organization

Preferred Provider Organization (PPO) is a type of health insurance arrangement that allows plan participants relative freedom to choose the doctors and hospitals they want to visit. PPOs also provide a network of healthcare providers who agree to provide care to plan participants at reduced costs. These providers could be doctors, hospitals, and other healthcare professionals.

Overview

PPOs are one of the most popular types of plans in the Individual Health Insurance Market. They allow members to see any healthcare provider of their choice, but they also offer a network of providers who will provide services at a discounted rate.

History

The concept of a PPO was first proposed in the early 1980s as a response to the rising costs of healthcare. The goal was to create a network of providers who would agree to provide services at a discounted rate in exchange for a steady stream of patients.

How PPOs Work

In a PPO, the insurance company creates a network of providers who agree to provide care at reduced rates. Plan participants are free to choose any healthcare provider, but they will receive a higher level of coverage if they choose a provider within the network.

Advantages and Disadvantages

PPOs offer a greater level of flexibility than other types of health insurance plans, such as HMOs. However, this flexibility can come at a cost, as PPOs often have higher premiums and out-of-pocket costs.

See Also

• Health Maintenance Organization
• Point of Service Plan
• Exclusive Provider Organization