What is a PPO? Understanding PPO Health Plans

What is a PPO?

PPO, which stands for Preferred Provider Organization, is defined as a type of managed care health insurance plan that provides maximum benefits if you visit an in-network physician or provider, but still provides some coverage for out-of-network providers. Additionally, you can usually visit any provider without a referral from your primary physician.

Managed care plans attempt to reduce the cost of medical care while maintaining quality of care. PPO plans were created to gain some of the cost-saving features of an HMO (like having a network of providers) while giving members more flexibility than with a typical HMO. This mix of lower costs and greater flexibility makes PPO plans extremely popular.

PPO Network

Like an HMO plan, PPO plans also feature a network of doctors and hospitals you can visit. Similar to an HMO, PPOs have provider networks to save on health insurance costs. Providers in the network agree to accept lower payments in exchange for access to patients in the insurer’s network. Unlike HMOs, however, PPO networks do provide some coverage for out-of-network care. Using a provider who is not in the PPO network will still be covered by your health plan, but you will likely have to pay more. You will have the lowest out-of-pocket costs if you use an in-network provider.

like many HMO plans do. With a PPO plan, you can see any doctor or specialist you want without seeing your primary care physician first to get a referral.select a Primary Care PhysicianPPO plans do not have the requirement that you

PPO Costs

In general, PPO plans tend to be more expensive than an HMO plan. Your monthly premium will be higher and you will have to meet your deductible before your health insurer starts paying. You will also have to pay more out-of-pocket if you visit a provider who is not part of your PPO network.

Requiring a PCP is a cost-saving feature of HMOs. PCPs coordinate care and help determine if care is medically necessary, which tends to reduce costs. Because PPO plans don’t require a PCP, they offer more convenience but can also be more expensive.

If you choose a copay PPO plan, you will have to pay a copay (a fixed dollar amount) each time you visit a provider. Generally, a PPO plan with a copay has lower premiums than a comparable non-copay plan. That’s because in addition to paying for a portion of the service, the copay discourages members from seeking unnecessary medical care.

Pros and Cons of PPO Plans

PPO plans offer a lot of flexibility, but the downside is that there is a cost for it, relative to plans like HMOs. PPO plan positives include not needing to select a primary care physician, and not being required to get a referral to see a specialist. Furthermore, you're still covered even if you see a provider that isn't in the PPO network, though the coverage will be lower than if you see an in-network provider.

PPO plan cons include the aforementioned costs - premiums will generally be higher, and you'll usually be responsible for paying the full cost of the medical services you use until you meet the plan's deductible.

PPO Vs. HMO: How Do They Compare?

HMO plans and PPO plans have some similarities and some differences. Use our “PPO & HMO Health Plan Differences” article to view each plan’s features side by side.

Individual Health Plans from Medical Mutual

Medical Mutual doesn't currently offer individual PPO plans, but we do offer a number of quality medical plans for individuals and families, including POS plans. Our POS plans have features commonly found in PPO plans. If you're looking for Medicare PPO plans, you can learn more about our Medicare Advantage PPO plans.