What defines a preferred provider organization (PPO)?

A preferred provider organization (PPO) is characterized by its structure, which allows members the flexibility to choose their healthcare providers. Members can see any provider, whether they are part of the PPO network or not, but there are usually different cost implications depending on the choice of provider. If a member chooses an in-network provider, they will typically incur lower out-of-pocket costs, while seeing an out-of-network provider usually results in higher costs. This flexibility is a hallmark of PPOs, distinguishing them from other types of health insurance plans that might have more restrictive provider access.

The other choices reflect features typical of different types of health insurance plans, such as Health Maintenance Organizations (HMOs) that require members to use in-network providers exclusively, or plans that require referrals for specialist visits. Additionally, a PPO does not limit coverage only to hospital stays, as this choice suggests. Overall, the ability to see any provider with varying costs is precisely what defines a PPO.