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.

PPO plans do not have the requirement that you select a Primary Care Physician 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.

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 of a PPO Plan

Here are a few pros of choosing a PPO plan:

  • You have access to a large network of doctors and hospitals.
  • You don’t need to wait for referrals or pre-approvals from your PCP.

Cons of a PPO Plan

There are a few negatives to enrolling in a PPO plan:

  • You must be prepared to pay for your monthly premium, copays, your deductible and coinsurance.
  • You will have to pay a higher amount if you use a non-network provider.

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.