Preferred Provider Organization

A preferred provider organization is a managed care organization of medical doctors, hospitals, and other health care providers  who have agreed with an insurer or a third-party administrator to provide health care at reduced rates to the insurer’s or administrator’s clients. A PPO is a subscription based medical care arrangement, and allows you to visit whatever in-network health care provider you wish without first requiring a referral from a primary care physician.  A membership allows a substantial discount below the regularly charged rates of the designated professionals partnered with the organization.  They negotiate with providers to set fee schedules, and handle disputes between insurers and providers.  PPOs can also contract with one another to strengthen their position in certain geographic areas without forming new relationships directly with providers. PPOs are one of the most popular types of plans in the individual and family market.  Although they tend to have slightly higher premiums than HMOs and other more restrictive plans, they offer patients more flexibility overall by providing a large network of doctors to choose from, and reimburse members for both in-network and out-of-network expenses.  Note: Out-of-network reimbursements are at a lower rate in comparison to in-network providers. EPO vs PPO An EPO is similar to a PPO aside from the sole fact that PPOs will reimburse out-of-network providers at a reduced rate, whereas an EPO only covers in-network doctors.  EPOs are typically bound to PPO health care providers within your county of residence.  

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