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Insurance Term - Preferred Provider Organization (PPO)

It is a network of healthcare service providers with which a health insurer (or an insurance company) has negotiated contracts for its insured customers to receive healthcare services at discounted costs. Healthcare decisions generally remain with the patient as he or she selects service providers and determines his or her own need for availing the services. Patients have financial incentives to select healthcare service providers within the PPO network. In short, it is an indemnity plan where coverage is provided to participants through a network of selected health care providers (such as hospitals and physicians). The enrollees may go outside the network, but would incur larger costs in the form of higher deductibles, higher coinsurance rates, or non-discounted charges from the providers. In other words, it is a combination of traditional fee-for-service and an HMO. When an individual utilizes the doctors and hospitals that are part of the PPO, he/she can have a larger part of the medical bills covered by medical reimbursement. The customer has the option of utilizing other doctors outside the ambit of PPO, but at a higher cost. Thus, Preferred Provider Organization (PPO) is a network of medical providers who charge on a fee-for-service basis, but are paid on a negotiated, discounted, fee schedule, based on the volume.

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Insurance Term - Preferred Provider Organization (PPO)

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