What is a Preferred Provider Organization (PPO)?

A Preferred Provider Organization (PPO) is essentially a network of healthcare providers who have agreed to provide services at negotiated costs, resulting in reduced rates for members of the plan. This arrangement allows individuals the flexibility to choose their healthcare providers from a list of participating providers, where they can receive care at a lower out-of-pocket expense.

Enrolling in a PPO often means that patients can see specialists without needing a referral, which adds to the appeal of this type of insurance plan for many individuals looking for more freedom in their healthcare choices. In addition, PPOs typically cover some portion of the costs for services rendered by out-of-network providers, albeit at a higher cost to the member.

The other options refer to different types of healthcare structures. A single provider for all healthcare needs would describe a more integrated model, not typical of a PPO. A hospital network without specialists suggests a limited scope of care, which does not align with the broader network of services that a PPO offers. Lastly, a pharmacy benefit management company focuses specifically on managing prescription drug benefits and does not encompass the broad range of medical services provided in a PPO.