What is PPO (Preferred Provider Organization)?
Also known as: Preferred Provider Organization, PPO plan
Definition
A PPO is a health plan that lets members see any licensed provider without a referral, paying less when they use the insurer's preferred network and more when they go outside it. PPOs trade higher premiums and deductibles for the broadest choice of doctors and hospitals in U.S. private insurance.
Real-World Example
An executive in New York keeps a PPO to see a Manhattan orthopedist directly, skipping the PCP referral step. The visit is billed at $310; the PPO negotiated rate lowers it to $184, and the plan pays 70% after the deductible.
Why It Matters
PPO flexibility matters most for people with chronic conditions, frequent travel, or established specialists. It also matters at claim time — knowing the difference between in-network coinsurance and out-of-network balance billing can determine whether a hospitalization costs $3,000 or $30,000.
Frequently Asked Questions
Do PPO plans require referrals?
No. Members can book specialists directly, which is the main reason PPOs remain popular with employer groups.
What is balance billing on a PPO?
When an out-of-network provider bills the difference between their full charge and what the PPO paid. It is legal in most states outside of emergencies covered by the No Surprises Act.