Preferred Provider Organization (PPO)
A health insurance plan that lets you see any doctor or specialist without a referral, with lower costs for in-network providers.
What is PPO?
A preferred provider organization (PPO) is a type of health insurance plan that contracts with a network of preferred providers — doctors, specialists, and hospitals — at negotiated rates, while also offering partial coverage for out-of-network providers. Unlike HMO plans, PPOs do not require members to select a primary care physician or obtain referrals to see specialists. Members have the flexibility to see any licensed provider, though in-network care has lower cost-sharing (deductibles, copays, coinsurance) than out-of-network care. PPOs typically have higher premiums than HMOs in exchange for this flexibility. PPOs are the most common type of employer-sponsored health plan in the US and are popular with people who have established relationships with specific physicians or who anticipate needing specialist care without coordination delays.
Example
A patient with a PPO plan needs to see a cardiologist. She schedules directly without a referral and chooses her preferred in-network cardiologist, paying a $60 specialist copay. If she chooses an out-of-network cardiologist instead, she pays her out-of-network deductible first, then 40% coinsurance rather than 20% — but the visit is still partially covered.
Source: Investopedia — PPO