What is a PPO (Preferred Provider Organization)?

A PPO (Preferred Provider Organization) is a managed care plan with more flexibility than an HMO. Characteristics: a network of 'preferred' providers who have agreed to discounted rates with the insurer; members get lower cost-sharing when using in-network providers; out-of-network providers can be used at higher cost (typically higher deductible and co-insurance); no primary care physician required and no referrals needed for specialists. PPOs typically have higher premiums than HMOs because members have more freedom of choice. They appeal to people who value provider choice over lower costs. Out-of-network providers may also balance-bill (charge the difference between their fee and what the insurer reimburses), which the PPO does not cover.