Medical insurance in the USA - a guide to understanding Preferred Provider Organisactions

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Preferred Provider Organisations (PPO)

Preferred Provider Organizations are another attempt to reduce medical costs. This is an arrangement whereby a selected group of independent hospitals and medical practitioners in a certain area agree to provide certain services at a prearranged rate.

The organizers and providers agree upon medical service charges that are generally less than the provider would charge patients not associated with the PPO.

These differ from HMOs in that the providers are paid on a fee for service basis rather than receiving a flat monthly amount and the organizer or contracting agency might be:

Traditional insurance companies
Blue Cross/Blue Shield
Local groups of hospitals
Local groups of physicians
An existing HMO
Large employers
Trade unions

Those people who will receive services select a preferred provider from a list that the PPO distributes. Usually the choices are more extensive with a PPO than a HMO.

Sometimes PPOs and HMOs are lumped together and called a managed care system. One characteristic still exists concerning regulation, however. HMOs increasingly have to meet state requirements as well as standard established by federal government. PPOs are less stringently regulated since any group that can agree on the arrangements can call itself a PPO.

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DISCLAIMER: This information is not presented by a medical practitioner and is for educational and informational purposes only. The content is not intended to be a substitute for professional medical advice, diagnosis, or treatment, nor recommendation of any product or supplier. Always seek the advice of your physician or other qualified health provider with any questions you may have regarding a medical condition and insurance policies. Never disregard professional medical advice or delay in seeking it because of something you have read.