Meaning of PPO in Health Insurance

PPO health plans offer benefits to insurers, providers and consumers.

PPO stands for preferred provider organization. It is a common format group health insurance policy. PPO is a networked setup whereby health insurance companies establish a contracted provider network that offers benefits to the insurer, provider and insured.

Insured Benefits

PPO is usually a convenient and efficient system of health insurance that is common in group health plans. The insured selects a provider from a network of physicians or facilities without need for referral. At the point of service, any deductibles, co-pays or co-insurances are usually due (or billed). The insurer and provider work out the insurance portion based on agreed-upon rates.

Provider Benefits

Providers benefit from greater exposure for their services as a part of a PPO network. Those insured receive a directory of providers and can often search the network online. Providers have a larger potential prospect base and less need for additional marketing expenses.

Insurer Benefits

The insurer is often more involved in facilitating the PPO process. However, insurers usually pay less in benefits because networked providers agree to reduced contracted rates for services as a requisite to being a networked provider.

References

• InvestorWords.com: PPO Definition
• HealthInsuranceControl: Preferred Provider Organization (PPO)--Health Insurance Definition