Meaning of PPO in Health Insurance

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.