People use acronyms everyday and often they become so commonly used that many people aren’t really sure what they stand for and may be embarrassed to ask. An earlier post discussed what an HMO is and a PPO is another good example of an acronym you may not fully understand.
PPO stands for Preferred Provider Organization which is a form of managed care closest to an indemnity plan. A PPO has arrangements with doctors, hospitals, and other providers of care who have agreed to accept lower fees from the insurer for their services. As a result, your cost sharing should be lower than if you go outside the network. In addition to the PPO doctors making referrals, plan members can refer themselves to other doctors, including ones outside the plan. If you go to a doctor within the PPO network, you will pay a co-payment (a set amount you pay for certain services—say $10 for a doctor or $5 for a prescription). Your coinsurance will be based on lower charges for PPO members.
If you choose to go outside the network, you will have to meet the deductible and pay coinsurance based on higher charges. In addition, you may have to pay the difference between what the provider charges and what the plan will pay.
Ruthann Russo, PhD, JD, MPH, RHIT, is a healthcare expert with more than 20 years of experience working in and advising healthcare organizations.
