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What is a PPO?

Maryalene LaPonsie | October 27, 2010

Question: What is a PPO?

Answer: A PPO is a Preferred Provider Organization. It is a type of medical insurance that pays a fixed fee for different health care services. The PPO negotiates discounted medical coverage fees with certain health care professionals, hospitals and clinics. These preferred providers are considered in-network. Individuals with PPO medical insurance can use out-of-network providers, but your out-of-pocket expenses are generally higher.

PPO medical insurance is often amongst the more affordable health insurance plans. Because PPOs have negotiated fixed fees with their providers and may limit claims from out-of-network providers, they can keep their costs low. This results in lowering the health insurance cost for consumers.

When comparing health insurance plans, it is important to note whether your physician or preferred hospital is in the PPO network. In addition, be sure to review the medical expenses, including co-pays and deductibles, which may apply to both in-network and out-of-network services. Although PPOs are affordable health insurance options, carefully estimate all potential out-of-pocket expenses before selecting a plan.

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