A preferred provider organization, or PPO, is a type of provider arrangement that a health plan uses to deliver medical care to its enrollees. The network is comprised of doctors, specialists, and various medical facilities such as hospitals. Collectively, these entities are known as providers. In a PPO health plan, enrollees have the choice of using either an in-network provider or an out-of-network provider.
In-network providers typically provide the least expensive care for a PPO enrollee, but the PPO plan still allows for the use of out-of-network care. An advantage of in-network providers is the absence of “balanced billing.” Balanced billing occurs when a health care provider’s standard charge is greater than the combination of insurance reimbursement and patient cost sharing, and the provider bills the patient for difference.