Preferred Provider Organizations (PPO)

Preferred Provider Organizations (PPO) are one type of Medicare Advantage plan that allows you to choose your own health care providers.

Each PPO has a network of doctors, hospitals, and other health care providers called “preferred providers.” Members typically pay less if they use a preferred provider because the plan has already negotiated set rates with its preferred providers.

However, you are not tied to the network and care from other health care providers is covered. Services usually cost more to the patient for out-of-network care. This flexibility is one of the reasons that PPO plans are often more expensive than HMO plans.

With most PPO plans, there is no need for a referral to see a specialist. However, like with other health care providers, seeing a specialist who is a preferred provider will be more affordable.

PPO Plans & Prescription Drug Coverage

Many PPO plans provide prescription drug coverage. Consult with the plan you are considering regarding prescription drug coverage. If you want prescription drug coverage and a PPO plan, you need to select a PPO plan that covers prescription drugs. As a Medicare Advantage (Part C) plan, you will not be eligible to join a Part D plan if you are part of a PPO plan.

PPO Plan Costs

PPO plans typically charge higher premiums than HMO plans because of the additional flexibility they provide, and the administrative costs that that flexibility entails. You will need to see if your current health care providers are in the plan’s preferred provider network. If not, you will need to consider whether changing providers, absorbing the extra cost of seeing your current providers, or selecting a different plan is right for you.

There are also out-of-pocket costs to consider when evaluating your projected total healthcare costs under a PPO plan. Under a PPO plan, there is typically a co-payment when you see a provider, or a deductible (or both). Review the plan you are considering to get an idea of your out of pocket costs.

Benefits of a PPO Plan

In summary, PPO plans can offer several benefits, including:

  • Greater flexibility in choosing providers
  • No need to choose a primary care doctor
  • Typically no need for a referral to see a specialist
  • May cover a broader array of services than an HMO