What is a PPO medical plan?

PPO stands for "Preferred Provider Organization". It is a variety of managed care, and as such, has certain similarities to an HMO ("Health Maintenance Organization"). It is a form of managed care that generally provides more choice of provider, and to that extent, is closer on the care continuum to an indemnity plan. Unlike an HMO, the member usually has the option to use a non-network provider. However, to encourage the use of network providers, the plan member often has to pay a greater portion of medical charges for use of one.

A PPO does not provide medical services directly, but acts as something of a go-between between buyers of health care services (such as employers, unions, third-party administrators, and others) and health care providers. It does this by negotiating contracts with providers to deliver the services to a group of covered persons.

A PPO can be sponsored by a group of medical providers, by a third party administrator, by a group of employers, by an insurer, or by some other entity. Sometimes the PPO offers a range of health, but sometimes they specialize, such as in dental care.