Preferred Provider Organization – PPO

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DEFINITION of 'Preferred Provider Organization – PPO'

A type of health insurance arrangement that allows plan participants relative freedom to choose the doctors and hospitals they want to visit. Obtaining services from doctors within the health insurance plan's network, called "preferred providers", results in lower fees for policyholders; however, out-of-network doctors are still covered. Coverage under a preferred provider organization (PPO) requires ongoing payment of premiums by policyholders to the insurance company.

INVESTOPEDIA EXPLAINS 'Preferred Provider Organization – PPO'

In contrast to an HMO, with a PPO it is not necessary to designate a single doctor as a policyholder's primary care physician, nor is it necessary to obtain a referral from a primary care physician in order to see a specialist such as an orthopedist or an ear, nose and throat doctor. However, non-emergency hospital visits and outpatient surgery often must be pre-approved by the insurer in order to be covered.

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