Group 15988 5

Preferred Provider Organization

A preferred provider organization is a subscription-based medical care arrangement.{{cite book|title=An Introduction to: Preferred Provider Organizations (PPOs)|first=Linda Krane|last=Ellwein|date=15 June 1982|publisher=InterStudy|ol = 14736792M}} A membership allows a substantial discount below the regularly charged rates of the designated professionals partnered with the organization. Preferred provider organizations themselves earn money by charging an access fee to the insurance company for the use of their network, unlike the usual insurance with premiums and corresponding payments paid either in full or partially by the insurance provider to the medical doctor. They negotiate with providers to set fee schedules and handle disputes between insurers and providers. PPOs can also contract with one another to strengthen their position in certain geographic areas without forming new relationships directly with providers. This will be mutually beneficial in theory as the PPO will be billed at the reduced rate when its insureds utilize the services of the “preferred” provider, and the provider will see an increase in its business as almost all insureds in the organization will only use providers who are members. PPOs have gained popularity because, although they tend to have slightly higher premiums than [[HMO]]s and other more restrictive plans, they offer patients more flexibility overall.{{cite web |url= |title=Health Harbor – Health Insurance Plan Choices |access-date=2011-01-27 |archive-url= |archive-date=2011-01-11 }}

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