Preferred Provider Organization (PPO)

The Preferred Provider Organization (PPO) is a type of Medicare Advantage Plan that is available at a local or regional area. With the PPO plan you pay less if you use doctors, hospitals, and providers that belong to the network. You can use doctors, hospitals, and providers outside of the network but at an increased cost.

The concept of the preferred provider organization is that the providers will provide the insured members of the group a substantial discount below their regular rates. The insurer is billed at a reduced rate when you (the insured) use the services of the "preferred" provider and the provider will see an increase in their business because almost all of the insured in the organization will only use providers that are members.

The insured benefit, as lower costs to the insurer results in lower rates of premiums. PPOs earn money by charging an access fee to the insurance company for the use of their network.