A Preferred Provider Organization is a form of managed care closest to an indemnity plan. A PPO negotiates arrangements with doctors, hospitals and other providers who accept lower fees from the insurer for their services. As a result, your cost-sharing will be lower than if you go outside the network of providers.
If you go to a doctor within the PPO network, you will pay a co-payment for certain services, such as $20 for a doctor and then your PPO insurance policy will pay the rest of the doctor’s charges, no matter what they really amount to.
Another characteristic of PPOs is the ability to make self-referrals. PPO plan members can refer themselves to doctors of their choice, including specialists, as long as those providers are also part of your PPO network. With a PPO plan, you are allowed to see providers that are NOT members of the network, but in this case, your insurance company will only pay some of those charges, leaving you to pay the balance. If you have a PPO plan, in order to make it work well for you, you should always seek medical care from members of the PPO.