Which statement correctly describes a Preferred Provider Organization (PPO)?

• A. Care must be obtained only from in-network providers with no out-of-network coverage.
• B. It relies on a pure fee-for-service model with no negotiated rates.
• C. It requires all care to be coordinated through a primary care physician.
• D. A health care provider contracts with the PPO to furnish health care services at a predetermined cost, much the same as the HMO.

Answer: (D)

In a PPO, providers contract with the plan to furnish services at negotiated, predetermined rates. This means the plan has negotiated prices with doctors and hospitals, and members pay less when they stay in-network. You can also use out-of-network providers, but at higher out-of-pocket costs. There’s no requirement to go through a primary care physician for referrals, which sets PPOs apart from HMOs. The statement that best captures how a PPO works is that a health care provider contracts with the PPO to furnish health care services at a predetermined cost, much the same as the HMO.