What Does PPO Mean on Medical Insurance?

by Reannan Raine ; Updated October 25, 2017

A preferred provider organization (PPO) is a type of health or medical insurance. It is a group of physicians, clinics and hospitals who have entered into an agreement to provide health care at a discounted rate.

Organized by Groups

PPOs are organized by different groups within the health care service provider field. These groups typically include, but are not limited to, insurance companies, hospitals, doctors, dentists and large employers.


PPO participants are paid on a fee-for-service basis. This fee is a predetermined amount paid for a particular service.


PPOs offer a wider range of options in service providers than HMOs.

Discounted Rate

Services are offered at a discounted rate and the insured may choose the provider they want to use within the network.


The PPO does not maintain facilities. The services are provided in the practitioner’s facility.

Co-Payments and Deductibles

A PPO generally charges co-payments and deductibles to the insured.

About the Author

Reannan Raine worked for 30 years in the non-profit sector in various positions. She recently became a licensed insurance agent but has decided to pursue a writing career instead. Ms. Raine is hoping to have her first novel published soon.