What does PPO stand for in healthcare terminology?

PPO stands for Preferred Provider Organization. This healthcare term refers to a managed care organization of medical doctors, hospitals, and other healthcare providers who have contracted with an insurer or a third-party administrator to provide healthcare at reduced rates. In a PPO, members are given the flexibility to choose between in-network providers, who offer lower out-of-pocket costs, or out-of-network providers, who may charge higher fees.

This structure allows patients to have a wider selection of healthcare providers while also benefiting from discounts negotiated by the organization. The emphasis on "preferred" indicates that utilizing contracted providers will yield the most cost-effective care for both the member and the insurer. Understanding this model is crucial for financial counseling, as it impacts healthcare costs and insurance planning strategies for individuals.