What is a characteristic of a Preferred Provider Organization (PPO)?

A Preferred Provider Organization (PPO) is designed to offer flexibility and cost savings for its members. One of the essential characteristics of a PPO is that it provides services at pre-arranged reduced rates. These reduced rates are negotiated between the PPO and a network of healthcare providers, allowing members to receive care at a lower cost when they use providers within the network.

This structure encourages members to seek care from preferred providers but still allows for some out-of-network coverage, often at a higher cost. Having predetermined rates helps to manage costs effectively for both the insurance company and the consumers. This arrangement emphasizes affordability and accessibility for members while maintaining a variety of healthcare options.

In contrast, high costs for all services, mandatory specialist referrals, and limited provider choices do not accurately describe the nature of PPOs. Rather, they portray characteristics typically found in other plan types, like Health Maintenance Organizations (HMOs), where costs can be higher, referrals are necessary, and options for providers are more restricted.