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Glossary Terms

What is a Preferred Provider Organization (PPO)?

What is a Preferred Provider Organization (PPO)?

A Preferred Provider Organization (PPO) is a health insurance plan that provides coverage through a network of selected care providers.

You can think of a PPO as a managed-care health insurance plan that offers more flexibility in coverage than Health Maintenance Organizations (HMOs). The network will include contracted medical professionals that partner with health insurance companies. Healthcare facilities and practitioners are preferred providers, providing health services to insurers' policyholders at reduced rates.

While those enrolled can receive care outside of this network, it will cost more. This means participants will receive the maximum PPO benefit when they visit in-network healthcare professionals but are also covered when they see an out-of-network provider (it will just cost them more out-of-pocket).

How Does a Preferred Provider Organization Work?

A PPO is a managed network of physicians (primary and specialty), hospitals, and other healthcare providers. Health insurance plans negotiate schedules and fees for service. While rates are typically lower than self-pay, insurers pay the PPO to access that network of care providers.

Unlike HMOs, which require participants to seek services from an assigned provider, PPO participants have access to a large network and can access care in many states and cities. Because of this freedom, accessibility, and convenience, PPO premiums are often higher than those of managed care.


When comparing a PPO and HMO plan, there are key differences:

  • Cost: PPOs are more often expensive

  • Availability: Employers commonly offer both PPOs and HMOs. HMOs are often common in the Affordable Care Act (ACA) marketplace

  • Out-of-network care: PPOs allow this but HMOs very rarely do. 

  • Need a referral to see specialists? PPOs normally do not need a referral, while HMOs do.  

  • Need a primary care physician (PCP)? PPOs do not require you to have a primary care physician, while HMOs do. 

In summary, PPOs offer greater flexibility and often do not require referrals or a PCP. HMOs can often be preferred because there is a coordination of care through the use of a PCP who has a better understanding of the patient's medical history, medications, and family history.

PPOs and Patient Records

Since PPO plan participants can go to many doctors without referrals, their health records must be accurate, complete, and those patients need to coordinate their care better.

When patients' health information is in one place, physicians can better understand their health and make better decisions. In these cases, Electronic Health Records (EHRs) that are integrated with a Health Information Exchange (HIE) are highly beneficial, providing healthcare providers with an electronic record of each patient.

So, whether a patient comes to a local healthcare facility or is in the emergency room, care providers have access to the real-time information they need to make more informed decisions and improve the quality of care. Physicians benefit from complete, up-to-date information for faster, more accurate treatment decisions and patient experience coordinated care.

Information may include allergy information, lab reports, hospital discharge summaries, mental health records, etc.

How TempDev Can Help

TempDev's team of NextGen consultants, developers, and trainers support your needs whether you want to implement, switch, or upgrade your EHR system. With TempDev's NextGen dashboardstemplates, and reports, you can better support your patients' needs, regardless of whether they are PPO or HMO participants.

Contact us here or by calling us at 888.TEMP.DEV to get the help you need to implement your EHR system.


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