What is a PPO plan?

Like many Medicare Advantage plans, a Preferred Provider Organization (PPO) plan has a network of preferred providers under contract for services. However, there are no referral requirements. Members in a PPO may choose any doctor or provider that will bill the plan. Important note: Physicians and other providers have no obligation to see patients who are outside their contracted networks.

The services of out-of-network or non-preferred providers can cost more.  

For example, a visit to an in-network specialist is $35, one not in the network is $60. Cost sharing for a hospitalization stay in-network is $395 a day for the first five days and 50% of the cost for out-of-network.

Premiums tend to be higher with a PPO plan; however, there are zero-premium plans available in some areas. A PPO plan has two out-of-pocket limits: one for in-network services, with the maximum limit set at $8,850, and another for in- and out-of-network combined, a maximum of $13,300. Some plans offer lower limits. 

There are two types of PPO plans.

• A local PPO has a small service area, such as a county or part of a county, with approximately 2,000-5,000 providers in its network.
• A regional PPO has a contracted network that serves an entire region or regions and can include 16,000-17,000 providers in the network. This plan must do business in regions defined by the government, including both urban and rural areas.

An important note about PPOs and drug coverage: A beneficiary who needs coverage for prescription medications should select a PPO that includes drug coverage (known as an MA-PD plan). If the plan does not offer drug coverage, it’s not possible to join a stand-alone Part D prescription drug plan.