The Insurance Buying Guide: Preferred Provider Organizations

The Medical Expense plan can give you complete freedom of choice when it comes to doctors, pharmacies and hospitals. Or it can attempt to limit you to a preferred provider organization (PPO). In this case, it would provide a list of "preferred" doctors and hospitals. If you go to a doctor or hospital that is not on the list, the insurance company will penalize you by reimbursing a smaller percentage of your medical expenses. If you see a preferred provider, you will get the full reimbursement percentage.

If your regular doctor and your neighborhood hospital are on a list of preferred providers, it often is beneficial to go with a PPO program -- instead of a full freedom of choice plan -- because you'd be paying less to go where you planned to go already.