What is a preferred provider organization (PPO)?
A preferred provider organization (PPO) is a Medicare Advantage plan which gives policyholders an incentive to use the providers (doctors, hospitals) within the plan’s network of service providers. In return, the plan pays a higher percentage of your health care expenses.
But out-of-network care is also covered, albeit with higher out-of-pocket costs (this is in contrast to a plan like an HMO, which generally won’t cover out-of-network costs at all).
There are two types of Medicare Advantage PPOs: Regional PPOs and local PPOs. A regional PPO has a service area that covers an entire state or multi-state area determined by Medicare, whereas a local PPO serves a county or group of counties determined by the Medicare Advantage plan and approved by Medicare.
Virtually all Medicare Advantage PPOs are local PPOs. Local PPOs account for 42% of all Medicare Advantage plans in 2024, while regional PPOs account for only about 1% of plans.
Not all areas have Medicare Advantage PPOs available. You can check plan availability using the Medicare plan finder tool. You’ll be able to filter the results by plan type; if PPOs are available, that will be one of the options you can select.
