Covered California Certified Enroller Practice Exam

What does PPO stand for in healthcare?

1. Preferred Provider Organization

2. Payer Provider Option

3. Paid Provider Organization

4. Premium Provider Option

The correct answer is: Preferred Provider Organization

The correct answer is "Preferred Provider Organization." This term refers to a type of health insurance plan that provides a network of healthcare providers to offer services at reduced rates. Members of a PPO have the flexibility to use any healthcare provider, but they receive higher benefits and lower out-of-pocket costs when using providers within the network. PPOs are designed to combine some features of health maintenance organizations (HMOs) and fee-for-service plans, allowing enrollees the freedom to choose specialists without needing a referral. This aspect of flexibility and choice is what makes PPOs appealing to many individuals seeking health coverage. Understanding the definition of other options helps clarify this. "Payer Provider Option," "Paid Provider Organization," and "Premium Provider Option" are not established terms in healthcare, which reinforces the accuracy of "Preferred Provider Organization" as the recognized definition within the industry.