What is the definition of Preferred Provider Organization?

A Preferred Provider Organization is a group or network of doctors and other medical providers that are part of a managed care plan.

The medical providers (doctors, hospitals, nurses, etc.) belonging to a network are usually paid using a negotiated fee schedule but are required to charge using a fee-for-service basis. These medical providers agree to give their service for a lower-than-normal fee in exchange for more patients being sent their way. Existing provider organizations may also charge insurance companies for access to the network.

Some managed care plans also allow their members to use providers that are not part of the preferred provider organization. However, these are commonly more inconvenient to use.

The preferred provider organization is usually characterized by its involvement in the medical utilization review process and a pre-certification requirement. By pre-certification, we refer to the need for patients to get the approval of the insurance industry (by way of a primary care physician) before they can make use of the services.

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