An Introduction to Medicare Preferred Provider Organization Plans

A Medicare Preferred Provider Organization (PPO) Plan is a type of Medicare Advantage Plan, offered by a Medicare-approved private insurance company.  A PPO plan will cover your Medicare Part A and Part B, as well as usually offering additional coverage and, in some cases, drug coverage. However, PPO plans do differ from Original Medicare in function and cost.

PPO plans have a specific network of approved health care providers.  While you may go to other doctors and hospitals not on the list, doing so will usually cost you more.  Choosing a doctor from your PPO plan’s list allows you, then, to save money.  You can also receive care from specialists without a referral, but like choosing your regular doctor, it’s advisable to select one from your plan’s network in order to reduce costs.  Some plans may give you a discount if you give notice when you’re getting service outside of the network. 

PPO plans cover all services offered by Medicare Parts A and B, although the costs differ. In addition to the monthly Medicare Part B premium, you will usually also pay a monthly premium for Part A and Part B coverage, as well as prescription drug coverage and/or extra benefits, if offered by your plan.  Your PPO plan will likely charge additional deductibles, coinsurances, or copayments according to the services you receive.  In a Regional PPO plan, there is an annual out-of-pocket cost maximum.  Local PPO plans may not have a cap.

When choosing your plan, keep in mind that all PPO companies must offer a plan with prescription drug coverage.  If you choose a plan without this coverage, you can’t enroll in a Medicare Prescription Drug Plan.  If you need – or think you may one day need – prescription drug coverage, choose a plan that includes this benefit.