How does a PPO typically handle billing for services?

A Preferred Provider Organization (PPO) generally employs a negotiated discounted fee-for-service model to manage billing for services. In this model, the PPO contracts with network providers to offer services at reduced rates. When a patient seeks care from one of these providers, the PPO pays a portion of the cost based on the agreed-upon fee schedule, and the patient may also be responsible for a co-payment or coinsurance.

This approach allows patients the flexibility to see various providers, whether in or out of network, though visiting in-network providers is typically more cost-effective. The negotiated rates help control healthcare costs while ensuring that both the provider and the PPO can remain viable financially.

This structure distinguishes it from annual capitation payments, where providers receive a fixed fee per patient regardless of services provided, and other billing methods like direct billing or billing the government, which do not align with the standard practices of a PPO.