What is a characteristic of a preferred provider organization?

A preferred provider organization (PPO) is designed to offer greater flexibility and choice to its members regarding healthcare services. One of the main characteristics of a PPO is elective contracting, where insurers establish agreements with specific healthcare providers to deliver services at discounted rates. This model allows members to seek care from a variety of doctors and hospitals, rather than being limited to a rigid network.

Additionally, risk sharing in a PPO model typically involves shared financial incentives between the insurance company and the healthcare providers. This can encourage providers to offer high-quality care while managing costs effectively, as they share in both the risks and benefits of patient outcomes. Members of a PPO have the option to see any provider, including those outside of the network, though it may come at a higher out-of-pocket cost.

In contrast to mandatory hospital admissions or fixed access to physicians, PPOs allow for more flexibility. The statement regarding no quality controls does not accurately reflect the nature of PPOs, as there are often standards and measures in place to ensure care quality. Therefore, the characteristic of elective contracting and risk sharing distinctly defines how PPOs function.