What is the main function of a Preferred Provider Organization (PPO)?

The primary function of a Preferred Provider Organization (PPO) is to guarantee lower healthcare costs to the employer by allowing employees to choose from a network of healthcare providers who have agreed to provide services at reduced rates. This arrangement provides flexibility for employees to seek care from both in-network and out-of-network providers, although opting for out-of-network care usually incurs higher costs.

PPOs negotiate discounted rates with healthcare providers, which leads to cost savings for both employers and employees. As a result, many organizations prefer PPO plans for their employees, as they can help manage and contain healthcare expenses while offering a range of choices for medical services. This is particularly important in the context of employer-sponsored insurance plans, where managing costs is a significant aspect of health benefits strategy.

The other options do not accurately reflect the main function of PPOs. For instance, providing healthcare services at no cost is not feasible under PPO structures, as there are typically copays and deductibles. Elevating healthcare costs significantly contradicts the purpose of PPOs, which aim to reduce costs. Finally, a PPO’s goal is not to reduce employer healthcare options, but rather to enhance flexibility in provider choice while still benefiting from cost agreements with selected providers.