A PPO (Preferred Provider Organization) is not itself Medicare or Medicaid. It’s a type of health plan structure that exists in both programs. You’re most likely to encounter a PPO through Medicare Advantage, where about 24% of all enrolled beneficiaries choose a PPO plan. But some state Medicaid programs also use PPO-style managed care arrangements, and people who qualify for both Medicare and Medicaid can enroll in special plans that may follow a PPO model.
What a PPO Actually Is
A PPO is a way of organizing a health insurance plan around a network of doctors, hospitals, and specialists. The defining features are flexibility: you can see specialists without getting a referral from a primary care doctor, and you can go outside the plan’s network for care if you’re willing to pay more. These rules apply whether the PPO is offered through Medicare, Medicaid, or a private employer.
Think of Medicare and Medicaid as the funding sources (who pays for your care), and a PPO as the delivery method (how your care is organized). The two concepts sit on different levels.
PPOs in Medicare Advantage
The most common place Americans encounter a PPO in government healthcare is Medicare Advantage, also called Medicare Part C. These are private insurance plans approved by the federal government that replace Original Medicare. As of February 2024, about 24% of Medicare Advantage beneficiaries were enrolled in a PPO plan, making it the second most popular option behind HMOs at 30%.
Medicare Advantage PPOs have a network of providers, but you can also see out-of-network doctors for covered services as long as the provider agrees to treat you and hasn’t opted out of Medicare. You’ll typically pay higher copays or coinsurance for out-of-network care. Emergency and urgent care are always covered regardless of network. You don’t need a primary care physician to coordinate your care, and you never need a referral to see a specialist.
This is a meaningful difference from Medicare Advantage HMOs, which generally require you to pick a primary care doctor, get referrals for specialists, and stay within the network for all non-emergency care. If you value the freedom to see any doctor without jumping through hoops, a PPO gives you that at the cost of potentially higher out-of-pocket spending when you go out of network.
PPOs in Medicaid
Medicaid is run state by state, and each state decides how to structure its managed care programs. Some states contract with private insurers that operate PPO-style plans for Medicaid beneficiaries. The availability, structure, and provider networks vary significantly depending on where you live. Not every state offers a PPO option within Medicaid, and even when they do, the plan may not look identical to a Medicare Advantage PPO because states set their own rules about cost-sharing and network requirements.
If you’re on Medicaid and want to know whether a PPO is available to you, your state’s Medicaid agency is the place to check. The options depend entirely on what your state has negotiated with private insurers.
When You Qualify for Both Programs
Roughly 12 million Americans are “dual eligible,” meaning they qualify for both Medicare and Medicaid at the same time. For these individuals, there are Dual Eligible Special Needs Plans (D-SNPs), which are a category of Medicare Advantage plan designed to coordinate benefits from both programs. Some D-SNPs follow a PPO structure.
Dual eligibility covers a range of situations. You might have full Medicaid benefits, or you might qualify for a more limited category where Medicaid helps pay your Medicare premiums or cost-sharing. Either way, D-SNPs exist to simplify things by bundling your Medicare and Medicaid benefits into a single plan with one card and one set of rules.
How PPO Costs Compare to HMO Costs
Within Medicare Advantage, PPO and HMO plans share the same baseline cost structure: both involve a monthly plan premium (which can be $0 for some plans), your Part B premium, deductibles, copays, and coinsurance. The real cost differences show up in how you use the plan. Because PPOs allow out-of-network care, you may face higher cost-sharing when you choose providers outside the network. HMOs keep costs lower by restricting you to in-network providers.
Premiums vary widely by state and insurer, so there’s no single rule about which type costs more on a monthly basis. The tradeoff is straightforward: PPOs charge you for flexibility, while HMOs save you money in exchange for less choice.
Choosing Between PPO and HMO
Your decision depends on how you use healthcare. A PPO makes sense if you see multiple specialists, travel frequently, or want the option to see providers outside a network without prior approval. You’re paying for convenience and choice. An HMO works well if you prefer having a primary care doctor coordinate everything, don’t mind getting referrals, and want to keep out-of-pocket costs as low as possible.
If you’re enrolling in Medicare Advantage, you can compare PPO and HMO options side by side on Medicare.gov using your zip code. Each plan lists its network, premiums, drug coverage, and estimated yearly costs based on your health needs. If you’re on Medicaid, contact your state’s Medicaid office to find out which plan types are available in your area.