Medicare, the federal health insurance program for people 65 or older, offers several pathways for receiving coverage. One common option is Medicare Advantage (Part C), which is offered by private insurance companies approved by the Centers for Medicare & Medicaid Services (CMS). A Preferred Provider Organization (PPO) is a specific type of Medicare Advantage plan. These plans deliver all the benefits of Original Medicare (Part A and Part B) and often include additional coverage like prescription drugs (Part D), vision, and dental care.
Defining the Medicare PPO Structure
A Medicare PPO is a plan administered by a private insurer that contracts with a network of healthcare providers and facilities. This network is composed of “preferred providers” who agree to accept the plan’s negotiated rates for services.
The plan must cover all services included in Original Medicare, but it can structure its own cost-sharing and rules for accessing care. PPO plans are designed to offer flexibility by maintaining a list of preferred providers while still providing coverage for care received outside of that network. This structure allows members a greater degree of choice in selecting doctors and hospitals.
While the plan has a list of in-network providers, members are not typically required to select a single primary care physician (PCP) to manage their care. The ability to seek care outside the preferred network is a defining characteristic of the PPO model within Medicare Advantage.
Network Flexibility and Accessing Care
The most distinctive feature of a Medicare PPO is the freedom it provides in choosing healthcare professionals. Members receive the highest level of coverage and lowest out-of-pocket costs when they use doctors, specialists, and hospitals that are part of the plan’s preferred network. These in-network providers have a contract with the plan and bill at the agreed-upon, lower rates.
A significant advantage of the PPO model is that members usually do not need a referral from a primary care physician to see a specialist. This absence of a “gatekeeper” simplifies the process of seeking specialized medical attention, allowing members to directly schedule appointments with specialists.
While the plan encourages the use of in-network providers for cost savings, PPOs still cover services obtained from out-of-network providers. When a member chooses an out-of-network provider, the plan will still contribute to the cost, but the member’s share will be higher. Before receiving out-of-network services, contacting the plan is advisable to confirm coverage and ensure the service is medically necessary.
Regardless of the provider’s network status, all Medicare PPO plans must cover emergency and urgent care services. This ensures that members can access immediate, necessary treatment without worrying about network restrictions in a crisis. This protection applies whether the member is traveling within the United States or receiving emergency care outside their plan’s service area.
Understanding the Financial Structure
The financial framework of a Medicare PPO is built on a two-tiered cost-sharing model that incentivizes using the preferred network. Members typically face lower copayments or coinsurance amounts for services received from in-network providers. Conversely, utilizing an out-of-network provider results in higher copayments or a greater coinsurance percentage.
PPO plans may charge a monthly plan premium in addition to the standard Medicare Part B premium, though some plans offer a $0 plan premium. PPOs also usually have a separate deductible that must be met before the plan begins to pay for certain services. The cost differences between in-network and out-of-network care often apply to deductibles as well as copays and coinsurance.
A protective financial feature of all Medicare Advantage plans is the Maximum Out-of-Pocket (MOOP) limit. This limit represents the most a member will have to pay for covered Part A and Part B services in a calendar year. Once this threshold is reached through deductibles, copayments, and coinsurance, the plan covers 100% of covered services for the remainder of the year.
For PPO plans, there are often two distinct MOOP limits: one for in-network services and a higher, combined limit that includes both in-network and out-of-network costs. For instance, in 2025, the federal government set a limit on the in-network MOOP at $9,350 and a combined in-network and out-of-network MOOP at $14,000, though many plans set their own lower limits. The MOOP only applies to covered medical services and does not include the cost of the plan premium or prescription drug spending.
PPO Versus Other Medicare Advantage Plans
PPO plans are often compared to Health Maintenance Organization (HMO) plans, another common type of Medicare Advantage offering. The primary distinction lies in network access and the need for referrals. PPO plans offer more flexibility by allowing members to receive covered care from out-of-network providers, albeit at a higher cost.
HMO plans, by contrast, generally require members to receive all non-emergency care from providers within the plan’s network. If an HMO member seeks routine care outside the network, the plan may not cover the services, leaving the member responsible for the full cost. This restriction is often the trade-off for the lower monthly premiums associated with HMO plans.
HMOs usually require members to choose a primary care physician who acts as a coordinator, and a referral is generally needed to see a specialist. PPOs eliminate this referral requirement, giving members direct access to specialized care. While PPOs offer greater freedom, they may have higher premiums or higher cost-sharing for in-network services compared to HMO plans.