Which statement best describes a PPO?

• A. Freedom to choose provider but out-of-network has higher cost
• B. PCP gatekeeper
• C. Requires referrals
• D. Capitation-based payments

Answer: (A)

PPOs are defined by letting you choose providers with flexibility, while giving you a financial incentive to stay in-network. The statement captures this by saying you have freedom to choose a provider, but going out of network costs more. That cost difference comes from negotiated in-network rates, which reduce your out-of-pocket when you stay in-network. You don’t need a primary care doctor to approve referrals in a PPO, and capitation payments aren’t the defining feature of PPO plans. So this description best describes a PPO.