A key factor that distinguishes the various types of health plans is the type and amount of risk that a health plan assumes with respect to the delivery and financing of healthcare benefits. An example of a type of health plan that typically assumes the financial risk of delivering and financing healthcare benefits is a

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A preferred provider organization (PPO) is a type of health plan that assumes financial risk for the delivery and financing of healthcare benefits. PPOs typically contract with a network of healthcare providers who agree to provide services to plan members at a discounted rate. The PPO assumes the financial risk for paying healthcare claims for its members, and may also negotiate rates with providers and manage care to control costs. In contrast, third party administrators (TPAs), utilization review organizations (UROs), and pharmacy benefit management (PBM) plans do not typically assume financial risk for delivering and financing healthcare benefits.

A Key Factor That Distinguishes the Various Types of Health