A preferred provider organization has characteristics of both Individual practice association (IPA)and an indemnity plan.

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A preferred provider organization (PPO) allows members to choose from a network of preferred healthcare providers who have contracted with the PPO at a discounted rate. This is similar to an Individual Practice Association (IPA). However, unlike an IPA, PPO members have the option to seek care outside of the network, but may incur higher out-of-pocket costs. This flexibility is more like an indemnity plan. Therefore, a PPO has characteristics of both an IPA and an indemnity plan.

A Preferred Provider Organization Has Characteristics of Both Individual Practice