Which of the following is a characteristic of Preferred Provider Organizations (PPOs)?

PPOs, or Preferred Provider Organizations, are designed to offer more flexibility to members when it comes to choosing healthcare providers. One of the defining characteristics of PPOs is that physicians are compensated on a fee-for-service basis. This means that instead of receiving a flat salary or capitation payment, healthcare providers are paid for each specific service they deliver to a patient. This incentivizes providers to deliver the necessary care, as they receive payment for each procedure or visit, rather than being restricted by a fixed budget or membership fee.

While members of a PPO do have a network of preferred providers to choose from, they are not bound to select providers solely from this network, which contrasts with models like Health Maintenance Organizations (HMOs) where care is limited to a specific network. Additionally, patients within PPOs typically do not need to obtain referrals to see specialists, allowing for direct access to specialized care. Coverage is not exclusively limited to in-network providers, as PPO members can also receive care from out-of-network providers, albeit usually at a higher out-of-pocket cost.