Life License Qualification Program (LLQP) Practice Exam

Which statement about Preferred Provider Organizations (PPO) is INCORRECT?

1. PPO's usually have more providers than an HMO

2. Prices are negotiated in advance for PPO providers

3. In-network PPO providers offer better coverage

4. PPO's are NOT a type of managed care system

The correct answer is: PPO's are NOT a type of managed care system

Preferred Provider Organizations (PPOs) are indeed a type of managed care system. This arrangement allows for a network of healthcare providers who have agreed to provide services at reduced rates to members. The primary function of a PPO is to offer flexible options for healthcare services while controlling costs, which is a hallmark of managed care systems. PPOs negotiate prices in advance with their network providers, ensuring that members receive more affordable rates when they seek care from in-network providers. This aligns with the goals of managed care to provide cost-effective and coordinated healthcare. In addition, it is accurate that PPOs typically include a greater number of providers compared to Health Maintenance Organizations (HMOs), which often have more stringent provider lists. Given this context, identifying the statement that suggests PPOs are not a type of managed care system is incorrect, as it fundamentally misunderstands the nature and purpose of PPOs within the healthcare landscape.