Plain version: a preferred provider organization (PPO) works like a store with member prices. Use the network and pay less; go elsewhere and you are still covered, but you pay more.

Why out of network costs more: a network provider agrees to accept the negotiated rate and writes off the rest of the charge. A non-network provider has no such contract and may bill the patient for the difference (balance billing), outside the protections on the next page. Example at a non-network doctor's private office, deductible already met: the doctor charges $800, the plan's allowed amount is $500, and the plan pays 60% out of network, or $300. The patient owes $800 − $300 = $500 ($200 coinsurance plus a $300 balance bill).

The legal basis for an insurer's PPO: a disability insurer may not directly provide hospital or physician services, control the choice of provider or exercise medical judgment, but it may negotiate contracts with providers for alternative rates of payment and offer those rates to insureds who select those providers (Ins. Code §10133(b)). An insurer operating under a certificate from the Insurance Commissioner is outside the Knox-Keene Act unless it directly provides care through its owned or contracting facilities and providers (HSC §1343(e)(1)). So a PPO policy from an insurer is regulated by the Department of Insurance, not the DMHC.

Network adequacy (10 CCR §2240.1(c)): an insurer's network providers must be within these maximum travel times or distances of each covered person's residence or workplace: - Primary care providers: 30 minutes or 15 miles. - Hospitals: 30 minutes or 15 miles. - Specialists: 60 minutes or 30 miles. The commissioner adopted these timely access rules under Ins. Code §10133.5 for insurers that contract for alternative rates.