Preferred provider organizations (PPOs) are a type of health plan that contracts with medical providers to create a network of participating providers. You pay less if you use providers that belong to the plan’s network. Typically PPOs goffer a wider choice of providers than HMOs. Premiums may be similar to or slightly higher than HMOs, and out-of-pocket costs are generally higher and more complicated than those for HMOs. PPOs allow participants to venture out of the provider network at their discretion and do not require a referral from a primary care physician.