The type of payment structure that PPO's usually offer in their contracts with providers is called?

PPOs (Preferred Provider Organizations) typically utilize a discounted fee-for-service payment structure in their contracts with providers. This approach allows providers to receive payments based on the services rendered to patients, but at rates that have been negotiated and reduced compared to their standard fees.

Discounted fee-for-service arrangements are beneficial for both the provider and the insurer. The insurer can offer lower premiums to members since they negotiate rates with providers, while providers benefit from a steady stream of patients associated with the PPO network. Members are often encouraged to utilize in-network providers who accept these discounted rates, leading to cost-effective healthcare solutions.

In contrast, fee-for-service is a more straightforward approach without negotiated discounts, which may not reflect the financial dynamics found in PPO agreements. Episode-of-care and capitated payment models are structured differently, focusing on overall care management or an all-inclusive amount for a spectrum of services over time, rather than per individual service negotiated to a discount. Thus, the correct understanding of the PPO payment structure aligns strongly with the concept of discounted fee-for-service.