Insurers may an insurer may offer preferred provider insurance policies that limit, through the use of provider service contracts, the numbers and types of providers of health care services eligible for payment as preferred providers, and may establish terms and conditions that providers must meet to qualify for payment as preferred providers. Services rendered by preferred providers may be compensated either through direct payments to the health care provider or through reimbursement to the insured. PPOs must also pay a reasonable amount of compensation as determined by the commissioner for non-preferred provider services.

This subtitle applies to for-profit and nonprofit individual and group health plans, but does not apply to employee plans governed by ERISA.