Escalating employee health care costs are prompting many small businesses to implement self-funded health plans. In a self-funded plan, a corporation designs its own health plan and pays its claims up to a specified limit. A third party administrator handles the claims servicing and a reinsurance carrier establishes limits beyond which the employer does not participate in claim payment. Because the plan is tailor-made for each employer, the benefits are flexible. Another way to control costs is through a preferred provider organization (PPO), which offers discounted services without sacrificing quality of care. By raising deductibles outside the PPO and lowering them within the PPO, the employer encourages employees to use the designated services.