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PubMed1992

Preferred provider organizations--a review and update. Part I.

This is the first of two articles on preferred provider organizations (PPOs). Part I focuses on how PPOs operate, their rapid growth in the private sector, and the Health Care Financing Administration's (HCFA's) involvement with PPOs for Medicare beneficiaries. Part II, which will appear in next month's issue of the Bulletin, will report on recent research concerning PPOs' cost-effectiveness, states' legislative activities affecting PPOs, and potential liability issues created by PPOs, as well as the College's views on these types of health care delivery systems.

Centers for Medicare and Medicaid Services, U.S.↗
PubMed1987

Preferred provider organizations one year later.

One year ago we conducted the first comprehensive national survey of preferred provider organizations (PPOs). Results of this study demonstrated that, contrary to popular belief, there did indeed exist a "generic" PPO with clearly defined characteristics. Furthermore, we found that this new form of health delivery organization was rapidly expanding. A new national survey, completed in September 1986, shows continued brisk growth in the number of persons eligible to use PPO services. Utilization review programs have become more stringent and increasingly focus on physician practice patterns. One striking finding is that joint ventures between provider-sponsored PPOs and commercial insurers are multiplying.

Cost Control↗
PubMed1991

A performance-based quality evaluation system for preferred provider organizations.

This article describes a performance-based quality evaluation program developed by a partnership of insurers for a nationwide preferred provider organization (PPO) which uses indicators to monitor for practice deviations from PPO standards representing four components of patient care--administrative efficiency, patient satisfaction, medical practice standards, and clinical outcome. Quality improvement efforts to eliminate deviant practices through indirect organizational strategies and direct communication with preferred physicians are also described. The program's strengths are its effective use of available data, its potential application to other organizations with a loosely connected network of providers, and its ability to simultaneously monitor care received over time by individual patients in various settings (hospitals, physician offices).

Humans↗
PubMed1991

Medigap preferred provider organizations: issues, implications, and early experience.

The Health Care Financing Administration is sponsoring the Medicare Physician Preferred Provider Organization (PPO) Demonstration to assess the feasibility and desirability of including a PPO option under Medicare. Two sites are currently operational. At one site, Blue Cross and Blue Shield of Arizona is offering a PPO linked with a medigap insurance plan. This "medigap PPO" and its initial experience are described, and a preliminary assessment of the viability and effectiveness of medigap PPOs nationally is provided. Impediments to the development and effectiveness of medigap PPOs are identified and possible government actions discussed.

Aged↗
PubMedDate not supplied

The effects of preferred provider organizations on costs and utilization of hysterectomy.

In this study, the costs and service utilization of preferred provider organizations (PPOs) were compared against traditional indemnity plans with similar benefits and utilization review for hysterectomy, a potentially overused procedure. PPOs were associated with significant cost savings, achieved primarily through lower utilization rates.

Adult↗
PubMed1993

Selection in a preferred provider organization enrollment.

OBJECTIVE: The study was conducted to determine whether favorable or adverse selection occurred in a preferred provider organization (PPO) enrollment. DATA SOURCES AND STUDY SETTING: Secondary data sources were used to conduct a retrospective study of the utilization of health services and the demographic characteristics of the population involved in the first open enrollment in a new university-based PPO. The PPO under study, sponsored by the University of Michigan (UM) Medical Center, was offered to all 43,005 UM employees, dependents, and retirees. STUDY DESIGN: We analyzed insurance company payments during the one-year period prior to the enrollment to compare the utilization patterns of those who enrolled in the PPO with those who did not. DATA COLLECTION: Prior health care utilization data were obtained from Blue Cross-Blue Shield of Michigan on the entire university population for one year prior to the start of the PPO. Demographic data were obtained from the personnel office of the university. PRINCIPAL FINDINGS: The PPO group had a younger median age than the non-PPO group; the sex distribution was roughly similar for the two groups. In the PPO group 57 percent of all contracts were family contracts compared with only 30 percent in the non-PPO group. The PPO group experienced 20.6 percent lower inpatient payments per member, and 9.4 percent lower outpatient payments per member in the year prior to the enrollment. These differences resulted in an overall 18.7 percent lower payment per member for the PPO group in the year prior to their enrollment. CONCLUSIONS: The results show, based on prior insurance payments, that this PPO received favorable selection during the open enrollment, a finding consistent with favorable selection found in early HMO enrollment.

Academic Medical Centers↗
PubMedDate not supplied

Preferred provider organizations: the new health care partnerships.

It is a rare hospital organization that is not involved with an HMO, PPO, or other alternative delivery system. It is a strategic imperative for most hospital organizations to participate in ventures which can direct blocs of patients. Preferred provider organizations have all the elements necessary to ensure the success of new financing and delivery arrangements--but why have so many failed to reach their promised expectations. This article describes the objectives of each of the four major participants in a PPO arrangement: providers, employers, employees, insurance carriers/administrators. Each of these partners must benefit from the new delivery/financing mechanism. Arrangements will differ given the local stage of HMO development, hospital and physician cultures, insurance company traditions, and the general "competitiveness" of the marketplace. A successful PPO arrangement will effectively address the objectives of each partner; it will provide a mechanism for bringing providers and purchasers together in developing exciting new health care financing programs.

Economic Competition↗
PubMed1988

Predicting enrollment decisions in a preferred provider organization: a comparison of models--features versus benefits.

Five attitudinal models are compared on their ability to explain and predict the enrollment decisions of university employees toward a preferred provider organization. In the comparison of models, a distinction is maintained between the relatively objective attributes of the plan (features) and the relatively subjective attributes of the plan (benefits). The model that best predicts the enrollment decisions of enrollees is found to be different from the model that best predicts the decisions of nonenrollees. A "best" overall predictive model is selected and a method to aid managerial interpretation of the determinant attributes identified is developed.

Community Participation↗
PubMedDate not supplied

Operational and legal implications of preferred provider organizations.

The healthcare marketplace of the 1980s is competitive. Federal policymakers, private insurers, and businesses have formulated innovative ways to increase price competition within the healthcare sector. The 1980s have been characterized by a shift from a regulatory emphasis to one including both regulation and competition in an effort to contain healthcare costs. This article examines preferred provider organizations (PPOs) and differentiates them from health maintenance organizations (HMOs) and exclusive provider organizations (EPOs). It also reviews alternate PPO models and discusses operational and legal implications.

Economic Competition↗
PubMed2004

Preferred provider organizations and Medicare: is there an advantage?

A key component of the new Medicare reform law is an overhaul of Medicare managed care, including a strong emphasis on recruiting private plans--especially preferred provider organizations (PPOs)--to participate in the new Medicare Advantage program. Citing the popularity of PPOs for privately insured Americans, proponents have touted PPOs as critical to injecting more and better competition into Medicare. This study, based on findings from the Center for Studying Health System Change's (HSC) site visits to 12 nationally representative communities, explores the reasons for the strong growth in commercial PPO enrollment and examines whether PPOs--as currently structured--can add value to Medicare. The available evidence suggests that the PPO model will face challenges in achieving the policy goals set forth in the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA), including increasing benefits, improving quality and slowing cost growth.

Cost Control↗
PubMed1986

The hospital-based preferred provider organization and its potential impact on hospital pharmacy.

In response to competitive pressures in the marketplace, hospitals are becoming involved in the prepayment of services. This is exemplified by the hospital-based preferred provider organization (PPO). This article reviews the PPO concept, the economic forces behind its proliferation, and its potential impact on hospital pharmacy. The PPO reinforces incentives for the hospital and pharmacy to be efficient in the production and use of inpatient services. However, it may be a vehicle by which the hospital pharmacy can expand into new areas, outside the realm of inpatient care.

Insurance, Health↗
PubMed2000

Dentists' participation in capitation and preferred provider organization dental plans.

BACKGROUND: In 1998, the American Dental Association Survey Center conducted a telephone and mail survey of U.S dentists in private practice in an effort to determine the extent of dentists' participation in capitation and preferred provider organization, or PPO, dental plans and the characteristics of dentists who participate in those plans. METHODS: An initial phone screening survey was conducted with a random sample of 11,550 dentists in private practice. Dentists who indicated that they participated in capitation or PPO dental plans received a follow-up mail survey asking specific questions concerning these two types of dental plans. RESULTS: Almost one-half of responding dentists indicated that they participated in either capitation or PPO dental plans. However, far more dentists reported participating in PPO dental plans than in capitation dental plans. The majority of participating dentists' patients were reported to be fee-for-service patients. CONCLUSIONS: Dentists' participation in PPO dental plans generally increased from that indicated in previous surveys, though participation in capitation plans declined. There was some regional and demographic variation in participation in these dental plans, but such differences were not large. Pricing and concerns about quality of care continue to be the primary concerns of nonparticipating dentists. PRACTICE IMPLICATIONS: Dentists reporting participation in PPO dental plans are becoming more common, but such plans still do not cover the majority of participating dentists' patients. A large percentage of nonparticipating dentists cite pricing and concerns about quality care as reasons for not joining these plans.

American Dental Association↗
PubMed2005

Preferred provider organization claims showed high predictive value but missed substantial proportion of adults with high-risk conditions.

BACKGROUND AND OBJECTIVE: We assessed the validity and utility of a claims-based ICD-9-CM algorithm for identifying preferred provider organization (PPO) enrollees ages 18-64 years at high risk for influenza complications. METHODS: PPO enrollees with >/= 2 encounters in an ambulatory setting or >/= 1 encounters in an inpatient or emergency room setting with ICD-9-CM diagnosis codes for the high-risk conditions were considered algorithm positive. Stratified random sampling was used to select 1,001 algorithm-positive and 330 algorithm-negative enrollees for medical chart abstractions. RESULTS: The prevalence of high-risk conditions using claims data was 2.5% compared to 18.2% according to medical records. The algorithm had a sensitivity of 12% and a specificity of 99%. Positive and negative predictive values were 87 and 84%, respectively. Sensitivity was twofold higher among adults aged 50-64 years than among younger adults (17 vs. 9%). Applying an algorithm definition of >/= 1 encounters in any setting resulted in an increased sensitivity, but captured a higher proportion of false positives. CONCLUSION: A claims-positive record was highly indicative of the presence of high-risk conditions, but such claims missed a large proportion of PPO enrollees with high-risk conditions. It is important to assess the validity of administrative data in different age groups.

Adolescent↗
PubMed2000

Characteristics of dentists participating in capitation and Preferred Provider Organization dental plans.

BACKGROUND: In 1998, the American Dental Association Survey Center conducted a telephone and mail survey of U.S. dentists in private practice in an effort to determine the extent of dentists' participation in capitation and preferred provider organization, or PPO, dental plans and the characteristics of dentists who participate in those plans. METHODS: An initial telephone screening survey of a random sample of 11,550 dentists in private practice was conducted to identify dentists who participated in PPO or capitation dental plans. Dentists who participated in either of these plan types then were asked to complete a mail survey on their plan participation. RESULTS: The majority of dentists participating in either type of dental plan reported having never left a dental plan. Dentists who belonged to more than one PPO or capitation plan reported that a larger percentage of their patients were enrolled in these plans and that more of their practice's gross income came from the plans. Participation in PPO and capitation plans has had a positive impact on the practices of many of the responding dentists, particularly with regard to expanding their patient base. CONCLUSIONS: The authors found that the majority of dentists participating in PPO dental plans found it to be a positive experience overall. Dentists participating in capitation plans were less satisfied; more than 50 percent of capitation plan participants reported some level of dissatisfaction with the plans. The majority of dentists participating in a PPO plan expected to renew participation when their current contract expired; a much smaller percentage (though still a majority) of responding capitation-plan participants indicated the same. PRACTICE IMPLICATIONS: Responding dentists' overall indication of satisfaction with their current PPO plan participation probably indicates further growth for these dental plans. On the other hand, capitation plan participants seem much less satisfied with their plans. PPO plans, therefore, seem much more likely to be the type of plan that dentists will choose in the future.

Capitation Fee↗
PubMedDate not supplied

Preferred provider organizations: an analysis.

The field of health care is moving very quickly, developing new technologies and diagnostics as well as devising new ways to pay for this technology. This article deals with one particular, rapidly evolving payment mechanism, namely, the Preferred Provider Organization (PPO). The analysis below describes the growth of the PPO, both in the medical field and in the current general marketplace, and examines its future. Creative approaches to designing PPOs are also discussed. Finally, this article offers some suggestions on ensuring the viability of PPOs.

Data Collection↗
PubMed1984

Preferred provider organizations: antitrust aspects and implications for the hospital industry.

The hospital industry is currently undergoing a substantial transformation as a result of changes in third party reimbursement mechanisms and a tendency toward a more competitive economic environment. Hospital administrators will have to demonstrate substantial flexibility in considering and implementing innovative institutional arrangements to ensure survival in this time of austerity. The Preferred Provider Organization (PPO) is a recent development in the health care industry involving the selective contracting for health care services. This Article examines the role of section 1 of the Sherman Antitrust Act in scrutinizing the PPO for anticompetitive effects, considering the divergent requisites for competition in the health care sector. The Article also proposes a modified Rule of Reason for application to the PPO and other innovative cost containment arrangements in the industry and considers the implications of such flexible application of conventional antitrust principles for the future of the hospital industry.

Contract Services↗