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What began as a local marketing effort by two Chicago hospitals to reach the city's fast-growing Hispanic population has turned into a national program with franchises in San Diego and San Antonio, Texas. Formed in 1989, Hispanocare, a preferred provider organization catering to Hispanics, began attracting attention in other cities with large Hispanic populations, prompting the Chicago hospitals to begin a marketing push.
How groups insured by fee-for-service health plans react to increased competition from health maintenance organizations (HMOs) is an unresolved question. We investigated whether groups insured by indemnity plans respond to HMO market competition by changing selected health insurance features, such as deductible amounts, stop loss levels, and coinsurance rates, or by adopting utilization management or preferred provider organization (PPO) benefit options. We collected benefit design data for the years 1985 through 1992 from 95 insured groups in 62 US metropolitan statistical areas. Multivariate hazard analysis showed that groups located in markets with higher rates of change in HMO enrollment were less likely to increase deductibles or stop loss levels. Groups located in markets with higher HMO enrollment were more likely to adopt utilization management or PPO benefit options. A group located in a market with an HMO penetration rate of 20% was 65% more likely to have included a PPO option as part of its insurance benefit plan than a group located in a market with an HMO penetration rate of 15% (p < 0.05). Concern about possible adverse selection effects may deter some fee-for-service groups from changing their health insurance coverage. Under some conditions, however, groups insured under fee-for-service plans do respond to managed care competition by changing their insurance benefits to achieve greater cost containment.
PURPOSE: Cystitis is one of the most common bacterial infections seen by physicians in outpatient settings. Published clinical guidelines by the Infectious Disease Society of America and other organizations have been established to enable effective treatment, while attempting to decrease cost and limit antibiotic resistance. METHODS: Insurance claims data for employees and dependents of a single Midwest corporation, with Preferred Provider Organization coverage, diagnosed with cystitis between 1996 and 1999 were matched to prescription drug claims for those who filled an antibiotic prescription within 3 days of diagnosis. RESULTS: For acute and recurrent cystitis physicians prescribed trimethoprim-sulfamethoxazole 37% and 18% respectively. The other most common antibiotics prescribed were the broad-spectrum flouroquinolones, and nitrofurantoin. The mean duration for these prescriptions was 10 days regardless of whether the infection was acute or recurrent. CONCLUSIONS: The first line recommended antibiotic, trimethoprim-sulfamethoxazole, was prescribed in 37% of acute infections, and for considerably longer than the suggested 3-day course of therapy. Steps should be taken to educate physicians and patients on the choice and dosage of antibiotics for cystitis to minimize emergence of antibiotic resistance.
Preferred provider organization contracting for specialty care has become increasingly attractive for health care payers now taking a second look at expanding their role in cost containment.
Health plans and providers need to profile current practice patterns to understand better the resources used in managing medical conditions. A profiling system is presented that groups International Classification of Diseases (ICD-9-CM) codes into 125 diagnostic clusters based on clinical homogeneity with respect to physician treatment response. For each diagnostic cluster, diagnostic episode clusters (DECs) are formulated. A DEC links all services incurred in treating a patient's medical condition within a specific period of time. Each DEC is marked with a severity-of-illness, comorbidity, and age indicator. To test the validity of the diagnostic cluster methodology, claims were analyzed from a preferred provider organization (PPO) and an independent practice association (IPA). PPO and IPA DEC charges and utilization were compared with t-tests. Physician practice patterns differed based on patient severity of illness, comorbidities, and age. Both PPO and IPA physicians delivered significantly more resources to patients in higher severity-of-illness categories. PPO physicians generally treated older patients with more resources than younger patients. Patient age did not have the same impact on IPA physicians' practice patterns. IPA physicians' average treatment pattern was about 22% less expensive than that of PPO physicians. IPA physicians decreased average expenses by reducing hospital days by about 73% (P < 0.01) and hospital outpatient visits by about 89% (P < 0.01) compared to the rates of PPO physicians. Ambulatory services among IPA physicians were not significantly higher than rates for PPO physicians. The DEC methodology is a valid approach for profiling patterns of treatment. The style of medicine in the IPA was less hospital intensive and, consequently, less expensive than that practiced by PPO physicians. PPO physicians also had greater practice pattern variations than IPA physicians.
This article is the last in a series of three articles compiling the results of the 1995 Managed Care Marketplace Information Survey conducted by the ADA Council on Dental Practice. It addresses practice characteristics of dentists participating in capitation and preferred provider organization plans.
This paper reports national and state findings on the generosity or actuarial value of U.S. employer-based plans and adjusted premiums in 2002. The basis for our calculations is simulated bill paying for a large standardized population. After adjusting for the quality of benefits, we find from regression analysis that adjusted premiums are 18 percent higher in the nation's smallest firms than in firms with 1,000 or more workers. They are 25 percent higher in indemnity plans and 18 percent higher in preferred provider organizations than in health maintenance organizations. The generosity of coverage increased from 1997 to 2002.
In 1986, the Seventh Circuit Court of Appeals in Ball Memorial Hospital v. Mutual Hospital Insurance denied an injunction sought under the antitrust laws by the plaintiffs, eighty acute care hospitals, which would have precluded Blue Cross and Blue Shield of Indiana from implementing a Preferred Provider Organization. The Ball court used a conservative economic analysis to deny the injunction and failed to consider many industry-specific factors. This Note examines these factors and challenges the Ball court's position by arguing that antitrust scrutiny of alternative health care delivery markets must go beyond the court's narrow approach.
This study explores a possible association between the propensity of primary care physicians to record referrals on special referral forms and the source/mechanism of payment for services. Using a randomly selected sample of visits to University faculty family physicians over a 12-month period, referrals were identified from three sources: progress notes, a special form that was included in the patient's chart, and a computerized list that was generated from the special referral form. A notation in one or more of these sources constituted a referral. Using all three sources, the referral rates were 13.8 referrals per 100 patient encounters for Health Maintenance Organization (HMO) patients, compared with 14.1 for Preferred Provider Organization (PPO) patients and 10.4 for patients with other insurance (p = .83). The progress note in the patient chart was the best source for determining whether a referral had been requested, with approximately 85% documentation. Special forms were not likely to be completed for referrals, especially for non-HMO patients (less than 30% documentation). Thus, reliance on a special form for documentation of referrals would have led to the erroneous conclusion of higher referral rates for HMO patients. The tendency of providers to be more complete in recording referrals of HMO patients (a recording bias) may account for the observed higher rate of referral of such patients in other studies.
BACKGROUND AND OVERVIEW: The author examined the impact of trends in commercial insurance plans and their managed care products on the traditional fee-for-service solo or partnership model of dental practice. CONCLUSION: In response to rising dental expenditures, employers are passing on more costs of dental insurance to employees, dropping dental benefits altogether and moving from indemnity to managed care plans, mainly preferred provider organizations. These trends are likely to continue, resulting in fewer people with employer-based dental insurance coverage. PRACTICE IMPLICATIONS: These changes in dental insurance coverage are unlikely to challenge the traditional model of dental practice within the next five years, largely because of the growing decline in the supply of dental services and a lack of local market concentration of dental managed care companies.
Information is critical for making health-care purchasing decisions. Identifying the importance of dimensions and criteria used by purchasers of clinical laboratory testing services is the second step in the development of a report card to evaluate such services. The purpose of this study was to quantify the utility--the importance of four dimensions: access, cost, quality, and service--for two stakeholders of clinical laboratory testing services. Data were collected using a survey of hospital laboratories, as well as independent practice associations (IPAs) and preferred provider organizations (PPOs) that purchase clinical laboratory testing services. Although valued differently with respect to the magnitude of the utility score, both stakeholders rate quality and cost as first and second in importance. Managed-care organizations rate access and service as third and fourth in importance. Hospital laboratories consider service third in importance, yet with a similar utility score as that for managed-care organizations. Ten of 19 criteria (52.6%) were rated differently by the stakeholders. Using these utility scores for the dimensions and the criteria serves as a preliminary scoring system for a report card to evaluate clinical laboratory testing services.
To avoid antitrust problems, health care organizations must conduct a fair hearing on decisions related to physicians' staff appointment or privileges. To win such litigation, the physician must show some effect on interstate commerce and prove a conspiracy. These cases are usually reviewed not as a per se violation (in which motives and other relative factors are not considered) but under the rule of reason test--that is, the court considers whether the action was more procompetitive or anticompetitive. Hospitals can protect themselves by using admission criteria related to their interests and excluding potential competitors from staffing decisions. Hospitals that are underused, are geographically isolated, or offer unique services will have the least latitude in staffing decisions. Physicians getting together to agree on charges constitutes price fixing--a per se violation. Preferred provider organizations can avoid price fixing by using the "messenger" or "supermessenger" approach to negotiating payment, in which they relay information between individual physicians and the payer. Having an outside committee establish the fee is another possibility. To minimize antitrust concerns, joint ventures should include pooling of capital, shared risk, enhanced competitive pressure, and efficiencies and economies of scale. In malpractice suits, hospitals--including their boards of trustees--are liable for the actions of their physicians. Boards must exercise their ultimate authority for staffing decisions. More malpractice cases are arising and awards are increasing in U.S. society, while at the same time companies that offered liability insurance are withdrawing from the market.(ABSTRACT TRUNCATED AT 250 WORDS)
This case report describes a qualitative and preliminary quantitative assessment of a quality-based physician compensation program. The Hawaii Medical Service Association's Physician Quality and Service Recognition program offers an innovative and effective approach for improving delivery of high-quality and cost-effective care to patients enrolled in preferred provider organizations. Support for the program is demonstrated through increasing numbers of voluntarily participating physicians. Preliminary assessment of population outcomes reveals sustained improvements in many clinical areas and mixed findings in others. This study contributes to the body of knowledge available to payers and policy makers considering alternative payment methods to reward improved performance.
We examine the effects of hospital consolidation on the actual prices paid by preferred provider organizations. We find that price increases following consolidations among nearby hospitals invariably equaled or exceeded median price increases among other hospitals in the same market. Using multivariate regression analysis, we find that consolidation enables hospitals to increase prices in three of the four markets studied; these increases are generally statistically significant. In the remaining market, the measured effect was zero. Our results suggest that some, but not all, consolidations of competing hospitals facilitate price increases. We conclude that antitrust scrutiny of hospital consolidation is warranted.
As relative latecomers to the computer age, most preferred provider organizations are just beginning to see the value of automation in gaining a competitive advantage. In addition to using electronic data interchange to automate claims processing, some forward-thinking PPOs are using automation to provide quick confirmation of patient eligibility for coverage or to streamline utilization review.
Silent preferred provider organizations (PPOs) are insurance payer arrangements that offer patients discounted provider fees without providing incentives for them to access the providers' services. These schemes take millions of dollars annually from the pockets of physicians and other health care providers. Learn how to spot a silent PPO and keep your payers on the straight and narrow.
This Issue Brief discusses issues in mental health care benefits. It describes the current state of employment-based mental health benefits and discusses studies and issues regarding full mental health parity. It also includes an analysis of the effect of full mental parity on the uninsured population and the effects of the limited mental health parity provision contained in the VA-HUD appropriations bill. The final section discusses the implications of mental health parity for health plans and health insurers. When employers began to provide health insurance benefits to their employees and their families, they extended coverage to include mental health benefits under the same terms as other health care services. Many employers continued to add mental health benefits through the 1970s and early 1980s until cost pressures required employers to re-examine all health care benefits that were offered. They quickly found that, while only a small proportion of the beneficiaries used mental health care services, the costs associated with this care were very high. As a result, employers placed limits on mental health benefits in an attempt to make the insurance risk more manageable. The general strategies employers have used to manage their health care costs are cost sharing, utilization review, managed care, and the packaging of provider services. Employers' cost management strategies may be restricted, however. Five states have mental health parity laws, but three of the states--Rhode Island, Maine, and New Hampshire--apply these laws only to the seriously mentally ill. In addition, 31 states mandate that mental health benefits be provided. However, state mandates apply only to insured plans, not to self-insured employer plans, which are exempt from state regulation of health plans under the Employee Retirement Income Security Act of 1974 (ERISA). A number of recent studies have examined the effect of mental health parity on health insurance premiums in a "typical" preferred provider organization and on the uninsured. In general, the studies concluded that mental health parity could increase health insurance premiums, decrease health insurance coverage for non-mental health related illnesses, and increase the number of uninsured individuals. All studies of mental health parity, and mandated benefits in general, assume that there is a strong likelihood that increased health benefit costs would be passed along to workers in the form of higher cost sharing for health insurance, lower wage growth, or lower growth in other employee benefits.
This prospective study investigated the influence of professional training and method of payment on how dental practitioners planned extraction of impacted third molars. The subjects were four groups of dental practitioners in metropolitan Chicago: 1) general dentists in traditional fee-for-service practice; 2) general dentists who were members of a preferred provider organization; 3) general dentists who were members of an Independent Practice Association model of a capitation system; and 4) oral and maxillofacial surgeons, all of whom were in fee-for-service practice. A carefully selected and trained professional actress, in good health, with four unerupted, impacted, and asymptomatic third molars, brought her recently taken full mouth periapical and panoramic radiographs to randomly selected dentists for a consultation. The number of planned extractions (no treatment was ever done) was compared. Data showed that oral and maxillofacial surgeons suggested significantly more extractions than capitation dentists and the average of all general dentists, combined.