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PubMed1985

The development of preferred provider organizations and its antitrust implications.

The preferred provider organization (PPO) is rapidly evolving as a major innovation in the health care industry. Its development has had serious legal antitrust implications. Health care is rapidly becoming more businesslike. Third party payers as well as providers are aggressively pursuing market shares. This has led to combinations and price negotiations that have often confronted the antitrust laws. The PPO is a most prominent example. This article is addressed to a wide range of health professionals. Initially, those antitrust laws applicable to the health care industry are presented. A discussion of the development and structure of PPOs follows. Special attention is directed toward the applicability of the antitrust laws to various forms of PPOs. Although each case must be decided upon its merits, guidelines are suggested to avoid the pitfalls of antitrust prosecution and litigation.

Economic Competition↗
PubMed1985

Preferred provider organization liability for physician malpractice.

The preferred provider organization (PPO) is a recent innovation in the health care industry, designed to reduce costs through selective contracting and utilization controls. This Note examines malpractice liability theories potentially applicable to PPOs. The Note compares PPOs to other health care institutions, including hospitals and HMOs, and concludes that PPOs are at minimal risk of incurring liability for physician negligence.

Insurance, Health↗
PubMedDate not supplied

The effects of preferred provider organizations on health care use and costs.

Preferred provider organizations (PPOs) now account for half the enrollment in managed care plans. There are more than 1,000 PPOs, and over 20% of the insured population in the United States are enrolled in this type of plan. Still, there have been few investigations of use and cost of health services in these plans. This paper presents an analysis of a convenience sample of 1,977 companies, most of them mid-sized, from 1988 to 1990. On average, PPOs were associated with cost savings of 12% per covered life (95% confidence interval, 7.2% to 16.9%) as compared to traditional plans with utilization review. The source of cost savings was primarily through lower utilization rates, including a 9.7% lower rate of physician office visits (5.2% to 14.3%) and a 9.3% lower rate of hospital admissions (4.1% to 14.5%). Cost savings were found in seven individual PPOs and a group of small PPOs in the study. Two PPOs were associated with added costs and results were indeterminate for four others. While PPOs may not achieve the level of savings reported by some health maintenance organizations, they may provide a means to achieve some degree of managed care savings for some employer groups.

Adult↗
PubMed1990

Feasibility analysis of preferred provider organizations.

Hospital management frequently considers diversification into Preferred Provider Organizations (PPOs) as a strategy for responding to intense competition for patients. The author presents a feasibility analysis framework for determining the potential success of such an action. Knowledge of this technique allows nursing executives to significantly contribute to the work of committees overseeing these analyses.

Decision Making↗
PubMed1986

Preferred provider organizations and antitrust policy: some recent issues.

Preferred Provider Organizations (PPOs) have rapidly increased in number in response to soaring health care costs. Government antitrust enforcement agencies have encouraged the growth of PPOs because they help bring needed competition to the health care field. Antitrust problems in this area can generally be avoided by careful planning and counseling, but there are antitrust questions that are sometimes raised. Such issues include whether large PPOs can selectively deal with certain hospitals and refuse to deal with others; when exclusion of competing providers by provider-sponsored plans might be unlawful, and whether PPOs can be contract preclude participating providers from participating in competing plans. In analyzing such questions, one should look at whether there is an agreement among competing providers, whether the PPO has sufficient market power to cause anticompetitive effects, whether the restrictions in issue are motivated by an anti-competitive effects, whether the restrictions in issue are motivated by an anti-competitive purpose, and whether there are procompetitive (including efficiency enhancing) reasons for the arrangement. Another question that is frequently raised is when can provider members of a PPO jointly negotiate or set their reimbursement rates. The law is not clear on this subject. However, if the provider members of a PPO make significant financial contributions to the plan or otherwise share in the risk of adverse financial consequences resulting from the plan's operation, antitrust risks are lessened.

Economic Competition↗
PubMed1987

Preferred provider organizations. Implications of the fastest growing health care option.

Preferred provider organizations (PPOs) are a new delivery arrangement that affords the consumer flexibility in choosing providers, while offering financial incentives to use preferred providers (both hospitals and physicians). These providers, who contract with a PPO, must agree to utilization review and usually accept a discounted charge as payment. Preferred providers do, however, benefit from an increased patient base and more rapid claims payment while remaining in the fee-for-service sector. The article examines this innovative delivery approach and discusses potential implications for primary care physicians.

Fee Schedules↗
PubMed1986

Preferred provider organizations: today's models and tomorrow's prospects.

Preferred provider organizations (PPOs) have recently attracted much attention as an alternative to both traditional fee-for-service medicine and health maintenance organizations. To examine their development and structure, we conducted a telephone survey with executives of more than 130 operational PPOs. We describe typical examples of the three most common types of PPOs-those sponsored by providers, insurers, and entrepreneurs-and identify problems each faces in the increasingly competitive health care environment. We then cite approaches that innovative PPOs are using to deal expressly with these problems.

Blue Cross Blue Shield Insurance Plans↗
PubMed1987

Preferred provider organizations, price-fixing and Section 1 of the Sherman Act.

The economic forces that bring the products of any market to fruition cannot proceed through history unrestrained. Society must maintain a sense of control over its economic market if the fruits of this market are to benefit all. The two forms of control that society has sought to apply in the past are (1) procompetitive restrictions and (2) anticompetitive regulations. The health care industry, however, is one which traditionally has been exempt from these private market restrictions. Throughout its history, the health care industry has discouraged its members from engaging in competition. For years, the industry had been allowed to develop its own peculiar "guild" system of economics. Today, this system is being challenged by proponents of a more traditional "market" approach. Under this new approach, a competitive market determines prices, encourages efficiency, maintains quality and spurs innovation. A response to this procompetitive system has been the advent of Preferred Provider Organizations (PPOs). Preferred Provider Organizations have rapidly increased in number in response to soaring health care costs. Government antitrust enforcement agencies have encouraged the growth of PPOs because they help bring needed competition to the health care field. A problem with the "encouragement" is that it frequently runs amuck of antitrust regulations. In these situations, one should look at whether there is agreement with Section 1 of the Sherman Act.

Economic Competition↗
PubMed1987

Pharmacy preferred-provider organizations.

The structure, features, and evolution of pharmacy preferred-provider organizations (PPOs) are described. Pharmacy PPOs may be sponsored by insurers, employers, providers, or independents (wherein the PPO functions as a third-party administrator); insurer and provider sponsorship are the most common. The advantages and disadvantages of these four types of sponsorship are described. Ways that pharmacy PPOs contain costs include the following: using drug product selection formularies (wherein providers are paid at prospective prices for generic products, regardless of the product dispensed or prescribed), reducing drug use by employing use-review mechanisms, and eliminating fraud and abuse through audits. Another cost-management feature being planned is the use of prescribing protocols. PPOs benefit pharmacies by increasing patronage and traffic flow, protecting market share, and improving cash flow by expediting payment of claims. Factors to consider in choosing a pharmacy PPO include the organization's market share, financial health, payment record, quality of claims processing, and long-term goals. As the pharmacy PPO industry matures, PPO financing will evolve from fee-for-service arrangements to moderate-risk contracting to full-risk contracting with plan buyers, using a negotiated amount per subscriber per month. Increasing competition and adoption of a credentialing process should result in more specific quality-of-care and performance standards for pharmacy PPOs.

Cost Control↗
PubMed1990

Continuity and change in preferred provider organizations.

This paper presents the results from a national survey of preferred provider organizations (PPOs) that was conducted in 1988. It is based on telephone interviews conducted by the authors with executives in over 170 PPOs in the United States. We compare the survey results with those obtained from similar surveys conducted in 1985 and 1986, allowing us to assess the extent to which PPOs have grown and changed. We found that PPOs have continued to grow at an extremely rapid rate. During the Summer and Fall of 1988, the time in which the survey took place, 37.6 million people were eligible to use PPO benefits, compared to the 16.5 million figure we obtained two years earlier. We did not find, however, that PPOs are moving in the direction of providing more innovative forms of health care cost containment. Most PPOs still rely on discounts from providers and utilization review to achieve savings. There is little trend towards using incentive reimbursement techniques and choosing preferred providers that have shown themselves to be cost-efficient. We conclude that in the coming years PPOs must demonstrate the ability to control rising health care costs. To accomplish this, they will need to put more pressure on providers to use resources more sparingly. Otherwise, they may lose their market share to other forms of managed care.

Capitation Fee↗
PubMed1988

A preferred provider organization (PPO) case study for mental health and substance abuse.

The Preferred Provider Organization concept is quickly becoming more popular because of its relative cost-effectiveness and recent successes. Managed care through means of this mental health and substance abuse PPO may well serve as the prototype for the general health care cost containment efforts of the future for the self-insured insurance plans for Alabama state employees and teachers. The first year also revealed several problems in the original proposal especially with respect to the unintended attractiveness of inpatient/residential care. Consequently, copayment plans were added to dissuade unnecessary lengthy stays (see Table 2). Second, a new quality assurance mechanism has been added to further evaluate the need for admissions to facilities, as well as for the need for continued inpatient treatment. The Alabama Quality Assurance Foundation (AQAF) began on January 1, 1988, conducting the preadmission certification on all admissions based upon criteria established jointly by AQAF and the PPO providers. In addition, AQAF will conduct continuing stay reviews at predetermined time periods to ensure that continued treatment in an inpatient setting is indeed necessary.

Alabama↗
PubMed1984

Preferred provider organizations.

The 1980s has marked the beginning of a new alternative health care delivery system: the preferred provider organization ( PPO ). This system has developed from the health maintenance organization model and is predominant in California and Colorado. A PPO is a group of providers, usually hospitals and doctors, who agree to provide health care to subscribers for a negotiated fee that is usually discounted. Preferred provider organizations are subject to peer review and strict use controls in exchange for a consistent volume of patients and speedy turnaround on claims payments. This article describes the factors leading to the development of PPOs and the implications for occupational therapy.

Delivery of Health Care↗
PubMed1984

The preferred provider organization development process: models for applying a systematic approach.

To date, the preferred provider organization (PPO) concept has received considerable attention. Current literature, however, has focused on conceptual explanations and case studies of this new alternative delivery system as opposed to the process involved in developing operational PPOs. This paper focuses on the application of analytical techniques to strengthen PPO development activities. These techniques range from network analysis for planning PPO development to system flowcharts that depict new PPO operations. Since PPOs are used as the application base for the above tools, a brief description of PPOs will be addressed prior to explaining the techniques.

Insurance, Health↗
PubMed1987

Use of ambulatory health care services in a preferred provider organization.

The organization of the delivery of health care can have significant cost-saving implications, but few of the available studies have made adequate comparisons of costs across plans. Furthermore, new organizational types such as independent practice associations and preferred provider organizations have not yet been studied in detail. This paper examines ambulatory utilization in a preferred provider organization (PPO) for Uniformed Services beneficiaries at Pacific Medical Center (PMC) in Seattle. The utilization in the PPO is compared with the results of a recently reported study of three other organizationally different Seattle plans: a Blue Cross/Blue Shield plan (BC), a closed-panel health maintenance organization (HMO), and an independent practice association (IPA). The PPO was similar to the IPA and the HMO in having a high percent of patients with any ambulatory use and had standardized ambulatory costs per user which were lower than BC but higher than the HMO. Thus, this particular type of PPO may have cost-saving features, particularly because the Uniformed Services population is known to use more health services than the general population. Methodological issues for future utilization research across organizations are also discussed.

Adolescent↗
PubMed1990

The cost of acute outpatient primary care in a preferred provider organization.

This report is a case study analysis of the relative costs of preferred provider organization (PPO) and non-PPO managed episodes. Results indicate that the episode costs of PPO providers are not significantly different from the episode costs of non-PPO providers for general acute primary outpatient health care. PPO provider episode costs were 3.12% higher for acute upper respiratory illness. Higher PPO physician charges of 10-16% appear to be the main reason for relatively higher PPO episode costs. For general primary health care, drug charges are 23% higher in PPO episodes than in non-PPO episodes. Higher physician and drug charges are partially compensated for by diagnostic charges, which are 14-18% lower in PPO-managed episodes. In light of these findings and the cost-sharing arrangement with the PPO, it is likely that the employer/insurer plan paid expenditures for outpatient care will increase, contrary to expectations.

Adult↗
PubMed2004

The applicability of the Consumer Assessments of Health Plans Survey (CAHPS) to Preferred Provider Organizations in the United States: a discussion of industry concerns.

OBJECTIVE: This paper examines the applicability of a leading patient survey, the Consumer Assessments of Health Plans Study (CAHPS), to Preferred Provider Organizations (PPOs) in the United States. DESIGN: Elite interviews were conducted with users of the CAHPS survey in PPO settings. STUDY PARTICIPANTS: Study participants attended either the California Healthcare Foundation Quality Performance Measurement in Preferred Provider Organizations Forum or the National Conference to Examine PPO Quality. Eleven representatives of state and federal government health care purchasers, commercial PPO plans, and survey vendors were included. MAIN OUTCOME MEASURES: The interview included 21 questions addressing experiences with and concerns about using the CAHPS survey in PPO settings. RESULTS: Respondents raised concerns about the influence of out-of-network care on CAHPS reports and ratings of PPO health plans. Suggestions were made for additional PPO-relevant items such as after-hours care, numbers and types of specialists in the PPO network, and disease management. CONCLUSIONS: Modifications to some of the CAHPS survey items are needed to address concerns of users about their applicability in PPO settings.

Community Participation↗