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Evaluation of a preferred provider organization.

Preferred provider organizations (PPOs) have emerged as a new approach to organizing health care services; the promise of melding the primary strengths of indemnity insurance with HMO plans was rapidly embraced. The performance of PPOs has not yet been measured critically, despite their growth to over 250 plans. A single, large case study of PPO design and performance is examined, revealing a mixed but hopeful picture of administrative challenges, physician response, patient use patterns, and cost reductions, PPOs offer fertile ground for future research.

Adolescent↗

The litigation exposures posed by preferred provider organizations.

Preferred provider organizations (PPOs), which are designed to help contain ever-increasing employee health-care costs, are being eyed favorably by benefits administrators who want to hold down both these costs and the cost of health insurance premiums. But there's a fly in this ointment: According to Anthony M. Vienna (an attorney with the firm of Zobrist, Vienna, & McCullough), such PPOs can place employers at risk of litigation arising from anti-trust violations and medical malpractice. Some types of PPOs pose greater risks than others, however. Vienna explores the nature and degree of risk entailed by three: provider-based PPOs, payor-based PPOs, and interface PPOs.

Insurance, Health↗

The effect of injecting price competition into the hospital market: the case of preferred provider organizations.

Preferred provider organizations (PPOs) and other discount health care purchasers are injecting price competition into the hospital market, which has hitherto been insulated from price competition by comprehensive and generous insurance coverage. Providing the discounts demanded by PPOs thus poses unaccustomed and difficult problems for hospitals. We constructed a model to study the choices forced by PPOs on the hospital market. We predict that prices will fall, excess capacity will be reduced, and some hospitals may develop financial problems. In the extreme case, prices will fall substantially, some hospitals will go bankrupt, excess capacity will be eliminated, and an unprecedented price volatility will be introduced into the market.

Costs and Cost Analysis↗

An assessment of the anticompetitive effects of preferred provider organizations.

Although preferred provider organizations (PPOs) sponsored by third parties are likely to offer benefits to society through increased competition, those sponsored by providers may generate a risk of anticompetitive collusion. Such cartellike collusion could result in price fixing, less aggressive utilization review, and restrictions on entry and innovation in the market. In this article, we provide guidance on the potential risks posed by provider-sponsored PPOs. We suggest that public policy should generally promote PPOs and remove regulatory barriers to their growth because of their cost containment potential. Policy design should, however, reflect an awareness of the potential anticompetitive outcomes of provider-sponsored PPOs and should promote antitrust oversight of their activities.

Economic Competition↗

Differences in the kinds of problems consumers report in staff/group health maintenance organizations, independent practice association/network health maintenance organizations, and preferred provider organizations in California.

BACKGROUND: Little is known about the extent to which consumers have specific problems with their managed care organizations (MCOs) or whether these problems differ by type of MCO. OBJECTIVE: To estimate the prevalence at which consumers in managed care report specific problems and to assess whether rates in preferred provider organizations (PPOs), independent practice association (IPA)/network health maintenance organizations (HMOs), and staff/group HMOs differ. DESIGN: Random probability sample of insured adults weighted to reflect the underlying population in California. A computer-assisted telephone interview survey was conducted in September 1997. Logistic regression models estimate the adjusted odds of reporting each problem in the last year in IPA/network HMOs versus PPOs, IPA/network HMOs versus staff/group HMOs, and staff/group HMOs versus PPOs. SUBJECTS: One thousand two hundred one insured adults who had resided in California for > or = 12 months. MEASURES: Prevalence of 11 consumer problems in MCOs. RESULTS: Forty-two percent of adult Californians in managed care in our sample reported > or = 1 problem with their MCO in the last year. Adjusted odds that adults in IPA/ network or staff/group HMOs reported delays in getting needed care, not receiving the most appropriate or needed care, and being forced to change doctors were higher than for adults in PPOs. Adjusted odds that adults in IPA/network HMOs reported difficulty getting a referral to a specialist and difficulty selecting a doctor or hospital were higher than for adults in PPOs and staff/group HMOs. Adjusted odds that adults in staff/ group HMOs reported misunderstandings over benefits and coverage; important benefits not covered; and problems with claims, billing, or payments were lower than for adults in PPOs and IPA/network HMOs. Adjusted odds that consumers in HMOs in our sample reported any problem with their health plan was higher for those in IPA/network HMOs compared with staff/group HMOs. No differences were seen by MCO type in the rates at which consumers reported being denied care or treatment, forced to change medications, or language and communication barriers. CONCLUSIONS: Rates at which consumers report problems with managed care and the kinds of problems they report differ significantly across different types of MCOs. These findings have important implications for federal and state policy for consumer protections in managed care.

Adult↗

Cost considerations with infertility therapy: outcome and cost comparison between health maintenance organization and preferred provider organization care based on physician and facility cost.

Of 98 retrospectively selected patient couples insured under one scheme (group I) who, based on performance of a hysterosalpingogram (HSG), were assumed to be under active infertility care, 96 were confirmed as infertile. These were matched by date, patient age and time of HSG to 96 patients under infertility care (group II). Both patient populations were then prospectively evaluated for outcome and cost of treatment. Total physician charges for groups I and II were similar. However, charges per achieved clinical pregnancy were higher in group I than group II since group I patients demonstrated a lower pregnancy rate (28/96, 29%) than group II patients (41/96, 43%) (P=0.05). Within group I, pregnancy rates were identical, whether treatment was provided by generalists or subspecialists. In group II, all care was provided by specialists. The number of days of treatment did not vary between groups I and H, though generalists in group I provided significantly fewer treatment days than specialists in either group I (P=0.003) or in group II (P=0.021). This was primarily due to a significantly higher patient drop-out rate in group I patients, and especially amongst those who received care from generalists (P < 0.0019). Group I patients also encountered significantly more surgical procedures than group H patients (P=0.0016). If physician charges are discounted and customary surgical facility costs are added, the actual cost structure for fertility care in group I patients was dramatically higher than in group II patients. The most cost-effective format to provide infertility care of high quality appears to be a managed care setting in which subspecialists provide a majority of care and in which patient choice is restricted to those subspecialists.

Female↗

Costs and survival of patients with colorectal cancer in a health maintenance organization and a preferred provider organization.

BACKGROUND: Colorectal cancer is relatively frequent among adults of working age, yet few studies have examined treatment, outcomes, and costs for people under 65 years of age with this disease. OBJECTIVE: The objective of this study was to compare the initial treatments, survival, cancer-related medical costs, and overall medical costs for working-aged persons with colorectal cancer in 2 large health insurance plans in Washington State, one a preferred provider organization (PPO) and the other a group model health maintenance organization (HMO). STUDY POPULATION: This study consisted of patients, aged 20-64 years, diagnosed with colorectal cancer in both health plans from 1996 to 1998. For each cancer case, up to 5 control subjects, matched on age and sex, were selected for the analysis. METHODS: We calculated unadjusted, attributable, and overall medical costs using the Kaplan-Meier sample average estimator. We calculated relative mortality rates using Cox regression. We used propensity scores to adjust overall costs and survival for potential confounding factors. RESULTS: Two hundred ten persons in the PPO and 136 persons in the HMO, aged 20-64 years, were diagnosed with cancer over the observation period and included in this study. Patients in the PPO were more likely to have local excision of their tumor (16% compared with 11%) and were less likely to receive chemotherapy (48% compared with 60%). The overall medical costs for the cancer cases were $46,000 in the HMO and $46,400 in the PPO (95% confidence interval for the difference: -$19,300 to 20,100). The cancer-attributable medical costs over 2 years were $40,400 in the HMO and $44,300 in the PPO (95% confidence interval for the difference: -$17,400 to 25,200). Survival was similar in the 2 health plans: the hazard ratio was 0.89 for those enrolled in the PPO (95% confidence interval: 0.50 to 1.59). Adjustment for potential confounding factors altered the results little. CONCLUSIONS: There were differences in the initial treatment of the patients in each health plan, but costs and survival were not significantly different between the 2 plans.

Adult↗

The impact of preferred provider organizations.

The development of preferred provider organizations (PPO) is of special interest to physicians because of the strengths of this form of medical services organization. Given the threats and opportunities in the health care environment, the PPO concept will evolve and impact both positively and negatively on physicians' practices. Specific impacts are predicted in the areas of product and service offering design, the type and number of partners in PPOs, the pricing models for medical services, promotional opportunities, and the change in the nature and extent of distribution of health care services. Examples of the evolution of the PPO concept and a short case history are included.

Colorado↗

Preferred provider organizations and physician fees.

Preferred provider organizations (PPOs) represent a form of managed care in which providers agree to accept discounted fees in exchange for the expectation that their patient volume will increase or at least be maintained. Managed care plans that rely on discounted fee-for-service (FFS) payments have increased from about 10 plans in 1981 to over 700 plans in 1994. In this study, we document levels of discounts achieved by two large national insurers and discuss how the size of the discount varies by type of service and how the discounted rates relate to Medicare fees. Our results show that, despite achieving large discounts (approximately 10 20 percent) relative to their indemnity plans, the two nationwide PPOs studied here pay at rates substantially above Medicare levels.

Fee-for-Service Plans↗

Preferred provider organizations: options for Medicare.

Preferred Provider Organizations (PPOs) offer purchasers of care several benefits, including expenditure reduction, utilization control, improved quality of care, and efficient management. Although Medicare could benefit from these outcomes, the program lags behind the private sector in PPO development. The Health Care Financing Administration (HCFA) must address several policy issues and constraints as it develops PPOs for Medicare beneficiaries. The agency must identify services and providers to include in the PPO, develop program sponsorship and administration methods, create viable provider and beneficiary incentives to participate, identify sources of PPO cost savings, and examine the role of medigap insurance policies in PPO development. In this article we discuss three possible PPO models for Medicare: a service or population specific PPO, an integrated PPO/medigap policy, and a Medicare Part A/B PPO. We conclude by identifying several issues that require further research before these PPO models can be tested.

Cost Control↗

Preferred provider organizations: an overview.

This article examines Preferred Provider Organizations--a recently developing alternative form of health care organization. Current problems in the health care system, together with the structure, purpose, and benefits resulting from Preferred Provider Organizations are discussed. The contents of the File HEALTH database are compared with other business and legal databases for unique coverage of this topic.

Information Services↗

Preferred provider organizations: issues for employers.

The preferred provider organization (PPO), an alternative delivery system currently embraced by the employer sector, has been growing at a phenomenal rate for the past few years. It is necessary to examine the issues an employer should consider when deciding whether to offer a PPO option, and to look at organizational issues such as PPO structure, quality, utilization review mechanisms, and benefits design.

Cost Control↗

Employer perspectives on the preferred provider organization concept.

The goal of preferred provider organizations (PPOs) is to identify cost effective physicians, hospitals and other providers and form them into healthcare delivery systems. Widespread interest in PPOs stems from the belief that they can contain costs while offering consumers a choice of physicians and hospitals. But there is little information available about the demand by employers to offer PPOs as a health plan option. This study gathered information on employers' attitudes toward PPOs through a survey of companies in the Minneapolis metropolitan area. Most of the surveyed firms were found to be self-insured and offered a choice of healthcare plans, including HMOs. Contrary to some previous studies, healthcare costs are a major concern by all of the firms. PPOs are viewed as one part of an overall strategy to reduce those costs while maintaining quality of care and convenient access to providers. Although somewhat skeptical about potential savings and concerned over the administrative costs of offering a new health plan, most of the firms indicated support for the PPO concept. The greatest market opportunity for PPOs is to offer the plan as an alternative within the company's existing indemnity plan, wherein employees who use the preferred providers are exempt from at least a portion of the coinsurance and deductible requirements.

Cost Control↗