Although preferred provider organizations (PPOs) now enroll the majority of individuals with commercial health insurance in the United States, State and Federal regulation of PPOs is limited, and PPOs have almost no performance reporting requirements. This contrasts sharply with health maintenance organizations (HMOs), which have been increasingly scrutinized by regulatory agencies, consumer and provider groups, and others regarding appropriateness of care, access to care, and member satisfaction.
This discrepancy in oversight has prompted some to call for similar scrutiny of PPOs. Yet, PPOs often argue that without HMO mechanisms like required designated primary care providers, capitated payments to serve as a financial incentive for providers, and utilization management systems applicable to all subscribers, they cannot be held accountable for provider behavior.
The Agency for Healthcare Research and Quality awarded a grant to URAC (HS10105) to support a national conference, "PPO Performance Measurement: Agenda for the Future." Conference participants examined approaches for assessing PPO quality. The conference was cosponsored by URAC, the Consumer Coalition for Quality Health Care, the Joint Commission on Accreditation of Healthcare Organizations, the National Committee for Quality Assurance, and the Centers for Disease Control and Prevention. Four commissioned papers from the conference, along with commentaries, were published recently in a supplement to Medical Care Research and Review. Publication of the supplement was sponsored by the Robert Wood Johnson Foundation and the California Health Care Foundation. The papers are summarized here.
Scanlon, D.P., Chernew, M., Doty, H.E. and Smith, D.G. (2001). "Options for assessing PPO quality: Accreditation and profiling as accountability strategies." Medical Care Research and Review 58(S1), pp. 70-100.
PPOs argue that providers, not the PPO health plans, are responsible for quality of care. Therefore, process and structure oversight such as accreditation and provider-focused systems such as provider profiling are more relevant than are plan-level measurement systems—such as the Health Plan Employer Data and Information Set (HEDIS) or the Consumer Assessment of Health Plans Study (CAHPS®)—which are used to evaluate HMOs. Although accreditation and provider profiling are feasible options for assessing PPO quality, both approaches are currently limited, according to these researchers. This is largely because no public or private purchasers or regulators demand that PPOs become accredited or report data about clinical quality of care.
PPO accreditation by groups such as URAC and the Joint Commission on Accreditation of Healthcare Organizations (JCAHO) focuses primarily on structural characteristics, for example, whether PPOs contract with enough providers of various specialties to guarantee that physicians are accessible to PPO members. These features are important for ensuring members' access to care and monitoring member satisfaction. However, current PPO accreditation programs are weak in their ability to monitor the quality and appropriateness of the clinical care provided by network physicians.
Physician profiling is an available option for assessing the appropriateness and quality of care provided by PPOs and could be used in concert with accreditation programs to monitor PPO clinical care. However, profiling systems require more clinical data than PPOs currently have access to, and they can be costly to implement, note the researchers. They conclude that although enhanced PPO clinical accountability is possible, it is unlikely to happen without the upstream investment of purchasers who begin to demand PPO performance accountability.
Kleinman, L.C. (2001). "Conceptual and technical issues regarding the use of HEDIS and HEDIS-like measures in preferred provider organizations." Medical Care Research and Review 58(S1), pp. 37-57.
Some HEDIS measures, which are designed to assess the quality and value of HMOs, may be premature or inappropriate to use with PPOs. However, there are significant opportunities to apply others, suggests this author. It may be possible to use some HEDIS measures, such as process of care measures, despite the loose structures among the components of many PPOs that present challenges to the measurement process compared with HMOs. For example, PPOs lack the ready access that HMOs have to clinical encounter data for either management or assessment purposes.
Process (effectiveness) of care measures for patients with defined conditions (for example, asthma) are among the most straightforward to use for assessing PPOs. Because the population is identified by diagnostic codes on a claim, the absence of PPO enrollment data does not limit population identification. Preventive service measures, such as breast and cervical cancer screening, require careful definition of the population eligible for such screening. This can be problematic in a PPO, in which complete data on the enrolled population may be unavailable. Similarly, measures that look at clinician followup after hospitalization are made more difficult by the fact that PPO patients may be admitted to hospitals in or out of networks, without the PCP's referral or even knowledge.
The author concludes that PPOs lack strong administrative leadership and a culture committed to quality, as well as the necessary data infrastructure needed for adoption and implementation of HEDIS measures. Increasing market demand for performance information makes it likely that PPOs will have to rise to meet the challenge to be accountable for the care their providers deliver.
Smith, D.G., and Scanlon, D.P. (2001). "Covered lives in PPOs." Medical Care Research and Review 58(S1), pp. 16-33.
Efforts to increase PPO accountability may require PPOs to devote additional resources for the collection and management of accurate enrollment data, conclude these authors. They examined issues that affect the adequacy of PPO enrollment data systems via review of the published literature, analysis of data on PPO enrollment from the new Interstudy PPO database (a national data set of PPOs), and discussions with health actuaries.
Although enrollment data may not be required for day-to-day PPO operations (for example, routine cost accounting), such data are important for tracking vital performance measures, since calculation of most clinical, health care use, and cost-based performance measures requires a population-based denominator.
Unfortunately, it is difficult for PPOs to obtain enrollment data, and PPO enrollment estimates typically depend on assumptions about the number of dependents per subscriber, assumptions that vary across plans. Uncertainty may exist even when enrollment data are available and complete because of challenges that PPOs face in linking enrollment data with claims and administrative data.
PPOs also vary in how they track enrollment both at the regional and company levels. Variations in tracking dependents and lack of information on the demographic characteristics of PPO subscribers affect a PPO's ability to produce standardized performance measures comparable to those of HMOs.
Schauffler, H.H., and McMenamin, S. (2001). "Assessing PPO performance on prevention and population health." Medical Care Research and Review 58(S1), pp. 112-136.
These authors compared PPO and HMO performance on the use of preventive care services and consumer satisfaction with preventive care. They conducted surveys of California health plans, employers, and the insured population between 1996 and 1999 and found that people enrolled in PPO plans were less likely than those in HMOs to receive blood pressure and mammography screenings or preventive counseling on gun safety, smoking, and sexually transmitted disease or HIV/AIDS prevention. Individuals in PPOs also were less satisfied with preventive care than those in HMOs. Moreover, cost sharing for preventive services had a negative impact on use of these services, especially for enrollees in PPOs who, on average, faced higher cost-sharing requirements than HMO enrollees.
Firms with a majority of their workers in PPOs were more likely to offer work-site wellness programs than firms with a majority of their workers in HMOs, and self-insured PPOs were more likely to offer work-site wellness programs to their workers than fully insured PPOs, independent of firm size. The authors note that their findings suggest specific strategies to assess, increase access to, and improve the quality of preventive care in PPOs.