Perspectives on Ppo Performance Measurement from Consumers, Ppo Leaders, and Employers

The views presented here are those of the author and should not be attributed to The Commonwealth Fund or its directors, officers, or staff. Copies of this report are available from The Commonwealth Fund by calling our toll-free publications line at 1-888-777-2744 and ordering publication number 409. The report can also be found on the Fund's website at www.cmwf.org. This paper examines the capabilities of preferred provider organizations (PPOs) to report standardized data on quality of health care using nationally recognized tools, such as the Health Plan Employer Data and Information Set (HEDIS) and the Consumer Assessment of Health Plans (CAHPS). It also presents findings of a series of meetings supported by The Commonwealth Fund to solicit the perspectives of those interested in PPO quality issues. In the summer and fall of 1999, the American Accreditation HealthCare Commission/URAC (URAC) met with consumers, PPO leaders, and employers, who discussed the need for PPO reporting and the perceived cost benefit of public reporting. URAC also conducted a review of the literature on quality issues specific to PPOs. The review examined topics of quality assessment in PPOs, PPO quality-measurement techniques, and consumer/purchaser needs for quality reporting from PPOs. Characteristics of PPOs The term PPO encompasses a very broad spectrum of organizations. Many experts on PPO operations assert that the purpose of PPOs is to provide lower-cost health care and wide choice of providers—not to " manage " care per se. PPOs can be generally categorized into those that operate as " wholesale " or leased organizations; those that have a network and provide some medical management activities; and those that integrate both insurance and network organizations. Wholesale entities lease their network to a payer customer (insurer, self-insured employer, or third-party administrator [TPA]), and do not bear insurance risk. PPOs are paid a fixed rate per member per month to cover network administration costs. Their customers bear insurance risk. PPO network providers are also paid on a fee-for-service basis. Unlike health maintenance organizations (HMOs), wholesale PPOs generally do not have enrollment data or claims data—two major sources of data for performance measurement. The integrated PPO model does bear risk through its insurance functions. Certain options are often discussed when examining how PPOs can be accountable for measuring and reporting on quality. These include accreditation (e.g., by URAC or the National Committee for Quality Assurance), a review of the structure and processes of an organization, …