When the general public thinks of managed care, it's probably HMOs that come to mind. And when organized managed care speaks, the voice most often heard is the Washington-based American Association of Health Plans, the sector's largest trade group.
But another managed-care association is clamoring to be heard-the Association of Managed Healthcare Organizations, formerly the American Association of PPOs.
The Fort Lee, N.J.-based AMHO says it speaks for newer, more flexible forms of managed care.
"We represent network-based managed-care plans. The AAHP primarily represents HMOs. We represent non-HMO managed-care, primarily PPOs and provider-sponsored organizations," as well as independent practice associations, says Brad Kalish, the AMHO's executive director.
The AMHO represents 231 companies. Some AMHO members that are PPOs also belong to the AAHP. While Kalish says "there's no negativity between the two groups," there is a sense among AMHO members that the word needs to get out about the various types of managed-care plans.
"While HMOs play an important role in healthcare cost containment, the AMHO wants to make sure the public is aware of their many non-HMO managed-care options," says Julia de Peyster, AMHO vice president.
PPOs have not been the focus of the backlash against managed care, mostly because they haven't used the controversial capitation method of physician payment and they offer more choice. Unlike pure HMOs, where enrollees have to visit a gatekeeper primary-care physician to receive referrals to specialists, PPO patients can see any physician on the plan's list of providers without going through a gatekeeper.
PPO enrollees can also go outside the network to receive care, but it will cost them more.
Although HMOs have established PPO-like point-of-service plans that also allow enrollees to receive care outside the network for a higher fee, the HMO enrollee has to have a primary-care physician, while the PPO enrollee doesn't.
Another key difference is that HMOs typically have a set list of covered benefits, but a PPO can tailor a benefit structure to suit the employer offering the plan, de Peyster says.
For employers, PPOs might not offer the same cost savings HMOs can deliver. Providers in a PPO network negotiate discounted fees in anticipation of a greater number of patients and agree to basic managed-care principles such as utilization review and guidelines for hospital admissions and use of resources, such as tests and other diagnostic procedures.
"The AMHO hopes its campaign to promote network-based plans and their emphasis on choice will help in general to improve public opinion toward managed care," de Peyster says.
PPOs-the AMHO's main constituency-are a huge presence in the market. Depending on who's counting, there are around 1,000 PPOs nationwide, Kalish says, and the number of employees covered by the plans has grown to more than 88 million. In comparison, there are about 650 HMOs with about 70 million enrollees (See charts).
"The PPO industry has grown markedly and mirrored if not exceeded the growth of HMOs," Kalish says. Further growth among PPOs can be expected as a result of the federal balanced-budget bill enacted this summer, which permits Medicare recipients to choose a PPO for their coverage. The new law also permits risk-bearing PSOs to serve that population.
But PPOs have taken a lower profile. Many PPOs are small and have no desire to expand nationally the way HMOs have, Kalish says. And unlike HMOs, most PPOs-even the largest ones with more than 1 million enrollees, like Newport Beach, Calif.-based Capp Care and New York-based MultiPlan-are not publicly traded.
"In the media's often negative portrayal of managed care, coverage of network-based delivery systems and their emphasis on freedom of choice is frequently ignored. As a result, managed care is too often synonymous with the HMO system of delivery," de Peyster says.
Says Nancy Romeo, a former PPO executive and now president of Peterboro, N.J.-based Sterling Health Strategies, a managed-care consulting firm, "People in the marketplace are looking for alternatives, and we (PPOs) believe we're the alternative."
Adds Kalish: "A few years ago, people said PPOs were a stepping-stone between indemnity (insurance) and HMOs. Now people have taken a step back and see that PPOs afford choice and an affordable price."
The growth of PPOs and PSOs will strengthen the AMHO's voice, its members believe. That's because the AAHP "has clearly represented HMOs and not PSOs at government hearings" on the regulation of the newly forming provider-sponsored plans that will serve Medicare recipients, Kalish says.
"HMOs are feeling threatened" by the prospect of PSOs assuming risk, Romeo says. The AAHP wants PSOs assuming risk to be regulated the same as HMOs and supports the same solvency standards for PSOs as for HMOs.
AMHO representatives testified before Congress last month that PSOs are different from HMOs and that PSO solvency standards should be based on their size and the amount of risk they bear.
The group also expects to become more visible through a national campaign it's developing to create greater awareness of PPOs, Romeo says.