Although more Americans are now in PPOs than HMOs, PPOs receive far less scrutiny when it comes to the quality of the healthcare they deliver.
But that may soon change because the most commonly used HMO accreditation group, the National Committee on Quality Assurance, is preparing a similar program for PPOs.
The Washington-based not-for-profit NCQA is drafting standards for rating PPOs on their appeals processes, provider credentialing, member satisfaction and other factors already used to measure HMOs.
Enrollees' personal experiences will also be factored in using a new Consumer Assessment of Health Plans Study (CAHPS) for PPOs, the same kind of survey used to rate HMOs in claims processing, customer service and ease of obtaining necessary care.
The results will eventually be posted on the NCQA's World Wide Web site (www.ncqa.org), so that consumers can readily compare their health plans to other PPOs and HMOs.
"One hundred million Americans shouldn't have to guess whether or not they are enrolled in a good health plan," NCQA President Margaret O'Kane said in a written statement. "NCQA's PPO accreditation program will give consumers a basis for choosing among PPOs based on quality."
The NCQA's efforts are backed by big-name employers such as General Motors Corp., Marriott International, Xerox Corp. and the federal Office of Personnel Management, all of which have said they will require the PPOs they work with to report CAHPS results.
"It's all about informed choice," says Laurel Pickering, executive director of New York Business Group on Health, which purchases healthcare benefits for 160 employers. "We plan to provide employees of our member companies with report cards showing each plan's accreditation status. It lets them know that they can trust the plan, and it lets us know that we're getting good value for our money."
PPOs began forming in the late '80s as an alternative to HMOs, which were often criticized for being too restrictive and for sacrificing quality for profits. Though HMOs control costs by putting limits on care, PPOs set no such limits.
But until recently, HMO premiums tended to be lower than those of PPOs, because the former's tighter management of patient care yielded greater savings. However, the price gap has narrowed, according to a recent survey of 600,000 employers by the benefits consulting firms William M. Mercer and Foster Higgins. The average annual per-employee costs of PPOs and open-ended HMOs were almost identical in 1999--$3,742 and $3,732, respectively.
As a result, PPO membership has been booming for five years, first exceeding that of HMOs in 1998. Last year, PPOs touted 100 million enrollees, while HMOs had 80 million.
"Very many PPOs are just essentially discount networks without recognition of any significant credentialing, quality assessment or quality management," says Glenn Smith, senior consultant at Watson Wyatt Worldwide in San Francisco. "These accreditation processes will look beyond the marketing hype and really delve into how effectively the network serves the people who access it. It's a big step toward public accountability."
The Institute of Medicine's recent study, which revealed that as many as 98,000 Americans die each year because of medical errors, underscores how important it is for all types of health plans to adhere to rigorous quality standards, Smith adds.
Laura Diamond, spokeswoman for the American Association of Health Plans, says that while her member HMOs have drawn intense scrutiny over the quality of their care--culminating recently in strict federal regulations and a series of class-action lawsuits--PPOs haven't received the same attention.
Because many of the accreditation criteria for HMOs and PPOs will overlap, health insurers that offer more than one type of plan will have to undergo only a single review covering all their products. And because few PPOs are involved in clinical care to the same extent as HMOs, they won't be rated on their preventive care or chronic illness programs.
But consumers won't get to benefit from the PPO ratings until next year. The NCQA plans to launch its guidelines in July, so the first results won't start rolling in before year-end, says NCQA spokesman Brian Schilling.
Nearly 30 top PPOs have already agreed to report CAHPS data in 2000, Schilling says. Once they get accredited, others could quickly follow.
HMOs did just that when the NCQA set up its accreditation program in 1991. Only 18 plans signed up in the first year. Today, 300 of the nation's 613 HMOs are rated by the agency.
As yet, large employers are smarter about picking health plans than consumers, Schilling says. About 75% of the country's biggest buyers of healthcare insurance already require accreditation and performance measurements.
