PPOs overtaking HMOs, at least for now

Though PPOs are gaining popularity and claim to be physician-friendly, they still have most of the familiar problems of managed care.

By Leigh Page, AMNews staff. March 5, 2001.

Preferred provider organizations are surpassing HMOs as the dominant form of managed care, but are they good for physicians?

"The PPOs are kind of 'managed care lite' -- there's a little less management and more choice," said David Rogers, MD, a solo ob-gyn in the Dallas suburb of Allen, Texas.

Dr. Rogers has sworn off HMOs altogether and cast his lot with PPOs. But they are far from ideal, he said. "PPOs are like the devil with a breath mint."

Preferred provider payments are often from 5% to 15% higher than HMOs, and PPOs do not require referrals to see other doctors. But Dr. Rogers said some PPOs do many of the things that physicians hate about HMOs: downcoding, bundling payments, making retroactive adjustments of claims and paying claims late.

The industry, however, bills itself as the physician's friend.

Because they don't interfere in a patients' choice of doctor, "PPOs understand and respect the sanctity of the doctor-patient relationship and realize that preserving this relationship is the crux of a successful health care model," said Bill Hale, president of Lake Forest, Calif.-based Beech Street Corp., one of the largest PPOs, with 342,000 contracts with physicians and other professionals.

Whatever physicians think of PPOs, they are now the dominant form of managed care.

PPO enrollment has risen three-fold since 1995, to about 100 million, according to the American Assn. of PPOs. HMO enrollment in that time increased a more modest 51%, to 80.9 million, according to InterStudy, an HMO research firm. [...]