Preferred provider organizations and physician fees.
Verrilli, Diana K
Date of Pub
Preferred provider organizations (PPOs) represent a form of managed care in which providers agree to accept discounted fees
in exchange for the expectation that their patient volume will increase or at least be maintained. Managed care plans that
rely on discounted fee-for-service (FFS) payments have increased from about 10 plans in 1981 to over 700 plans in 1994. In
this study, we document levels of discounts achieved by two large national insurers and discuss how the size of the discount
varies by type of service and how the discounted rates relate to Medicare fees. Our results show that, despite achieving large
discounts (approximately 10 20 percent) relative to their indemnity plans, the two nationwide PPOs studied here pay at rates
substantially above Medicare levels.
Comparative Study : Fee-for-Service Plans/classification/economics : Fees, Medical : Health Care Costs/classification : Insurance
Claim Review : Insurance, Health/economics : Medicare Part B/economics : Office Visits/economics : Physicians/economics :
Preferred Provider Organizations/classification/economics : Relative Value Scales : Support, U.S. Gov't, Non-P.H.S. : United