PPOs: Less Restrictive Options Favored By Consumers

      Less restrictive preferred provider organizations are surging in popularity in relation to HMOs, demonstrating that consumers increasingly believe that the health plan that manages least, manages best. Heralding "the fading of the gatekeeper concept," the New York Times examines how health plans have adjusted to the reality that Americans' thirst for choice in doctors and access to specialists will not be denied. Two phenomena signal this change: PPOs are growing at a much higher rate than HMOs, adding 44 million members in the past five years as HMOs added 30 million; and "tightly structured HMO plans [have relaxed] their rules" by installing point-of-service plans which offer access to out-of-network doctors with a primary care provider's permission. The transition to POS plans may not be feasible for many plans, as seen in the financial difficulties of "[a] number of HMOs, notably Oxford Health Plans." Analysts noted that POS plans have encountered problems "brought on by difficulty in keeping track of costs when members go to doctors outside the plans' lists."

Back To The Future
      Rising enrollment in less restrictive health plans threatens to obscure the motive that started the managed care revolution --limiting the out-of-control costs that come with unlimited patient choice. The Times reports that "[t]here is a risk ... that what consumers want will eventually send overall health care costs soaring again." The end result may be that managed care and reduced choice may be a requisite only for those without the ability to pay for more. Oxford President William Sullivan said, "Any consumer would probably prefer a PPO. But they are more expensive than HMOs. Members go ping-ponging around from specialist to specialist." Jon Gabel of Peat Marwick predicted, "Upper-middle-class people will be willing to pay more for the choice," while HMOs will appeal to those who are "more price sensitive" (Freudenheim, 9/29).