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Perspectives on PPO Performance Measurement from Consumers, PPO Leaders, and Employers

Are preferred provider organizations (PPOs) capable of reporting standardized health care quality data using nationally recognized measures? A new Commonwealth Fund study by Liza Greenberg of the American Accreditation HealthCare Commission/URAC addresses that question and presents findings from a series of meetings with key players in the PPO quality arena.

Approximately 90 million Americans are enrolled in PPOs, according to the study, Perspectives on PPO Performance Measurement from Consumers, PPO Leaders, and Employers. Unlike HMOs, PPOs generally have not been asked to report publicly on the quality of their patient care. This is starting to change, however, as managed care and PPOs become more prevalent.

Currently, no consensus exists on what set of tools is best for measuring PPO quality. Experts disagree on whether PPOs are even managed care organizations and whether they should be held accountable for the quality of clinical care. URAC's findings suggest that reporting on quality must consider the interests of diverse users of information, including purchasers, consumers, regulators, and the industry. In addition, PPOs should be rated based on the services for which they are contractually accountable and for which patients have benefit coverage.

There are several ways to hold PPOs accountable for measuring and reporting on quality, including accreditation, a review of the structure and process of the organization, and specific clinical measures of interest to purchasers. Standardized tools such as the Health Plan Employer Data and Information Set (HEDIS) and the Consumer Assessment of Health Plans (CAHPS) are not widely used because of problems in producing data comparable to that of HMOs. PPOs that do report standardized performance measures represent the most integrated model of PPO or have secured cooperation from their customers to share data and produce measurements, says the study. More often, PPOs produce nonstandardized measures of administrative quality and customer service.

Achieving several basic goals will result in improved health outcomes for patients and allow organizations to better gauge the quality of care, the study says. Among them are linking performance data from different parts of the health care system and identifying ways to convey information that help consumers select a health plan or provider. Consumer responses to CAHPS questions in PPO and fee-for-service settings should also be considered. Other priorities include improving data availability to detect vulnerable populations in less managed settings and establishing lines of accountability to effectively manage high-risk patients in loosely integrated systems.

Facts and Figures

  • Although PPOs are considered to be managed care organizations, they primarily manage only cost, through discounted physician fees.

  • Accreditation, a voluntary process, has not gained a significant foothold in the PPO market. Low employer demand for accreditation and cost are cited as two major reasons.

  • Rhode Island mandates that PPOs with more than 10,000 enrollees in the state report on HEDIS performance measures.

Publication Details



Perspectives on PPO Performance Measurement from Consumers, PPO Leaders, and Employers, Liza Greenberg, American Accreditation Healthcare Commission/URAC., The Commonwealth Fund, September 2000