PREFERRED-PROVIDER ORGANIZATIONS (PPO)

A concept that continues to receive considerable attention from employers and insurance companies is the preferred-provider organization. A few PPOs have existed on a small scale for many years, but since the early 1980s PPOs have grown steadily in number and in membership. Today, PPOs provide coverage for medical expenses to more Americans than do HMOs, primarily because of the flexibility of covered persons to choose their own medical providers.

What Is a PPO?
The term PPO tends to be used in two ways. One way is to apply it to health care providers that contract with employers, insurance companies, union trust funds, third-party administrators, or others to provide medical care services at a reduced fee. Using this definition, a PPO may be organized by the providers themselves or by other organizations such as insurance companies, the Blues, HMOs, or employers. Like HMOs, they may take the form of group practices or separate individual practices. They may provide a broad array of medical services, including physicians' services, hospital care, laboratory costs, and home health care, or they may be limited to only hospitalization or physicians' services. Some of these types of organizations are very specialized and provide specific services such as dental care, mental health benefits, substance abuse services, maternity care, or prescription drugs. These providers are referred to not as PPOs but as preferred providers or network providers.

The second use of the term PPO, and the one generally assumed when the term is used is to apply it to benefit plans that contract with preferred providers to obtain lower-cost care for plan members. PPOs typically differ from HMOs in several respects. First, the preferred providers are generally paid on a fee-for-service basis as their services are used. However, fees are usually subject to a schedule that is the same for all similar providers within the PPO, and providers may have an incentive to control utilization through bonus arrangements. Second, employees and their dependents are not required to use the practitioners or facilities that contract with the PPO; rather, a choice can be made each time medical care is needed, and benefits are also paid for care provided by nonnetwork providers. However, employees are offered incentives to use network providers; they include lower or reduced deductibles and copayments as well as increased benefits such as preventive health care. Third, most PPOs do not use a primary care physician as a gatekeeper; employees do not need referrals to see specialists.

Employers were disappointed with some of the early PPOs. While discounts were received, they seemed to have little effect on benefit costs because discounts were from higher-than-average fees, or providers were more likely to perform diagnostic tests or prolong hospital stays to generate additional fees to compensate for the discounts. Needless to say, these PPOs seldom lasted long. The successful PPOs today emphasize quality care and utilization review. In selecting physicians and hospitals, PPOs look not only at the type of care provided but also at the provider's cost effectiveness. In this era of fierce competition among medical care providers, these physicians and hospitals are often willing to accept discounts in hopes of increasing patient volume. It is also important for a PPO to monitor and control utilization on an ongoing basis and to deal with groups of preferred providers that monitor their own costs and utilization. As a general rule, however, PPOs do not monitor their preferred providers as closely as HMOs do.

Variations
Over time, PPOs have continued to evolve. A few PPOs compensate providers on a capitation basis, while a few others perform a gatekeeper function. If a specialist is not recommended by a subscriber's primary care physician, benefits may be reduced. With these changes, it is sometimes difficult to determine the exact form of a managed care organization. However, those that operate as traditional HMOs generally provide medical expense coverage at a slightly lower cost than those that operate as traditional PPOs, but there are wide variations among HMOs as well as among PPOs. Therefore, a careful analysis of quality of care, cost, and financial stability is necessary before a particular HMO or PPO is selected.

Another variation of the PPO is the exclusive-provider organization, or EPO. The primary difference is that an EPO does not provide coverage outside the preferred-provider network, except in those infrequent cases when the network does not contain an appropriate specialist. This aspect of an EPO makes it very similar to an HMO. The number of EPOs is small.

Sponsorship
Most of the early PPOs were established by insurance companies to provide products to compete with HMOs. In the 1990s, the number of PPOs grew significantly to about 1,100, with about 60 percent still owned by insurance companies. Another 10 percent are owned by HMOs to give them another product in their health plan portfolios to offer employers. The remaining 30 percent have a variety of ownership forms, including the Blues, third-party administrators, private investors, and groups of physicians and/or hospitals.

REASONS FOR USE OF MANAGED CARE

There are many reasons why employees elect coverage under a managed care plan. First, it may be the only plan the employer provides, although most employers allow a choice of benefit plans. In those situations, the following factors have been identified as reasons why a managed care plan, in general, or a particular managed care plan might be selected:

The reputation of the managed care plan. To some extent, this is a function of the managed care plan's experience. In areas where managed care plans have been established for many years, a larger percentage of employees participate. Employees are also concerned with perceived quality of care and are less likely to choose a plan known for frequent coverage denials and difficulty in obtaining referrals to specialists.

The extent to which employees have established relationships with physicians. Employees are reluctant to elect a managed care option if it requires that they give up a physician with whom they are satisfied. In some cases, of course, this physician also may participate in the managed care plan. In general, new employees are more likely to elect a managed care option if they are new residents of the area or are just entering the labor force.

Costs. Managed care plans are obviously more attractive to employers when they offer a less expensive alternative to coverage under insurance company plans. As a rule, managed care plans are less expensive, and any employee share of the premium is lower. Even when the premium cost is comparable, there is often broader coverage and no deductibles or percentage participation. If employees view a managed care alternative as being less expensive in the long run, their participation is greater.

In the early days of the growth of managed care, employers were concerned primarily with cost savings when they adopted managed care plans. In a more mature managed care marketplace, employers are concerned with the same factors when they change plans as are employees: reputation, availability of providers, and cost. Throughout most of the late 1990s, the economy was booming, labor markets were tight, and employers faced relatively modest premium increases from year to year. As a result, employers were much more likely than in the past to modify managed care plans or to adopt new plans that were less restrictive, and therefore somewhat more expensive, in their management of care. With greater premium increases as the new millennium begins, some benefit consultants feel that this trend may reverse itself, particularly if there is an economic downturn.

Group Medical Expense Benefits, Managed Care Plans - Reactions to Consumer and Provider Concerns

As previously mentioned, the majority of employers and employees are reasonably satisfied with managed care plans but have increasing concerns. However, the satisfaction of physicians and other providers is much more negative, primarily because of decreased control over medical decisions for their patients and a loss of income. As a result, there has been what the media describe as a "backlash against managed care." In some ways, this terminology is inaccurate. First, some of the public's concerns, such as the lack of mental health parity and the lack of coverage for certain preventive medical screenings, apply to the entire health care system. Second, while some of the concerns are aimed at all types of managed care plans, many are aimed solely at practices of HMOs.

This backlash has had several results:

States continue to enact legislation that addresses many of the concerns.

Managed care organizations voluntarily modify their practices in light of legislative activity and competitive forces.

The federal government continues to grapple with consumer legislation.

State Reform
State legislatures in recent years have passed several types of laws aimed at managed care reform. Many of these laws, which have been passed by from 12 to almost all states, include the following:

Antigag-clause rules

Grievance, review, and appeal procedures

Any-willing-provider laws

Mandatory POS options

Continuity of care

Provider protection

Emergency room coverage

Mental health parity

Diabetes health benefits

Minimum stays for certain procedures

Plastic surgery mandates

Direct access to providers

A smaller number of states have passed other types of reform legislation.

It should be noted that some of these changes tend to bring managed care plans closer to traditional indemnity plans in terms of both coverage and cost.

Antigag-Clause Rules. Most states have passed legislation preventing managed care organizations from including provisions in their contracts that prevent physicians from discussing with patients treatment options that may not be covered under their health plans or from referring very ill patients for specialized care by providers outside the plan.

Grievance, Review, and Appeal Procedures. A concern of many consumers over the years has been that managed care plans did not have adequate procedures to receive complaints or appeals about denials of coverage or to make decisions in a timely fashion. As a result, all states have passed some type of legislation that requires managed care plans to follow specified grievance, review, and appeal procedures. At a minimum, this legislation requires that enrollees be informed of the procedures, usually in writing. There is often a specific time period in which a plan must respond to a grievance, particularly when emergency care is needed. Some states have gone farther and require an independent external review process if an enrollee is dissatisfied after going through the plan's grievance and appeal process. The decision of the independent review organization is usually binding on the parties, but it is nonbinding in a few states.

Any-Willing-Provider Laws. There has been some concern, particularly by physicians, that managed care organizations exclude or expel physicians for providing care and/or tests that the physician, but not the managed care organization, feels is necessary. As a result, several states have passed "any willing provider" laws. These laws require that HMOs and other networks of medical care providers accept any provider who is willing to agree to the plan's basic terms and fees. This legislation has been opposed by managed care plans on the basis that it will prevent them from negotiating for the best possible terms with highly qualified and efficient providers.

Mandatory POS Options. As is discussed later, closed-panel HMOs have traditionally required that enrollees seek treatment from network providers. Several states have recently adopted legislation that requires that managed care organizations permit enrollees to seek treatment from nonnetwork providers by paying a portion, but not all, of the expenses incurred with these providers. In effect, such legislation turns a traditional HMO into a POS plan. In some states, this legislation applies only to HMOs with a minimum number of members, such as 10,000. In other states, a POS option must be made available to employer groups above a certain size, such as 25 employees.

Continuity of Care. One drawback to receiving care through a managed-care plan is that continuity of care may be lost if the provider ceases to be a part of the provider network, for whatever reason. Several states have recently addressed this issue through legislation. For example, one state requires that the managed care plan continue to pay for care for as long as 60 days, if such a continuation is appropriate. Many of the state laws deal primarily with pregnant patients and may, for example, require coverage to be continued until birth or shortly thereafter for any woman who is in the third trimester of a pregnancy at the time of her obstetrician's departure from the network.

Provider Protection. Most states now require that managed care plans disclose their criteria for selecting medical care providers, give these providers advance notice of contract termination, and provide them with procedures for contesting the termination. One purpose of this legislation is to address the concern that providers who give quality care might lose their provider contract if this care was more expensive or extensive than that the managed care plan deemed necessary.

Emergency Room Coverage. Managed care organizations have been criticized for often refusing to pay for emergency room care, claiming that emergency room treatment was unnecessary. For example, some plans do not pay if a person who goes to an emergency room with chest pains is found to have indigestion rather than a heart attack. The majority of states now require that a plan pay emergency room charges whenever a prudent layperson considers a situation to be an emergency. In addition, care cannot be delayed to get plan authorization for treatment.

Mental Health Parity. Some states have passed mental health parity laws that go beyond the federal law in that they require either complete parity for benefits arising from physical illnesses and mental illnesses or complete parity for physical illnesses and certain severe mental illnesses, such as schizophrenia, depression, or bipolar disorder. These types of laws apply to benefits provided under both traditional insurance contracts and managed care contracts.

Diabetes Health Benefits. Many states require that insurance contracts or managed care plans pay for certain education, equipment, and supplies required by diabetics. With proper care, diabetics can often avoid many serious complications of the disease, such as blindness, amputations, strokes, heart disease, and kidney disease. It is interesting to note one difference between the passage of the laws for mental health parity and diabetes health benefits. The push for mental health parity was partially a result of some managed care plans providing more restrictive benefits than many traditional major medical contracts. On the other hand, the diabetes legislation was probably encouraged by the publicity and success of practices adopted by some managed care plans that were not used in traditional major medical contracts.

Minimum Stays for Certain Procedures. As a result of concerns that some HMOs were compromising proper health care by forcing new mothers and their babies to leave the hospital too soon, most states adopted laws requiring minimum stays for mothers and newborns following deliveries. As a rule, these are for the same periods of time now required by the federal legislation. Most states also mandate that coverage be provided for minimum stays following surgery for breast cancer. For example, several states mandate coverage for stays of 48 hours for mastectomies and 24 hours for lymph node dissections.

Plastic Surgery Mandates. As a result of publicity over several cases where HMOs denied coverage for reconstructive surgery (for example, to deformed children), several states enacted legislation to require all health insurance contracts or health plans to provide coverage for certain types of reconstructive surgery. This legislation may apply to the repair of birth defects only or to a broader list of situations in which reconstruction might be needed as a result of mastectomies, trauma, infections, tumors, or disease.

Direct Access to Providers. Most states have passed laws to allow women covered under managed care plans to have direct access to an obstetrician/gynecologist without obtaining approval or a referral from their health plan. A few states require direct access to other types of providers, such as dermatologists.

Other Legislation. Other types of legislation have been introduced in several states, but the number of states adopting the legislation has been small to date. The following are examples:

Allowing managed care organizations to be sued for medical malpractice if their denial of medically necessary treatment results in harm or injury to a patient. Under a typical state law, a managed care plan cannot be sued for medical malpractice because it is not considered to be practicing medicine.

Requiring that patients and/or state regulators be informed of financial incentives offered to providers.

Granting patients access to all prescription drugs approved by the government for sale.

Making health care plans disclose their policies for covering experimental treatments.

Improving state monitoring of managed care plans by requiring that these plans report the status of patient grievances to the states.

Voluntary Reform by Managed Care Organizations
Many managed care reforms have been initiated voluntarily by managed care organizations. Some reforms are probably a result of the natural evolving of a new form of financing and providing health care. Other changes have occurred because of competition among managed care organizations for market share. However, most of the reforms probably are reactions to legislation that is proposed or passed by the states. After a few states pass a certain type of managed care legislation, there is often a tendency for managed care organizations nationwide to revise their plans to address the concerns that resulted in the legislation. There then may be little need for other states to adopt similar legislation, and, in fact, managed care bills introduced in state legislatures are often not enacted if the legislature learns that the managed care industry has already resolved the problem.

The threat of legislation, at either the state or federal level, is a major impetus for voluntary changes by managed care plans, just as it is for other types of businesses. Such voluntary reform may dampen the likelihood that more restrictive government regulation will result.

Federal Reform
Congress has addressed some health care concerns with the passage of such legislation as the following acts, the Mental Health Parity Act, the Newborns' and Mothers' Health Protection Act, and the Women's Health and Cancer Rights Act.

In late 2000, there are numerous bills in Congress that would add significant federal legislation to the health care environment. Sometimes referred to as a patient's bill of rights, this type of legislation seems to have bipartisan support. However, there are differences of opinion as to what should be done, and these often vary by political party. The following discussion addresses a few of these issues.

There is disagreement whether the legislation should apply to all health insurance plans or to self-funded plans only. For the most part, ERISA exempts self-funded benefit plans from state regulation; therefore, the types of state reforms previously described apply only to "insured" plans in the sense that they apply to insurance contracts and managed care plans over which the states have legislative control. There are arguments that federal legislation should apply only to self-funded plans because the states are already regulating the plans that are not self-funded. There are other arguments that federal legislation should apply to all health insurance plans because of a lack of legislation in some states and less-stringent regulation in many states.

Much of the proposed federal regulation is in fact broader than that found in most states, and even the Congressional Budget Office agrees that a federal bill would increase the cost of health care plans. Unfortunately, increased health plan costs lead to an increase in employers and employees being unable to afford coverage. This has resulted in a debate over what should be the proper balance between availability and cost.

There is also disagreement over the issue of health plan and employer liability. Some proposed legislation would allow employees to sue health plans and their employers if they are injured by a delay or denial of benefits. There are concerns that this type of legislation would benefit trial lawyers more than consumers. In addition, there are concerns that the potential liability might result in many employers terminating health care plans and giving employees pay increases with which they would have to arrange their own health insurance coverage. Such a result would undoubtedly increase the number of uninsureds because some employees would find other uses for the money. Some bills do not impose liability on employers; rather, they provide a process of external review over medical decisions of managed care plans.

If there is no federal legislation prior to the 2000 elections, health care reform is an issue that the new president will certainly face. Readers should follow legislative developments and their potential effect on health care plans.

Group Medical Expense Benefits, Managed Care Plans - Accreditation

As managed care matures and becomes more widespread, there is an increasing focus by government, employers, and consumers on quality. This has led many employers, particularly large employers, to require that managed care organizations for their employees meet some type of accreditation standards. Accreditation does more than just provide consumers with information about health plans. The process, which may cost a managed care organization several thousand dollars, compares it with what are considered benchmark standards of quality care. The organization knows where it stands in relation to its competitors and also what must be done to become accredited or to achieve a higher level of accreditation.

The leading organization for accrediting appears to be the National Committee for Quality Assurance (NCQA), an independent, not-for-profit organization that has been accrediting HMOs and POS plans since 1991 and plans to start accrediting PPOs. (It also accredits managed behavioral health care organizations, credentials-verification organizations, and physician organizations.) Unlike some accrediting organizations, NCQA makes detailed information available to the general public. The NCQA accredits managed care organizations by evaluating the following five areas of performance (the percentage weighting of each area in the overall accreditation decision is also indicated):

1. Access and service. Do health plan members have access to the care and service they need? For example, are physicians in the health plan free to discuss all treatment options available? Do patients report problems getting needed care? How well does the health plan follow up on grievances? (40 percent)

2. Qualified providers. Does the health plan assess each physician's qualifications and what health plan members say about their providers? For example, does the health plan regularly check the licenses and training of physicians? How do health plan members rate their personal physician or nurse? (20 percent)

3. Staying healthy. Does the health plan help people maintain good health and avoid illness? Does it give its physicians guidelines about how to provide appropriate preventive health services? Are members receiving tests and screenings as appropriate? (15 percent)

4. Living with illness. How well does the health plan care for people with chronic conditions? Does the plan have programs in place to assist patients in managing chronic conditions such as asthma? Do diabetics, who are at risk for blindness, receive eye exams as needed? (15 percent)

5. Getting better. How well does the health plan care for people when they become sick? How does the health plan evaluate new medical procedures, drugs, and devices to ensure that patients have access to safe and effective care? (10 percent)

From this information, the NCQA gives health plans one of the following accreditation outcomes:

Excellent

Commendable

Accredited

Provisional

Denied

The NCQA has also developed a set of performance measures that are designed to enable purchasers and consumers to have necessary information to reliably compare the performance of managed care plans. These measures are commonly referred to as the Health Plan Employer Data and Information Set, or HEDIS. The current version (which tends to change almost annually) has more than 50 measures that fall into the following categories:

Effectiveness of care

Access/availability of care

Satisfaction with the experience of care

Health plan stability

Use of services

Cost of care

Informed health care choices

Health plan descriptive information

Examples of a few of the measures that HEDIS reports, which then can be compared with suggested norms, are the following:

Percentage of adolescents receiving immunizations

Percentage of patients receiving beta-blocker treatment following a heart attack

Percentage of patients receiving appropriate treatment for asthma

Percentage of women receiving counseling at the onset of menopause

There are also other bodies that accredit various types of health care organizations, including managed care plans, and make their data available to consumers. The Joint Commission on Accreditation of Healthcare Organizations (JCAHO) has accredited hospitals for many years. It also accredits health care networks (including PPOs), home care organizations, long-term care facilities, behavioral health care organizations, ambulatory care organizations, and clinical laboratories.

Another major accrediting organization is the American Health Care Commission/URAC, commonly referred to just as URAC. URAC focuses on accrediting specific aspects of managed care, such as utilization review. Managed care organizations, such as HMOs and PPOs, can have their own utilization review activities accredited if prescribed standards are met. In addition, URAC accredits the activities of organizations that specialize solely in utilization review and that sell their services to managed care plans that do not have their own utilization review staffs. URAC also accredits organizations with respect to the following: case management standards, health call center standards, health network standards, health plan standards and network credentialing standards.

PREFERRED-PROVIDER ORGANIZATIONS (PPO) - Benefit Structure

The basic benefit structure of a PPO is very similar to that of the traditional comprehensive major medical contract. The most significant difference is that there is a higher level of benefits for care received from network providers than there is for care received from nonnetwork providers. Many PPOs have extensive networks of preferred providers, particularly in the geographic areas in which they operate, and there is little reason to seek care outside the network. Some of these PPOs also have reciprocity agreements elsewhere with networks of other PPOs and hospitals (called centers of excellence) that have excellent outcomes and reputations for certain types of medical procedures, such as cancer treatment, organ transplants. or burn treatment. Under these agreements, benefits are paid as if care was received from network providers. Other PPOs have more limited networks, and the need and desire for treatment from nonnetwork providers is greater. Table 11-2 shows excerpts of the benefit structure from an actual PPO.



The level of benefits under PPOs may vary because of differences in deductibles, coinsurance, maximum lifetime benefits, and precertification rules. There may also be a few additional benefits that are available only if care is received from a network provider. Finally, the procedures for filing claims also differ. The major purpose of these differences is to encourage an employee or dependent to receive care from preferred providers who have agreed to charge the plan a discounted fee.

Deductibles
A PPO may have annual deductibles that apply separately to network and nonnetwork charges. For examples, these might be $100 and $250, respectively. However, many PPOs have no deductible for network charges. Deductibles may be waived for some medical services, such as emergency or preventive care.

Coinsurance
Most PPOs use coinsurance percentages that are 20 percent (and occasionally 30 percent) lower when care is received from nonnetwork providers. The most frequently found provision applies 90 percent coinsurance to network charges and 70 percent coinsurance to nonnetwork charges. Coinsurance provisions of 100/80, 90/80, and 100/70 are also frequently used. As with deductibles, the percentage participation may be waived for certain medical services. In addition, different stop-loss limits or coinsurance caps, such as $1,000 and $3,000, may apply to network and nonnetwork charges.

While PPOs typically have higher coinsurance percentages for network charges than do traditional major medical plans, a covered person may be responsible for modest copayments in some circumstance. For example, there might be a copayment of $5, $10, or $15 for each visit to a primary care physician.

In evaluating PPOs, it is important to determine the basis the PPO uses to apply the coinsurance percentage. For example, assume a plan uses 80 percent coinsurance for nonnetwork charges and that a charge of $100 is incurred for a medical procedure from a nonnetwork provider. Most PPOs first determine whether this charge is usual, customary, and reasonable. If it is, the plan pays $80. If the plan determines that the usual, customary, and reasonable charge is $90, it will be 80 percent of that amount, or $72. However, some plans apply the coinsurance percentage to what is often referred to as allowable charges. In most cases, this is the amount that is paid to network providers for the same procedure. In some cases, network discounts are quite large and, for example, the allowable charge in this example might be only $60. For a nonnetwork charge, the plan pays 80 percent of this amount, or $48. Thus the insured has an out-of-pocket expense of $52. Needless to say, few employees and their families are going to seek nonnetwork care under this type of plan. For this reason, plans that pay nonnetwork charges on this basis are sometimes referred to as phantom PPOs.

Maximum Benefits
While there are variations, most PPOs have a lifetime maximum of $1 million for nonnetwork benefits. The lifetime maximum for network benefits is seldom less that $2 million and may even be unlimited.

Precertification Rules
PPOs often have precertification requirements for many types of hospitalizations, outpatient procedures, and medical supplies. For network benefits, the person responsible for obtaining the needed certification is the network provider, and the covered person is not penalized if the network provider fails to obtain the proper precertification. (This becomes an issue between the PPO and the provider.) However, this responsibility shifts to the employee or family member for nonnetwork services. If precertification is not obtained when required, there usually is a reduction in benefits. For example, what was once 80 percent coinsurance might shrink to 60 percent.

Additional Network Benefits
For the most part, PPOs pay benefits for the same medical procedures, whether they are performed by a network or a nonnetwork provider. However, a few procedures may be covered only if they are received from network providers. For example, routine physical exams may be covered only in the network. In addition, there might be coverage for more outpatient psychiatric visits if a network provider is used.

Claims
No claim forms are required for network services. The covered person merely pays any required copayment, and the provider of medical services does the paperwork needed to receive the additional amounts payable by the plan. Just as in traditional major medical plans, it is the ultimate responsibility of the covered person to file the claims forms necessary to receive benefits for nonnetwork care. Of course, the provider may do much of the paperwork and accept an assignment of benefits.

Regulation
PPOs have been subject to much less stringent regulation than HMOs with respect to their managed care activities. In fact, until recently, they were largely unregulated. As a result, the NAIC passed the Preferred Provider Arrangements Model Act, which has now been adopted by more than half the states. The act is relatively brief and establishes only a minimal regulatory framework. The act requires that PPOs incorporate cost-containment mechanisms, such as utilization review, to determine whether a service is medically necessary. Covered persons must be given reasonable access to medical services. The act also allows PPOs to provide incentives for persons to use the preferred-provider network and to place limitations on the number and types of providers with whom they contract.

It should be noted that most PPO contracts also meet the definition of insurance and are subject to the same regulation by state insurance departments as traditional insurance contracts with respect to contract provisions and benefit mandates.

Group Medical Expense Benefits, Managed Care Plans - Quality of Care

A difficult question to answer is whether persons covered by managed care plans receive the same quality of care as persons covered under traditional medical expense plans. If the sole objective of a managed care plan is to offer coverage at the lowest possible cost, there may be a decline in the quality of care. However, some type of quality assurance program is one aspect of any managed care plan. If properly administered, this type of program can weed out providers who give substandard and unnecessary care. In this regard, managed care plans may be more progressive than the medical field as a whole.

The results of numerous surveys and studies on the quality of medical care plans have been mixed. Some studies show that persons in managed care plans are less likely than persons in traditional medical expense plans to receive treatment for a serious medical condition from specialists, and they are also likely to have fewer diagnostic tests. There are those who argue that family physicians can treat a wide variety of illnesses and avoid unnecessary diagnostic tests and referrals to specialists. On the other hand, an opposing argument contends that the decline in the use of specialists and frequency of diagnostic tests is also a clear indication that there is a decline in the level of medical care. Other studies show that persons in managed care plans are much more likely than the rest of the population to receive preventive care and early diagnosis and treatment of potentially serious conditions such as high blood pressure and diabetes. In addition, managed care plans are viewed as having been successful in coordinating care when it is necessary for a person to see several different types of specialists. There is no doubt that there are some small provider networks with a limited choice of specialists, but most networks are relatively large or allow persons to select treatment outside the network. There are also many managed care plans that do refer patients to highly regarded physicians and hospitals or have these providers as part of their networks.

In evaluating the quality of medical care, it is also interesting to look at surveys of participants in the various types of medical expense plans. Most persons in traditional medical expense plans are convinced they receive better care because of their unlimited ability to choose providers of medical care as needed. While surveys of participants in managed care plans usually show a high degree of satisfaction with the medical care received, there are some concerns that have resulted in recent plan changes and legislative actions and interest.

Two recent developments relate to the quality of care provided by managed care organizations—an increased interest in accreditation and a consumer backlash against some aspects of managed care. This backlash has led to the introduction or passage of laws in many states aimed at solving consumer and provider concerns about access to care, quality of care, and choice.