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Related Experiment Videos

Selection in a preferred provider organization enrollment

J E Billi1, C G Wise, S I Sher

  • 1Department of Internal Medicine, University of Michigan Medical School.

Health Services Research
|December 1, 1993
PubMed
Summary

This study found that the Preferred Provider Organization (PPO) experienced favorable selection during its initial open enrollment. Enrollees had lower healthcare utilization and costs prior to enrollment, indicating a healthier group.

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Area of Science:

  • Health Services Research
  • Health Economics
  • Insurance Studies

Background:

  • Preferred Provider Organizations (PPOs) are a common type of managed care plan.
  • Understanding enrollment patterns, such as favorable or adverse selection, is crucial for PPO financial stability.
  • This study examines selection in a new university-based PPO.

Purpose of the Study:

  • To determine if favorable or adverse selection occurred in a university-based Preferred Provider Organization (PPO) during its first open enrollment period.
  • To analyze the health services utilization and demographic characteristics of PPO enrollees versus non-enrollees.

Main Methods:

  • A retrospective study using secondary data from the University of Michigan PPO.
  • Analysis of insurance payments and demographic data for 43,005 university employees, dependents, and retirees for one year prior to PPO enrollment.

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  • Comparison of healthcare utilization patterns between PPO enrollees and non-enrollees.

    • Main Results:

    • The PPO group was younger and had a higher proportion of family contracts compared to the non-PPO group.
    • Prior to enrollment, the PPO group had 20.6% lower inpatient and 9.4% lower outpatient payments per member.
    • Overall, the PPO group had 18.7% lower healthcare payments per member in the year preceding enrollment.

    Conclusions:

    • The findings indicate favorable selection for this university-based PPO, based on lower prior healthcare expenditures.
    • This aligns with previous research on favorable selection observed in Health Maintenance Organization (HMO) enrollment.
    • Favorable selection suggests the PPO attracted a healthier population, potentially leading to lower costs.