Study Says PPOs Don’t Mix Well With Medicare

Despite the will and wishes of many members of Congress, Medicare and preferred-provider organizations will not mix well, Mathematica Policy Research warns in a recent report.

One of the goals of Medicare reform being debated in Congress is to include PPOs in the system. Mathematica cites Medicare's very limited experience with PPOs, pointing out that as of August 2003, only 5 of Medicare's 150 coordinated health plans were PPOs.

“Although Medicare mounted a major PPO demonstration in January to get more plans involved, they are mainly in areas of the country where coordinated care plans, mainly HMOs, already exist,” contends Marsha Gold, a senior fellow at Mathematica.

There were 70,000 enrolled in the PPO demonstration project as of August.

Mathematica says that members' premiums for Medicare PPO demonstration projects are “more than two times higher than those for regular coordinated care plans (mainly HMOs) in the same area.”

Financial incentives to stay in the network make it very expensive for enrollees to go out of the network to any substantial extent. Mathematica is researching options for Medicare reform as part of its Monitoring Medicare+Choice project, which is funded by the Robert Wood Johnson Foundation.

Some experts say that concerns raised by Mathematica and others could be addressed in one phrase: more money. There's optimism that Congress will come through.