Covered Lives in PPOs

Many measures of health plan performance require a count of covered lives to make the results meaningful. For both organizational and economic reasons, many preferred provider organizations (PPOs) do not collect enrollment data. Enrollment can be estimated, but current techniques for estimating enrollment are quite imprecise. Imprecision introduces considerable uncertainty into measures of PPO performance. Furthermore, uncertainty may exist even when enrollment data are available and complete because of challenges that PPOs face in linking enrollment data to claims and administrative data. Efforts to increase accountability through performance reporting may require PPOs to devote additional resources for the collection and management of enrollment data. The authors describe practices in tracking enrollment in PPOs and provide data to illustrate variations at both the regional and company levels. Variations in tracking dependents and lack of information on the demographic characteristics of PPO subscribers affect a PPO's ability to produce standardized performance measures comparable to health maintenance organization performance measures.