Preferred provider organizations represent a form of managed care in which providers agree to accept discounted fee in exchange for the expectation that their patient volume will be maintained or increased. Between 1981 and 1994, the number of PPOs increased from about 10 plans to over 700. Using data from two large national insurers, this study shows that discounts of between 10 and 20 percent were achieved relative to their indemnity plans. However, it was still the case that the PPO rates remained substantially above rates paid under the Medicare fee schedule. (Health Care Financing Review 1996 Spring; 17(6):161-170)
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