Perspective               

PPOs Concentrated in Areas with Prior Success in Private Medicare Plans

Medicare Preferred Provider Organizations (PPOs), a relatively new private health plan option available to older and disabled individuals in certain regions of the country, have failed to draw interest in markets where Medicare private health plans, such as HMOs, have not already taken hold, a study by Mathematica Policy Research found. According to study researchers, it has proven extremely difficult to establish private health care plans in rural and generally less urban areas.

A Medicare prescription drug bill recently passed by the House of Representatives belies this evidence, however, as it relies exclusively on private health care plans to provide people with Medicare with prescription drug coverage. If the PPO demonstration is any example, people living in rural areas most likely will not have access to prescription drug coverage if it is only offered through private health plans.

Any prescription drug legislation needs to include a government fallback plan in which the federal government would deliver a drug benefit in areas where private health plans do not sell “stand-alone” drug coverage polices at any price.

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