Preferred provider organizations (PPOs) represent a diverse and complex set of arrangements among insurance entities, networks of physicians, network organizers, and purchasers. Opinions differ regarding the degree to which PPOs have responsibility to manage care and to measure and report key aspects of their performance to customers and the public. Technical and operational challenges to performance measurement currently limit public reporting, even when agreement exists that it is appropriate for PPOs to do so. The Health Plan and Employer Data and Information Set (HEDIS) is a health maintenance organization performance measure that could provide standards for PPO reporting. This article explores conceptual and methodological considerations regarding HEDIS and other performance measurement in PPOs and identifies failures of the current marketplace. While using some measures may be premature or inappropriate, there are significant opportunities to apply other measures now and, by doing so, to create a functional health care marketplace.
