HMO and PPO growth and hospital utilization and payment: a recursive model.

A recursive model of growth of Blue Cross and Blue Shield Plan Health Maintenance Organization (HMO) and Preferred Provider Organization (PPO) membership share is used to analyze total hospital utilization and payments per thousand insured members over an eight year study period, 1980 through 1987. Results indicate a strong, significant relationship between previous year Plan payments and current year growth in HMO membership share. Additional results suggest that Blue Cross and Blue Shield Plans experienced significant reductions in utilization and payments rates resulting from PPO membership share gains and not from HMO membership share gains.