More Employees Chose PPOs in 1999.

Enrollment in preferred-provider organizations continues to grow, according to a new study.

In the past two years, enrollment in PPOs rose to 43% from 35%, while enrollment in closed-panel HMOs lagged at 30%, and open-ended HMOs, or "point-of-service plans," declined to 16% from 20%, according to the National Survey of Employer-Sponsored Health Plans, released by William M. Mercer Inc.

Most employers surveyed said HMO enrollment would remain the same or decrease, while about 36% predicted it would grow.

Consumers' acceptance of PPOs has grown because there are fewer gatekeeper restrictions. PPOs have continued to lure customers by using cost controls, such as paying a fixed amount per day or per diagnosis, according to the study of 3,166 employers with 10 or more employees.

Managed-care providers also have used fixed-dollar copayments to encourage members to seek treatment from network-affiliated doctors. This year, 83% of PPO plans required an in-network copayment.

Average administrative costs for PPOs were $17 per employee per month, compared with $25 on average for an open-ended HMO. Still, the average per-employee costs of PPOs and open-ended HMOs were almost identical. The PPO cost was $3,742, while the HMO cost was $3,732.