Tests the hypothesis that the Federal Employees' Health
Benefits Program (FEHBP) has fostered an environment of
competing health plans, especially preferred provider
organizations (PPOs), in rural areas. There is a strong
relationship between the number of FEHBP plans and areas
with high population counts and high population density.
In many counties with low population counts (under
3,000), most PPOs are not contracting with the nearest
primary care provider. The authors conclude that the
FEHBP is not a perfect predictor of Medicare Advantage
(MA) plan activity because the MA program does not use
the FEHBP approach of certifying regional plans that must
offer local access. However, the FEHBP experience
indicates that plans are attracted to areas with high
population counts and high population density.