3M™ Potentially Preventable Services (PPS)

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Lower hospital costs while improving patient care

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Identify potentially preventable high-cost ancillary services using powerful clinical grouping logic

3M PPS rewards efficiency by identifying potential overuse or potential underuse of ancillary services

The 3M™ Potentially Preventable Services (PPS) methodology helps identify high-cost ancillary services while generating actionable insights that can lower costs and decrease the use of low-value health care services.

Nurse touching the shoulder of a patient in a wheelchair
3M PPS: Evidence-based guidelines to identify potentially preventable services

3M PPS applies to all patients regardless of payer and helps generate actionable insights for lowering costs and decreasing the use of low-value health care services.


Why choose the 3M™ Potentially Preventable Services (PPS) methodology?

  • physician speaking to a patient
    Reduces cost by improving quality of care

    Overuse of imaging scans, diagnostic tests, specific procedures and other services has been well documented, exposing patients to unnecessary cost, inconvenience and risk. 3M PPS addresses the challenge by providing risk-adjusted and actionable data on the incidence and cost of overuse.

  • physician writing on a clipboard
    Careful, clinically defined risk adjustment

    3M PPS compares services with diagnoses and performs risk adjustment based on the burden of illness in a patient population. It identifies providers and provider organizations with unusually high rates of ordering or providing potentially preventable services after considering differences in patient populations. In contrast, other approaches employ “all-or-nothing” rules that deny services or impose burdensome prior authorization, regardless of a provider’s past practices or patient population.

  • physician showing patient information on a tablet
    Comprehensive, evidence-based transparency

    3M PPS applies to all patients regardless of payer. Identification of potentially preventable services relies on evidence-based guidelines. The logic is documented in a definitions manual available to any licensee. Licensees may choose to focus on specific types of potentially preventable services appropriate for their population.

  • health care team discussing information on a tablet
    Integrated with other 3M methodologies

    The widely accepted 3M™ Clinical Risk Groups measures baseline population health status in comparing actual versus expected PPS rates. 3M PPS is one of the five 3M potentially preventable event methodologies that generate specific results for clinicians and health care managers to use in reducing cost and improving outcomes.

All about 3M PPS

3M PPS helps generate actionable insights, lower costs and decrease the use of low-value health care services.

  • Definition
    The 3M PPS methodology addresses high-cost ancillary services that may not provide useful information for diagnosis or treatment, and therefore have no effect on clinical management. Such services include diagnostic tests, laboratory tests, therapy services, radiology services and pharmaceuticals that may be redundant or are not reasonably necessary for providing care or treatment.
  • 3M PPS is equally useful to employers, payers, health plans, provider organizations and researchers. Any of these entities can use standard claims data to identify the number, cost and risk-adjusted rates of specific potentially preventable services and the providers that order or provide unusually high volumes of low-value services. As with the other PFPs, risk adjustment is critical for a fair comparison of rates between institutions.
  • Here are a few examples of the value 3M PPS can bring to clients:

    • Specifying potential overuse. For one large Medicaid managed care plan, 29 services accounted for over 75 percent of potentially preventable services. These included imaging services (CT, ultrasound, echocardiography, MRI) and lab tests (level I chemistry, levels I and II immunology, level II microbiology), as well as a variety of procedures (angioplasty, level I endoscopy of the upper airway) and drugs (classes IV and V pharmacotherapy).
    • Identifying potential underuse. Although overuse of ancillary services is the typical concern in fee-for-service medicine, 3M PPS analysis also identifies potential underuse. For example, under capitation payment, some patients may not receive enough services. These situations may be revealed by comparing actual services with what would be expected for a given patient population.
    • Focusing on targeted authorization or education programs. Rather than imposing burdensome authorization requirements on all providers or launching unfocused educational efforts, 3M PPS analysis focuses attention on those providers and organizations with high, risk-adjusted PPS rates. Risk adjustment using 3M CRGs takes away the “my patients are sicker” objection.
    • Rewarding efficiency. Under shared savings programs, payers and providers such as accountable care organizations (ACOs) share savings from reduced overuse. Importantly, payers can give providers specific data on PPS incidence by service, diagnosis and provider – the information needed to generate savings.
  • 3M PPS classification logic is the same for every licensee, although different organizations may use it in different ways. Each licensee determines the appropriate uses. At this time, 3M does not offer software that replicates the PPS analysis used by specific organizations. See the list of reimbursement calculation software available for all of the 3M patient classification methodologies.
  • The 3M PPS methodology is integrated with other 3M patient classification methodologies. For example:

  • The 3M PFP methodology is available in the following 3M products:

    Available to licensees on the 3M Customer Support website:

    • PFP Methodology Overview
    • PFP Definitions Manual
    • PFP Setup Guide
    • PFP Summary of Changes
  • 3M experts can advise employers, health plans, government agencies, provider organizations and other interested parties on how to obtain the maximum value from using 3M PPS. For example, 3M consultants can help an organization measure the incidence of potentially preventable services, compare against benchmarks and design improvement programs. 3M consultants can also help payers and other organizations measure PPSs across provider organizations and other patient populations, design pay-for-outcomes incentive methods and facilitate learning collaboratives. For more information, go here.
  • The methodologies to assign 3M™ Potentially Preventable Services (PPS), 3M™ Potentially Preventable Admissions (PPA) and 3M™ Potentially Preventable Emergency Department Visits (PPV) are all included within the 3M™ Population-focused Preventables (PFP) Software. Although 3M PPS is identified using only ambulatory claims data (i.e., physician, clinic and hospital outpatient), comparing 3M PPS rates across different populations requires risk adjustment by individual health status as measured by 3M CRGs. 3M PFP data requirements are the same as for 3M CRGs. All required data are routinely collected from institutional and professional claims, including the UB-04 and CMS-1500 paper forms and their corresponding X12N 837 electronic formats. Pharmacy data in NCPDP format are optional but recommended. Consistent, unique patient identifiers are essential. Analysis typically involves creation of a static data set comprising at least one full year of data; some users perform rolling analyses each month or each quarter. 3M PFP software does not need to be built into claim-processing systems.
  • Overuse of low-value tests, services and medications costs the American health care system $75 billion to $100 billion a year, according to a 2019 review article.¹ These figures do not include the impact on the patients who receive services of marginal utility that sometimes pose significant risk. Although overuse of specific tests, services and medications is well documented, the challenge has been what to do about it. Common approaches – such as expecting patients to second-guess their physicians, blanket denial of payment, or cumbersome authorization requirements – cause their own problems. Patients may not receive services that are medically appropriate in their circumstances, and back-and-forth authorization processes add more administrative costs of the U.S. health care system.

    In 2012, 3M met this challenge by releasing the 3M™ Potentially Preventable Admission methodology as one of the three Population-focused Preventables. (The others are 3M PPS and 3M PPV).

    As with all 3M PPE methodologies, three core concepts are essential. First, we recognize that not all services are potentially preventable. Second, what matters is not the individual service, but rather the overall rate of potentially preventable services. Instead of approaching quality with the mindset of “This should never happen,” we use a more realistic and meaningful approach of “This has happened too often.” Third, any comparisons across populations of patients must be risk-adjusted. In practice, that means that the actual 3M PPA experience of a population is compared with the experience that would be expected for a population with the same case mix.


    3M PPS logic is divided into two phases.

    1. Identify potentially preventable services
    2. Each service provided in a physician practice, outpatient hospital department (except emergency), or similar setting is assigned to one of approximately 600 3M™ Enhanced Ambulatory Patient Groups (EAPGs). The 3M PPS methodology compares the 3M EAPG with the principal diagnosis as classified by the diagnostic subgroup (DSG) component of the 3M™ Clinical Risk Groups (CRG) methodology. There are thousands of 3M EAPG/DSG pairs that indicate potentially preventable services. Examples (as of 2020) include:

      • MRI of the Back for Other Back and Spine Diagnoses (EAPG 294/DSG 937301)
      • Diagnostic Lower Gastrointestinal Endoscopy for Nausea, Vomiting, Diarrhea (EAPG 136/DSG 930401)
      • Occupational Therapy for Vascular Dementia (EAPG 270/DSG 900602)
      • Electroencephalogram for Headache (EAPG 211/DSG 904001).

      Detailed output from 3M PPS allows licensees to focus on PPS categories such as imaging, lab, endoscopy or therapy.

    3. Determine patient risk adjustment

    Consider the example of two physician practices that have identical rates of ordering MRIs in the early evaluation of low back pain. If one practice’s patients are baseline healthy and the other practice’s patients have multiple comorbidities, the differences in baseline health status must be considered. This is done by calculating norms by Aggregated Clinical Risk Group (ACRG) and then comparing each practice’s actual PPS experience with its expected PPS experience. The typical result is identification of individual practices with excessive rates of ordering or providing low-value ancillary services. Addressing these concerns may be as simple as showing physicians how they differ from their peers.

    3M PPS can also identify underuse. For example, when physician practices are paid by capitation (a flat rate per patient regardless of utilization), patients may be underserved. Again, comparing actual experience with expected experience (after case mix adjustment) provides actionable data for improvement.

    Further information on the 3M PPS logic is available in the 3M™ Population-focused Preventables (PFP) Classification Methodology Overview (PDF, 759 KB). Detailed information is available to licensees in the online PFP definitions manual.

    3M PPS clinical logic is maintained by a team of 3M clinicians, data analysts, clinical analysts, programmers and economists. The methodology is updated annually to reflect changes in the standard diagnosis and procedure code sets and make enhancements to the clinical logic.

    ¹Shrank WH, Rogstad TL, Parekh N. Waste in the US health care system: estimated costs and potential for savings. JAMA. 2019;322(15):1501-1509.

Learn more about 3M PPS

Publicly available documentation, articles and reports

Please note that documents not published by 3M do not necessarily reflect 3M recommendations and have not been approved by 3M. These documents are listed here for the information of readers interested in the various ways that 3M patient classification methodologies have been applied. Also note that listing these references does not imply endorsement of 3M methodologies by individual authors, other organizations or government agencies.

Some articles and reports are available from the publishers at no charge, while others require a fee.

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