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Managed Care Benefits

U.S. 1 Staff

December 15, 1999

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This article was published in U.S. 1 Newspaper on December 15,

Managed Care Benefits

In the face of a tight job market, good health

benefits

can help recruit the best workers. But how does a prospective employee

evaluate the various health plans? Look for whether a company offers

at least two managed care plans, one that requires you to visit a

"gatekeeper" doctor before you go to a specialist, and one

where you can refer yourself to a specialist.

The second kind, more flexible, is called a Preferred Provider

Organization

(PPO). PPOs are, at least in this part of the country, more expensive

per employee, and so far most employers aren’t picking up that extra

tab. If you, the worker, want the flexibility of a PPO, you will be

paying more.

To encourage your employer to dig deeper in its benefits pocket to

pay for a more flexible plan, take a look at the survey just released

by William M. Mercer, the healthcare consulting firm with an office

at the Carnegie Center. The survey shows that, nationally, employers

are paying health benefit increases this year that range from 13.8

percent to seven percent, with small companies showing the biggest

percentage increase.

You might point out to your boss that companies in this state pay

less than elsewhere. They had only a five percent increase this year,

for an average total of $4,280 per employee. That’s less than

companies

in the Northeast pay ($4,787). (Careful here, this part of survey

applies only to large companies of 500 employees or more).

But employers in the Northeast are less likely to jump on the PPO

bandwagon, says the survey. "Nationally, 51 percent of employers

offer a PPO, and 43 percent of employees are enrolled in one. In the

Northeast, only 41 percent of employers offer a PPO, and only 32

percent

of employees are enrolled in one. While the number of Northeast

employers

offering a PPO jumped dramatically in 1999, from 31 percent to 41

percent, the increase in employee enrollment was minimal."

"This may indicate that Northeast employers, because their costs

are higher, are reluctant to make a PPO plan their `go to’ plan,"

says John Menninger, a consultant in Mercer’s Carnegie Center

office (609-520-3748, E-mail: john menninger@us.wmmercer.com).

The cost difference between PPOs and less flexible plans, minimal

nationally, is significant in the Northeast. The average PPO cost

per employee in the Northeast was $4,343 in 1999, nine percent or

$410 more, than the less flexible plan.

"The added cost may seem insignificant when you boil it down to

$410 per employee, but those are the kinds of numbers that add up,

and they add up over time," says Menninger. He is an alumnus of

Ohio State, Class of 1986, has an MBA from Rutgers, and has been with

Mercer for seven years.

With more than 3,000 companies responding this year,

the Mercer-Foster Higgins National Survey of Employer-sponsored Health

Plans outdoes all others in size and comprehensiveness. It reflects

the views of about 600,000 employers. Official copies cost $500 and

will be available on February 7 but consumer-friendly information

is available at (http://www.wmmercer.com/us-news).

To lobby for a change in your managed care plan, you need to look

at what you already have. Here are the categories:

The traditional indemnity plan operates the old-fashioned

way. You go to a doctor, you pay the bill, and you send the bill in

to get partially reimbursed.

Among the managed care plans, the Preferred Provider

Organizations

or PPOs are considered the least restrictive. A network of

providers

contract to provide their services at a discount. You can self refer

to specialists and pick a doctor out of a directory. You pay less

for an in-network doctor than for an out-of-network doctor.

"PPOs don’t require doctors to get the plan’s approval before

beginning treatment," says Menninger. "They monitor physician

performance after the fact, avoiding the risk of denying care that

should have been given." This year showed a big jump in PPO plans

that offer disease management programs to educate those with heart

disease, diabetes, asthma, back pain, or depression — and assist

in behavioral change.

PPOs can be less expensive because they cut red tape. The average

administrative cost of a PPO this year was $17 per employee per month,

versus $25 for the more traditional HMO. Also, says the report,

"Because

they don’t limit coverage to a closed panel of providers, employers

with PPOs are less likely than those with HMOs to be sued."

The Point of Service or POS network is less flexible than

a PPO but more flexible than an HMO. In the provider network, it acts

like an HMO, Menninger explains. You designate the particular primary

care physician, but you can’t refer yourself to a specialist even

at the in-network level. You can nevertheless, get referred out of

network and still get partially reimbursed. Sometimes these plans,

introduced in the early 1990s, are called Open-ended HMOs.

Some POSs offer "open access" products, such as making it

possible to refer yourself to an OB/GYN provider (why should a woman

seeking birth control pills make two appointments when one would do?).

Some allow year-long specialist referrals (so, for instance, you can

go back to the same dermatologist for a year without visiting the

gatekeeper each time).

The Health Maintenance Organization or HMO has no

out-of-network

benefit. You go first to the gatekeeper doctor to get a referral for

specialty care. If you go out of network, you pay the whole cost.

HMOs are also starting to offer "open access" products. In

1999, 16 percent of employers with HMOs offer an open access plan,