Corrections or additions?
This article was published in U.S. 1 Newspaper on December 15,
1999. All rights reserved.
Managed Care Benefits
In the face of a tight job market, good health
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
(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
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
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
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
of employees are enrolled in one. While the number of Northeast
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 email@example.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:
way. You go to a doctor, you pay the bill, and you send the bill in
to get partially reimbursed.
or PPOs are considered the least restrictive. A network of
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,
they don’t limit coverage to a closed panel of providers, employers
with PPOs are less likely than those with HMOs to be sued."
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).
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,
up from 13 percent last year, says the report.
The good news: "When asked about plans for 2000, only about a
fourth of employers say they will increase either employee
or cost sharing. In this tight labor market, many employers are
to upset workers with bad news about their medical benefits,"
says Menninger. "They’d rather target cost management efforts
at trouble spots like prescription drugs, or look for win-win ways
to control cost."
— Barbara Fox
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