Fam Pract Manag. 1998 Mar;5(3):79-83.
You and your staff no doubt spend a lot of time keeping straight the details of your patients' health insurance plans and trying to collect from them. As you know well, some are certainly better than others. But your patients aren't the only ones you want to have good health insurance; it's protection you and your staff need, as well. When the typical roles are reversed and you become the purchaser rather than the provider, what makes one health plan better than another may not be so clear.
Of course, the wide variety of managed care programs makes your insurance choice more complicated than ever. In addition, the availability of new plan options may lead you to consider changing your coverage more often than in years past.
You also may find yourself needing to consider new insurers in part because of the 1996 Health Insurance Portability and Accountability Act (HIPAA). Because the law greatly increases the number of people whom insurance companies must cover, insurers face the prospect of higher claim rates. As a result, many will begin charging higher premiums; others may write policies with exclusions that don't fit your needs; still others may get out of the business, leaving their customers to seek new insurers.
Other provisions of HIPAA are better news for family physicians. If you're in solo practice, you may decide to take advantage of the law's feature that allows those who purchase their own health insurance to deduct part of the premiums from their taxes each year. You can deduct 30 percent in 1997, and that figure rises to 80 percent by 2006. HIPAA also authorizes insurers to market medical savings accounts. Depending on your health, income and personal financial situation, these high-deductible, low-premium plans may appeal to you.
Regardless of why you find yourself in the role of insurance purchaser, you probably could use some guidelines to help you make the right choice for yourself and your staff. There's more to choosing an insurer than finding the plan with the lowest cost. Here's a checklist of issues to consider:
Participation minimums. Insurance companies may require different numbers of employees to participate in an insurance plan before they will issue a policy. Some require that 50 percent to 75 percent of those who are eligible take part; others require no minimum at all. If potential insurers do set minimums, consider the amount you plan to require employees to pay for their coverage. Their willingness to participate will be based in part on how much comes out of their pockets.
Coverage for part-time employees. If you want to offer health insurance to your part-time employees, check to see whether potential insurers are willing to cover them. Some will, others won't.
Definitions of experimental treatments. You may want to clarify what medical treatments insurers define as experimental and therefore won't cover. Some that often fall into this category are bone marrow transplants, nutrient drinks for digestive disorders, treatment of sleep apnea and some speech therapy.
Lifetime maximums. Most policies limit the total amount of claim benefits to be paid to a person during his or her lifetime. This is critical for people with young children and for older people who may be more susceptible to diseases or injuries that require frequent or constant medical care. Lifetime limits differ from policy to policy but usually aren't problematic if the policy provides at least $1 million of coverage.
Exclusions. It's vital to know what isn't covered as well as what is. If a certain service isn't listed as a covered expense in your policy but also isn't specifically excluded, you may still stand a chance of having a claim for it paid. If the service is listed as an exclusion, your chances for payment are nil.
Under HIPAA, insurance companies may no longer deny coverage for individuals within a group because of a person's health history. This, of course, significantly increases risk for insurers. To temper this risk, some insurers are excluding high-cost services they previously covered, such as obstetrical care, transplants, speech and growth therapy and AIDS treatments.
Reasonable and customary charges. Under most indemnity plans, those covered by the plan share the cost of medical care with the insurance company after meeting a deductible. But most insurers require that the charges be “reasonable and customary.” It's important to know what percentage the company pays and how it defines “reasonable and customary.” Different answers can mean different amounts of money out of policy-holders' pockets.
Indemnity plans usually pay 80 percent to 90 percent of reasonable and customary costs with few, if any, limits on the choice of physician or facility. Managed care plans usually have agreements with their affiliated hospitals and medical groups about the amounts they can charge. But if you are treated by a physician or facility unaffiliated with the plan, the plan may pay as little as 50 percent of reasonable and customary costs. This can be important if you or a staff member need to see a specialist outside the plan or need medical care while away from home.
As an added complication, not all insurers define “reasonable and customary” the same way. Some base these charges on the average fees among hospitals or physicians in a given ZIP code. Some use averages for an entire state, and still others use multistate formulas.
First-dollar benefits. First-dollar benefits are those the insurer will pay in full or in part without requiring the policyholder to pay a deductible for the service. Preventive services such as physical exams, well-baby care and Pap smears are typically included. Be sure you know which services your potential insurers place in the first-dollar category and what portion of those charges, if any, you and your staff will be required to pay.
Claim handling. Keeping track of slow claim reviews and delayed payments is time consuming, and it can be a financial burden for policyholders who have advanced their own funds for services before making a claim. Ask prospective insurers how long it takes them to pay claims and whether their own staff process claims or whether they outsource the process. Request names of other customers so you can determine their satisfaction with claim payments.
Claim appeals. Everyone wants to think that properly filed claims will be paid without question. But as you know well, not every diagnosis or treatment is clear cut, and insurance companies reserve the right to deny some claims.
For each insurer you consider, you should know exactly how you will go about appealing claim denials. Some companies resolve disputes entirely by phone or mail. Others offer an appeals process that allows policyholders to appear before the insurer's appeals board. This is probably not a make-or-break decision point if you're satisfied with other aspects of the policy, but it is something you should review.
Fee-for-service (FFS) and managed care comparisons. In all likelihood, you will review both FFS and managed care plans of some type. After considering the points above, here are several other areas that you might wish to compare.
Most FFS plans cover the costs of consultations with specialists, regardless of whether the patient is referred by his or her primary care physician. As you know, the restrictions on referrals are usually much tighter — and the selection of consulting specialists much more limited — under managed care plans such as HMOs and PPOs. You can find something of a compromise in point-of-service products, which allow patients to see specialists outside the plan — and may require patients to pay 30 percent or more of the cost of those visits.
Another consideration is how (and whether) your plan will pay for care that policy-holders need while out of town. A common example is treatment for illnesses or injuries while traveling, but consider also whether the plan covers dependent students away at college. FFS plans usually pay for treatment provided anywhere. Each managed care plan may have its own rules about paying for out-of-area treatment.
Also keep in mind how FFS and managed care plans differ in their prescription coverage. Patients in FFS plans can usually receive name-brand medications from any pharmacy. Managed care plans often impose formularies, require the use of generics whenever possible and pay only for prescriptions filled at pharmacies that offer the plans negotiated pricing structures.
Finally, while you're evaluating which plan will best meet the needs of you and your staff in the future, also keep in mind your employees' immediate need: information about the selection process. Keep your staff in the loop. Your insurance choice will have a significant effect on them, and they will want to know what's happening and when a decision might be reached.
Bruce Mathews is the executive administrator of Physicians' Benefit Trust, a combined, self-funded, self-administered insurance program offered by the Illinois State Medical Society and the Chicago Medical Society to their members.
Copyright © 1998 by the American Academy of Family Physicians.
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