Health-care coverage has become a myriad of HMOs, PPOs and assorted other acronyms. When it comes to choosing a health plan, how do you sort through the alphabet soup to compare quality, price and coverage? Despite the confusion and complexity of the issues, there are several basic guidelines.
Insurers have started paying more attention to small businesses, so it is much easier to obtain information than it has been in the past.
"Find out how long the plan has been in business," says Reva Gould, vice president of NWB Managed Care Development, a managed-care consulting firm. "Find out what the size of the plan is. What's the membership, and how is it broken up between commercial, Medicare and Medicaid?"
This will give you an idea of the company's focus.
"You are looking for a well-run organization, regardless of whether the plan has 10,000 members or 1.5 million members," notes Gould.
Check with state regulatory agencies to find out about the plan's financing and any consumer complaints.
"An employer has every right to request quarterly or annual reports," says Gould. "You can take a look at the plan from a bottom-line perspective."
Quality can be difficult to measure, but agencies like the National Committee for Quality Assurance give various levels of accreditation to give prospective buyers a benchmark to measure plans.
"One of the best ways to learn about plan quality is word-of-mouth," notes Gould. "Talk to your fellow employers and find out who they are using and what type of customer service they get from the health plan. Ask how quickly claims are being paid."
Another way to get a broad comparison of health plans is through an insurance broker who handles multiple lines. The agent can give you a side-by-side comparison of coverage and costs.
"Employers many times are more concerned with price rather than what they are buying," says Gould. "They don't look at what the network or the infrastructure looks like. What will the satisfaction be? You don't want to be changing annually. The administrative costs of evaluation and the agony of converting plans isn't worth it.
"It pays to do your homework. The more informed you are and the more questioning you do, the health plan will recognize that you are well-informed, and that puts the plan on notice to perform."
The Employer Quality Partnership, a non-profit organization that helps employers and employees choose the right health care plan, recommends the following checklist:
- Financial stability. To manage risk appropriately, health plans must have enough resources to maintain solvency. Ask the plan to demonstrate its financial health. They can do this by showing state insurance filings and reports from ratings agencies like Duff and Phelps or Standard & Poor's.
- Outlook for change. Mergers and acquisitions among health-care organizations are common today. These can radically change a plan's network of doctors and its administrative structure. Ask if the plan anticipates a merger or acquisition. If it does, how will the plan minimize disruption to you and your employees?
- Plan features, limitations and exclusions. What a plan doesn't cover can be just as important as what it does cover. Ask the plan to provide details on what it does and does not cover and how it handles experimental procedures, transplants, durable medical equipment, infertility treatments, mental health and drug therapies. Also, what are the plan's deductible, co-payment, annual maximum and lifetime maximum benefit features?
- Emergency standards. Ask whether the plan uses the "any prudent lay-person" standard to pay for emergency room services. This standard allows employees to use their own reasonable judgment of what is a medical emergency.
- Administrative services. If the plan requires employees to file claims, getting claims paid on time and accurately will be very important. Ask the plan to document its claim-payment accuracy and turnaround time goals. Also inquire whether it has met these goals in the location that will process your employees' claims. It is also important to make sure the plan can handle all of your administrative- and customer-service requirements, such as processing your eligibility data and administering your plan design.
- Member satisfaction. Check with your state insurance commissioner's office or Better Business Bureau to see if any formal complaints have been filed against the plan. Then ask for the plan's latest member-satisfaction survey results. Independent surveys from external organizations as well as health insurance brokers or agents can all be useful resources for determining member satisfaction.
- Disenrollment rates. Ask the plan how many members have left in the past year and in the last few years. Turnover rates of more than 10 percent may indicate a problem in the plan's network or services.
- Grievance and appeals process. Federal law requires all health plans to set up and follow a formal process for grievances and appeals. Some plans use an independent or external process; others handle them internally. Some plans rely on third-party arbitration to resolve difficult problems. Ask the plan to explain its process and tell you the average length of time it takes to resolve an individual's appeal or grievance.
- References. Ask for the names of several employers your size who use the plan. Contact them. Also, ask the plan for at least one or two similar-sized employers who have left the plan in the past year or two and call them. They may be able to provide insight into problems.
- Level of comfort. Once you select a plan, you will have to interact with account representatives on a regular basis. Ensure that you like and trust the people with whom you'll be working. Will they return your phone calls? Can they adequately handle problems you encounter? Ask the references about their experiences.