How employers can save money with best-in-class health plan design

One of the best ways to control your health costs and trends is through your plan design. That’s why a self-funded environment provides an advantage for employers, says Mark Haegele, regional vice president of sales at HealthLink.

“There’s more to plan design flexibility, and you can take ownership over the plan design to change participant behavior,” Haegele says.

Smart Business spoke with Haegele about some best-in-class plan design practices that employers can incorporate into their plan design to help save money.

How does pay for performance work?

This term is broadly used throughout health care, but for plan design it means properly aligned incentives and paying for the performance of members and health care providers.

A provider might be reimbursed, based on how it performs according to metrics. If a primary care provider treats a member, it’s hard to quantify if that member is receiving the appropriate levels of care unless you set up a performance metric and engage on it.

Not only can health care providers and hospitals be reimbursed for performance, it works for members, too. The plan design can reimburse members based on their commitment to seeking and ensuring they meet the minimum levels of care for an illness or their overall health. Is their blood pressure, cholesterol and body mass index in range? If they are in check, your employees and their dependents might get dollar credits toward their premium.

You can also measure upwards of 30 chronic conditions for the minimal levels of care associated with those conditions. If a member meets that treatment protocol, you can either 1) pay for those minimum levels of care or 2) ensure that member gets credit toward his or her premium.

What are benefit carve outs?

In a self-funded plan, you can provide preferred pricing and providers for certain services that are carved out of your normal benefits. This includes things like dialysis, cancer, certain elective surgeries, laboratory or high-cost imaging.

Very specific language can be incorporated to help manage these cost items. Not only are you putting a limit on it, you’re also directing members to certain facilities.

How do member self audits help cut costs?

It has statistically been proven that when members get care, health care providers will make mistakes and bill for services that members didn’t receive. There have even been extreme examples where somebody has his or her broken arm set and gets billed for a hip replacement. Because there’s no mechanism to scrutinize these billings, mistakes often don’t get caught.

You can set specific plan language, so that if members ask for a list bill from their hospital stay (whether it’s in or outpatient), identify services that they didn’t receive and then get them eliminated from the bill, the employer shares the savings with the member.

What does ‘not to exceed’ language mean?

This is true reference-based pricing, with a list of common health procedures and the maximum that the plan will pay.

For example, a health network might determine knee replacements in your region on average cost $15,000. It also finds five facilities within 20 miles that charge $9,000. So, your self-funded plan might state that it will provide members with knee replacements, not to exceed $10,000.

It steers behavior and forces the member to ask questions and have a dialog with the insurance company, third-party administration or network about the cost.

How can state mandate exclusions be incorporated into plan design?

Under a fully insured environment, insurance companies have to cover everything that the state mandates. For example, bariatric surgery and infertility treatment have to be covered in Illinois.

If you’re self-funded, your plan design language can exclude state mandates. It highlights the fact that you have flexibility and control as a self-funded employer. You could even say: I’ll cover 50 percent, instead of the state mandated 80 or 90 percent.

Plan design features in a self-funded plan allow you to exercise more control over your health care costs, which is something that many employers are looking for.

Insights Health Care is brought to you by HealthLink

How to encourage healthier behavior in your employees

Employees are a company’s greatest assets — but their health issues can dramatically affect the workplace. Employees who aren’t healthy have lower productivity and higher health costs. The cost of health care has a major impact on a company’s bottom line, says Carla M. Flamm, account manager III at HealthLink.

According to the National Center for Chronic Disease Prevention and Health Promotion (CDC):

  • Four of the 10 most expensive health conditions for U.S. employers — high blood pressure, heart attack, diabetes and chest pain — are related to heart disease and stroke.
  • Work-related stress is the leading workplace health problem and a major occupational health risk, ranking above physical inactivity and obesity.
  • Productivity losses linked to employees who miss work cost employers $225.8 billion, or $1,685 per employee, each year.
  • Full-time workers who are overweight or obese and have other chronic health problems miss about 450 million more days of work each year than healthy workers.
  • A 1 percent reduction in excess weight and high blood pressure, glucose and cholesterol levels has been shown to save $83 to $103 annually in medical costs per person.

Smart Business spoke with Flamm about how to talk to your employees about their health.

How does encouraging healthy behaviors specifically benefit employees?

Employers have a responsibility and unique opportunity to promote individual health and foster a healthy work environment.

There are many reasons why people don’t take an active approach to their health. They may not know how or may lack the necessary tools. Providing relevant information and resources encourages employees to take personal responsibility for their health.

How does this benefit the employer?

As a result of your efforts, you can reduce health care costs. Plus, healthier employees equal greater productivity, higher morale and less absenteeism.

As employers of all sizes recognize these benefits, they are offering more wellness programs to their employees. According to the CDC, in 2014, 73 percent of companies with three-199 employees and 98 percent companies with 200 or more employees offered at least one wellness program as part of their health benefits.

When it comes to encouraging healthy behaviors, what are some best practices?

Senior leadership must drive the program. Some of the most common offerings include smoking cessation, discounts on gym memberships and distribution of monthly/quarterly reminders on relevant health related topics (i.e. healthy eating, stress management, self-care).

Many employers think about individual actions like quitting smoking, but you should also consider strategies designed to influence the overall work environment, not just one employee.

Does it matter how you communicate, and how can you ensure this is actually effective?

You’ll want to use the appropriate communication channels that fit your employee audience. Some examples include Intranet, posters, payroll stuffers and lunch-and-learns.

In order to ensure your communication doesn’t come across as lecturing or become one more piece of information that nobody looks at, you should create a wellness committee/team. This team from all levels of management can encourage feedback and help create a supportive work environment.

Why should you measure your effectiveness?

Measuring the effectiveness of your communication is just as important as delivering. Change rarely happens overnight. You’ll want to set realistic objectives and goals, and then determine if those goals were met and develop next steps.

In order to achieve engagement, employees must receive regular and effective communications, which are timely and relevant. It is critical that the employer determines how well the program has been received — listen to your staff and change your program activities if your employees are not engaged.

Insights Health Care is brought to you by HealthLink

How to get the word out about EAPs, which traditionally are under used

Employee Assistance Programs (EAPs) have a long history of success in helping employers and employees tackle complicated and difficult problems. EAPs can trace their beginnings back to 1917, and have been a part of many company benefit programs since the 1960s and 1970s.

And, yet, EAPs remain an under-used resource for many employees. Employers have to be frustrated when something that could help all employees is not put to best use.

“The reasons for the under use of EAPs are many,” says James Kinville, senior director of LifeSolutions, an EAP that is part of the UPMC Insurance Services Division. “What’s most important is overcoming those reasons and getting the word out to employees that EAPs are a valuable resource that they have available to them.”

Smart Business spoke with Kinville about ways employers can make employees more aware of EAPs and take advantage of their services.

Why do employees resist using an EAP?

Oddly, one of the biggest reasons is that many employees do not believe that EAPs are truly confidential. This comes from a lack of understanding of how EAPs operate. It is imperative that an employer continually educates employees about how an EAP works.

And, of course, the biggest thing is that an EAP is absolutely confidential. EAPs do not report back to the employer after meeting with an employee. Time spent with an EAP is not part of an employee’s work record.

Without that kind of understanding, it is difficult for an employee to look to an EAP as a trusted resource.

What are some other reasons for not using an EAP?

Another misconception still prevalent in the workplace is the stigma attached to reaching out for help in this manner. Men, especially, can struggle with this. What needs to be explained is that everyone at some time or other has had on- and off-the-job problems of a similar nature and getting help to deal with these kinds of issues is a smart thing to do.

Consider what EAPs handle: financial problems, marital and family issues, cancer, stress-related illnesses, caregiving for parents, substance abuse, workplace conflicts, depression and more. It makes sense to turn to a professional for help with these subjects and it makes sense to realize that some of these problems are bigger than anyone can handle alone. It’s not a stigma to go for help, but rather a wise choice.

Does an employee need to go through HR or get permission from their boss to use an EAP’s services?

There is no need for an employee to tell anyone — boss, HR official or work colleague — if he or she wants to partake of EAP services. Companies provide an EAP phone number and an employee can call confidentially and make an appointment.

Because EAPs operate independently of an employer, they are often flexible about when and where they can hold sessions. It could be over the phone, at a therapist’s office or even at the worksite.

What else do employers need to know about EAPs?

Sometimes, employers can be guilty of not fully realizing how EAPs can enhance an organization’s performance, its culture and its business success. EAPs provide value in three ways — by leveraging the value of an organization’s workforce, by addressing the cost of doing business and by helping an organization mitigate its business risks.

It is a key component of an employer strategy to increase employee engagement and improve productivity, morale and workplace harmony.

How does an employer choose an EAP?

Employers need to choose an EAP that can optimize its value to a company’s culture and workforce to ensure the achievement of business objectives.

Employers should weigh an EAP’s experience and expertise in the field, the credentials of the EAP’s staff, the EAP’s level of responsiveness and accessibility, its ability to integrate with other key benefit providers and whether it can tailor a plan design to fit a company’s specific needs.

Insights Health Care is brought to you by UPMC Health Plan

Why HSAs have become a valuable tool in retirement planning

Health savings accounts (HSAs) have become a popular way to pay for health care. And thanks to a growing understanding of their tax benefits, they are also starting to be seen as a worthwhile addition to any retirement plan.

According to a report from HSA consulting firm Devenir, more than $24 billion was deposited into HSAs in the United States in 2014 — up $5 billion from the previous year. In the same time, the number of actual accounts rose 22 percent to almost 17 million.

“HSAs are a great way to supplement retirement savings, but the concept is still new for some employees,” says Amber Hulme, Medical Mutual vice president, Central and Southern Ohio. “That’s why it’s important for employees to understand how HSAs works, so they can take full advantage.”

Smart Business spoke with Hulme about how HSAs work, why they are getting so popular and what makes them such a valuable tool for employees trying to plan for retirement.

What are the basics of an HSA?

HSAs can be used with certain types of high-deductible health plans. The IRS has rules for which plans qualify. For 2016, plans need to have a deductible of at least $1,300 for individuals and $2,600 for families.

The IRS also limits how much money can be contributed to an HSA per year — $3,350 for a single person, $6,750 for a family. Employees who are 55 or older can contribute an extra $1,000 each year.

Why are they getting so popular?

The biggest reason is the tax advantages. When employees open an HSA, they can defer money from their paycheck into their account tax-free. That also applies to any contributions their employer makes. The money can then be used to pay for approved medical expenses without paying taxes. Any money left over stays in the account, earning interest tax-free.

Eventually, employees can use the money they have accumulated to invest in stocks, bonds or mutual funds. Any profits, whether from dividends or capital gains, are nontaxable. HSA administrators might have rules about minimum balance before investments are allowed, but it’s usually not more than $2,000.

How do HSAs work in retirement?

HSA funds can always be used, tax-free, to pay for approved medical expenses. When employees turn 65, they aren’t subject to the early withdrawal penalty, which is usually around 20 percent. So they can choose to spend the money on other things, like travel, and only pay the taxes.

If they enroll in Medicare, no more contributions are allowed, but the money in the HSA can be used to pay the premiums — with no penalty and no taxes.
Medicare Supplemental (Medigap) policies have different rules, so that option isn’t available.

What are good ways to encourage employees to use their HSA?

Employer contributions are a great way to drive employee participation and gain acceptance in HSAs. That’s especially true for employees who are transitioning from a more traditional type of health coverage to a high-deductible plan.

Otherwise, employees just need to understand how HSAs work and all of the financial benefits they can offer. That’s why education is so important. The organization’s insurance carrier or HSA administrator can provide a wealth of resources to help make sure employees use their accounts as effectively as possible.

Are any other important trends developing?

Traditionally, HSAs have been accessed separately from a member’s health plan, either through a bank or another type of financial institution. But as consumers take more control of their health care, they want more connectivity and ease of use.

In response, many insurance carriers, including Medical Mutual, are moving toward platforms that let members review their HSAs and claims information in one place. This integration will help consumers be more engaged in their health care costs, and more empowered in their retirement planning.

Insights Health Care is brought to you by Medical Mutual

Simple, visible moves help in achieving a culture of wellness

Small changes, big results — that’s not always how things work, especially when it comes to health and wellness. But, in terms of the workplace, small changes can often do the most to encourage a culture of wellness.

“You can make a big difference in the lives of employees simply by making the work environment more conducive to wellness,” says Dr. Michael Parkinson, senior medical director of UPMC Health Plan and UPMC WorkPartners. “It doesn’t take major, costly changes to have an impact. Small, simple but visible moves can communicate that employers are serious about improving the health, safety and well-being of their most precious asset — their employees.”

Smart Business spoke with Parkinson about small changes that can impact wellness.

What are some ways employers can impact employee wellness at the workplace?

One place to start is to encourage employees to walk away from their desks. Cubicles are a mainstay of many workplaces, and employees spend much of their time in front of computers. If ‘sitting is the new smoking’ — yes, sedentary lifestyle is a major contributor to death and disease in the U.S. — then getting employees up and moving more needs to be built into each workday.

Leading companies schedule ‘recesses’ throughout the workday, emphasizing stretching, walking meetings and brief walks. Opening an attractive break room or workplace cafeteria encourages employees to not eat at their desks and move at lunchtime.

In early studies, standing workstations have been shown to decrease musculoskeletal strain, improve concentration and increase energy expenditure. Consider introducing one swing activity workstation per group of employees, if the expense for a total office reconfiguration is unaffordable.

Can employers actually increase their employees’ physical activity?

The Centers for Disease Control and Prevention (CDC) has determined that people who get adequate amounts of physical activity have reduced rates of chronic disease, are better able to maintain a healthy weight, can better manage stress and perform better at work.

Employers can help increase physical activity by taking small measures, which make more activity the expectation and default option. For instance, unlocking the stairwells, making them attractive and encouraging all executives and managers to ‘take a hike’ multiple times throughout the day creates an activity culture.

Employers can support employees who bike to work with safe and secure places on-site for bike storage. They can promote active means of transportation, such as mass transit, by providing transit passes. They can encourage running, walking, biking or taking a fitness class during the day with flextime schedules. Even a single wastebasket in a central work area encourages employees to walk in order to dispose of trash.

How can employers promote healthy eating?

Workplace cafeterias are an ideal place to preferentially price and promote fruits, vegetables, whole grains, non-processed foods and sugar-free drinks. Vending machines can offer healthy alternatives to snack food. Sponsoring ‘new fruit and vegetable of the month’ giveaways can expose employees to foods rarely eaten but loaded with vitamins, disease-fighting antioxidants and micronutrients.

What about stress, mindfulness and well-being?

All employers see direct and indirect costs of anxiety, stress, depression and lack of mental focus in their medical, disability, worker’s compensation and total productivity costs.

Can the office space or workflow be made less stressful? Are there unnecessary noises, interruptions or poor lighting that exacerbates an already challenging work environment? Are there quiet spaces or rooms for taking a break or practicing mindfulness (deep breathing with mental visualization) to relieve stress and re-charge?

Can employers work to decrease tobacco consumption?

The CDC estimates that smokers cost employers about $5,800 more than their nonsmoking co-workers. A smoke-free policy for the workplace and worksite property should be considered. Employers can make tobacco-cessation classes and services available, as well as materials that promote the benefits of living smoke-free.

Insights Health Care is brought to you by UPMC Health Plan

How to help employees manage their chronic health conditions

Chronic diseases are almost as costly as they are common. According to the Centers for Disease Control and Prevention (CDC), half of U.S. adults have at least one chronic condition, while almost one-third have two or more. And treatment of those conditions accounts for more than 80 percent of our health care spending.

“These conditions are some of the most costly causes of death in this country, but many are very preventable,” says Veronica Hawkins, Medical Mutual vice president of Government Accounts. “Fortunately, there are plenty of programs consumers can use that give them the tools, the education and the encouragement they need to really improve their quality of life.”

Smart Business spoke with Hawkins about the types of programs being offered in the market to help people manage their chronic health conditions, and how organizations can benefit as well — by increasing productivity in the workplace and reducing their health care costs.

What types of conditions are considered ‘chronic’?

The basic definition focuses on non-contagious diseases that have a long duration and generally slow progression. Some examples are cardiovascular diseases, diabetes and chronic respiratory diseases like chronic obstructed pulmonary disease (COPD) and asthma. In most cases, depression also falls into this category.

What is disease management?

It refers to ongoing care to help people with one or more chronic conditions. The idea is to prevent or minimize their effects through integrated care.

Many organizations today offer some type of disease management program to help their employees have a better quality of life. Plus, when employees don’t need to visit the emergency room or be admitted to the hospital as often, health care costs go down and productivity goes up.

How do the programs work?

Disease management is included with most fully insured plans. Self-funded employers, which pay their own claims, would likely have to buy into it. The cost structure, obviously, varies among carriers, but it is usually built in to either the employer’s premium or administrative costs.

In most cases, insurance carriers work with an outside vendor that uses claims information to identify members who might benefit from the program. They do outreach to identify members who want to participate, and those who do are usually assigned a health coach. The health coach educates the member on his or her condition and develops a plan to make changes that will improve their overall health.

The programs send educational materials to members even if they haven’t opted in — unless, of course, they decline to participate.

What else might be involved?

A member might use the program to better understand his or her medications or get counseling to quit smoking or lose weight. Depression screening is also very common.

Depending on the needs of the members, many programs offer counseling, home visits, 24-hour call centers and appointment reminder systems. Others allow members to receive their diabetic testing supplies, like a diabetes monitor or test strips, for no additional out-of-pocket cost. There is usually quite a bit of customization, so each member gets the help that he or she needs.

How can organizations get more employees to participate?

Engagement is obviously the most important part of a disease management program — and the biggest challenge. Monetary incentives are relatively common, depending on how the program is set up, either by the carrier, employer or program vendor. For example, participants might get a gift card for completing their first year in a program.

Obviously, each organization is different and the needs of individual members will vary. It takes time and expertise to find the right approach. But it can definitely be worthwhile.

Organization leaders should talk to their insurance carrier if they are interested in implementing a disease management program, or simply want to get more of their employees to participate in the one they already have.

Insights Health Care is brought to you by Medical Mutual

What employers need to know about behavioral health services

Although there is less stigma regarding behavioral health treatment than there used to be, many people still don’t understand what services are available or how to access them. Employers also may be too restrictive in their coverage and assume excluding services saves money.

The Mental Health Parity and Addiction Equity Act of 2008 requires that if behavioral health services are covered, the coverage be no more restrictive than the medical services coverage. The law removed limits on behavioral health benefits and improved access to behavioral health services, says Tom Albert, director of Behavioral Health Services at HealthLink.

“Most people don’t know that the parity law exists or that it may have changed the coverage of behavioral health services on their health plan,” Albert says.

Smart Business spoke with Albert regarding behavioral health services, including why they should be integrated into your medical management program.

What are behavioral health services?

Behavioral health services include the assessment, treatment or referral to a provider of psychiatric and/or substance abuse treatment. These services may be provided in a hospital, freestanding psychiatric or substance abuse clinic or medical office, depending on the severity of symptoms. Providers include psychiatrists, psychologists, social workers, master’s level counselors or advanced practice nurses.

Did the Affordable Care Act (ACA) affect these services?

The ACA made health insurance available to an additional 27 million people. It also defined psychiatric and substance abuse services as essential health benefits, which means that small group and individual marketplace plans must include coverage.

Are employers concerned about increased usage and ultimately cost?

Yes, employers are concerned, but excluding coverage isn’t always a good idea. In a given year, the National Alliance on Mental Illness indicates that 25 percent of adults will have an emotional problem, substance problem or mental illness. Over a lifetime, that rises to more than half. So, excluding coverage puts employers at risk for lost productivity due to absenteeism or presenteeism.

Also, excluding coverage may not save you money, as costs can shift. A 2008 study found that medical costs, not including behavioral health treatment costs, were about 54 percent higher for individuals with depression. Depression and other mental health problems can manifest themselves in physical symptoms. It makes current medical problems worse and can lead to new physical complaints.

How should employers manage the behavioral health of their employees?

Make sure your health plan(s) include coverage for psychiatric and substance abuse services, including eating disorders. These disorders, if left untreated, can result in higher medical costs, so you end up paying for it anyway.

Ideally, give your members access to mental health and/or substance abuse providers without referrals. If you’re worried about overuse, remember that there are different levels of care — acute inpatient hospitalization, residential treatment, partial hospitalization, intensive outpatient treatment or outpatient treatment. The most expensive services can be carefully managed with a medical necessity review — as long as it’s not more restrictive than your medical plan’s authorizations.

Also, choose a health plan that integrates your behavioral health into the management of your medical services. This allows medical and behavioral care management teams to work together on the needs of individuals with comorbid psychiatric and medical issues. Not only does this improve quality and treatment outcomes, but it also helps to control cost of care and makes it easier to ensure you’re meeting the requirements of the mental health parity law.

If your plan offers an employee assistance program (EAP), make sure the phone number or website is posted around the workplace. EAP services are a cost effective way for employees to get access to a mental health professional with no out-of-pocket cost. It allows them to evaluate and talk through a problem and decide what services may be appropriate. For many, EAP intervention is all that is needed.

Insights Health Care is brought to you by HealthLink

How to handle disability and absence management in the ACA era

The impact the Affordable Care Act (ACA) has had on employers is one that continues to evolve over time, sometimes in surprising ways. For example, it may prove that the ACA may well have its greatest impact in the area of workers’ compensation.

“The ACA is the greatest incentive to integrate all forms of disability management there has ever been,” says Patrick D. Haughey, associate vice president for Workers’ Compensation at UPMC WorkPartners. “The ACA mandates that employer groups have to provide disability for employees.

“An organization that can manage total disability from beginning to end is one that can deliver for employer groups in this era,” he says.

Smart Business spoke with Haughey about integrated disability management and why it makes sense for employers.

Why is absence management so important?

According to a 2013 survey on Absence and Disability Management by Mercer, the direct cost of incidental absence and disability benefits is the equivalent of 4.9 percent of payroll. Mercer estimates that indirect costs, such as replacement labor and lost productivity, are roughly the same, making the total impact of absences at about 8 percent of payroll.

What is integrated absence management?

Integrated absence management is about looking at problems in nontraditional ways.

For instance, if someone injures a knee at work and requires extended leave, in many cases that is looked at as an issue for a company’s workers’ compensation program. That means increased focus on the rehabilitation of the knee and on getting the employee back to work. What doesn’t happen is much time considering what may have caused or exacerbated the injury. Is it a weight problem? Is there a chance the injury could recur if the weight problem is not addressed? Is the employee possibly at risk for other health-related issues? What about the indirect impact of the injury such as stress or depression?

This is a ‘whole person’ approach that looks at all the care provided to an employee and then coordinates that care for the individual by integrating benefits and programs. Health risk factors have consequences and should be addressed proactively. An integrated, total health management approach provides employers with the best strategy to proactively manage its population.

One benefit for employer groups in employing integrated absence management is that it can keep premiums from escalating. An integrated approach, which may include wellness programs (rewarded by the ACA) and things like bringing in loss-prevention specialists, can result in premium reductions.

What would an integrated approach look like?

An actual case that involved UPMC WorkPartners is a good example.

An employee filed a Family and Medical Leave Act claim in order to have time to care for her mother. A leave specialist was able to refer her to our employee assistance program (EAP) to help her get daily care for her mother. In talking with the EAP counselor, the woman revealed that she was overwhelmed by the burdens of a job and additional family responsibility. The woman was then enrolled in a coaching program to help her learn how to better manage her time and stress.

The net result was an employee who was able to return to work with limited distractions.

What are some methods used in integrated absence management?

It’s important to align and integrate workers’ compensation, disability and leave. You also must be able to provide access to medical expertise throughout the life of a claim. Understanding the connections between programs and how each program can impact an employee at a time when assistance is needed most is critical to a successful integrated absence management strategy.

The only way to reduce time away from work is to align traditionally siloed occupation and non-occupational programs, and through those programs identify opportunities to positively impact more people and, as a result, improve the health and productivity of the workforce.

Insights Health Care is brought to you by UPMC Health Plan

How to reduce health care spending with HMOs

Health maintenance organizations (HMOs) are making a comeback. The plans have grown steadily in popularity since 2014, as the changes brought about by the Affordable Care Act have taken effect. Some studies have even shown that HMOs now account for more than one-third of all health insurance plans. Just a few years ago, it was less than 10 percent.

“More consumers today don’t have a strong preference about the doctor they see for things like minor illnesses,” says Amber Hulme, Medical Mutual vice president, Central and Southern Ohio. “For those types of consumers, HMOs offer a less expensive health insurance option, and their employer saves money in the process.”

Smart Business spoke with Hulme about how HMOs work, what makes the HMO plans currently on the market different from their predecessors and how organizations can save money on health care by offering an HMO option to their employees.

What is an HMO?

HMOs are a type of health insurance plan that offer access to a narrow network of doctors and hospitals. When members go out of network, the plan might not cover the services they receive and they could be responsible for the full cost. The specific rules for an HMO can vary from carrier to carrier.

How is an HMO different from a traditional plan?

The type of plan many people are used to is called a preferred provider organization (PPO) plan. With a PPO plan, members have the freedom to choose any doctor or hospital in the network. If they receive medical services from a doctor who is not in network, the services are usually still covered — they just have to pay a higher share of the medical costs.

An HMO is a less expensive option, but members do lose some of the flexibility of a PPO plan. HMOs don’t generally cover out-of-network care except in the case of an emergency. If a member gets medical services from a doctor not in the network, they normally are responsible for all the costs for those services.

What are the main advantages of an HMO?

With HMOs, the first advantage you usually hear about is cost. Insurance carriers can negotiate rates with providers differently for an HMO, which allows them to charge lower premiums. The deductibles are typically lower than comparable PPO plans, as well.

Another big advantage of an HMO involves the quality of care. With an HMO’s narrow network, care can be more coordinated and, in many cases, that integration can help make the outcomes better. Organizations pay less, while employees see a number of benefits in terms of how their care is managed.

How have HMOs evolved from what was available in the past?

The overall structure is similar, but there are some important differences to keep in mind. Many HMOs now offer some benefits for care received outside of the HMO’s network or service area. And in most cases, referral from a primary care physician (PCP) is no longer required to see a specialist. However, it’s still recommended that members choose a PCP to make sure they get the care they need. When PCPs coordinate care with specialists, it actually relieves some of the burden on the patient and more consumers are seeing that as a benefit.

How should organizations decide if this option makes sense for them?

With an HMO, access to care is one of the most important factors. HMOs are often a better option for organizations that have a limited number of office locations, where access to care isn’t an issue. If your employees live in localized areas, an HMO can definitely be a good option. In rural areas, it might be less practical.

Organizations should talk to their insurance carrier to evaluate whether an HMO makes sense for their employees.

Insights Health Care is brought to you by Medical Mutual

How to encourage your employees to choose a primary care physician

Only 78 percent of Americans acknowledge having a family doctor or primary care physician (PCP), according to a 2012 study by the Physicians Foundation. And for those ages 18 to 34, that lowers to only 64 percent.

Susan Lehne, account manager at HealthLink, says that as insurance plans have gone away from the health maintenance organization or HMO model and people look for something that’s not going to take them as long to seek care like emergency rooms, urgent care centers, telemedicine or retail pharmacies. Lehne is seeing a reduction in members choosing a PCP to guide their care because of these alternative care solutions.
This could be a costly problem for employers.

“Somebody needs to be looking at you,” Lehne says. “Somebody needs to be paying attention to your medical needs.”

Smart Business spoke with Lehne about the benefits of PCPs that can help both employees and employers.

Why is having a PCP important?

A PCP is your home base — the person you go to on a regular basis for routine exams and most of your care. Then, if that doctor feels that you need additional assistance, you would be referred to a specialist.

A PCP is a resource for all data about your health. That doctor keeps all of your medical records and tracks your height, weight, blood pressure, blood work, etc. His or her office also receives your records every time you go to a specialist.

This allows a PCP to have a big picture of what’s going on with your health, because he or she is seeing you hopefully at least once a year. That doctor is more likely to see a trend quicker, and early detection is key for many types of treatment.

What do patients need to know about selecting a PCP?

You may need to shop around to find someone that you like, but it’s also critical to figure out what it is that you need from your PCP. Make a list of your needs and rank them.

Do you want a PCP that is going to look at you and listen to what you have to say? Or, do you want someone who knows all of the pieces in the industry and does more research? The needs of a person who is in their late 60s will be completely different than the needs of a family that’s just starting out.

Also, make sure that you understand what are your avenues for communication, so you can make a plan, before a health concern crops up on a weekend or in the middle of the night.

Why do employers need to care about this?

Early detection makes a huge difference in regards to cost, because if a medical provider catches something earlier, it’s easier to treat.

A PCP also costs less than a specialist, which in turn affects health costs. So, if your employee already has a PCP, he or she will be more likely to see that person because they have a mark on his or her face — rather than go straight to a more costly dermatologist.

A recent study by the Commonwealth Fund evaluated 10 western countries’ ability to care for patients who are considered the costliest. The U.S. has the youngest population of those surveyed, but it had the highest incidence of chronic disease and spends 50 to 150 percent more on health care per capita than the other nine countries.

How can employers encourage plan members to regularly go to a PCP?

You don’t want to preach to your employees and their dependents, but it is important to make them understand the importance of having a PCP and routine services like an annual exam, mammograms or screenings. In order to encourage this, your plan design can provide incentives for members undergoing these routine services, such as a credit on the premiums or deductibles.

Employers generally need to do a better job of explaining why they have a particular plan, what that plan brings to their members and what they did on their side to keep costs down. Then, make sure that your plan members know that they need to do their part, too, which includes choosing a PCP and getting routine services that will hopefully reduce or maintain the health plan’s costs.

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