Plans Differ in Cost, Coverage and Convenience

What are your choices for health care plans these days? Most are familiar, but at least one is new. Here are the primary characteristics of each:

Health maintenance organizations (HMOs):
These plans offer a predetermined set of benefits for a fixed cost to the employer. They usually emphasize preventive care, and frequently there are minimal or no co-payments and no deductibles. Because the HMO absorbs the costs of any treatment that exceeds the premium, some employees may associate HMOs with media stories about refusal to cover a particular costly treatment. There are excellent HMOs and poor ones. Ask colleagues about their experiences.

Managed care:
According to the Health Insurance Association of America in Washington, D.C., 70 percent of Americans whose health coverage is through their employer are enrolled in managed care. The attraction for employers is that managed care allows employers to control costs far more effectively than in indemnity plans, where employees can see any doctor they wish. In managed care, each enrollee typically is assigned to a primary care physician who becomes the gatekeeper to all specialists in the plan. In a managed care plan, the employer contracts with selected providers for a comprehensive set of services to enrollees. Enrollees have financial incentives to use the providers covered by the plan. HMOs can be considered as managed care if there is a provider that decides which specialists a patient sees. PPOs usually aren’t considered as managed care-partcipants go straight to a specialist instead of through a primary care provider.

Preferred provider organizations (PPOs):
These are groups of hospitals and providers who form an organization and contract with employers to provide health care at a discounted fee. Employees enjoy that fee only when they obtain services from a PPO member provider or hospital.

Point of service plans (POSs, also known as fee for service):
Employees who select these plans want the full range of choice of providers and hospitals. Usually the employee is responsible for a deductible and a co-payment. Point of service plans are the most expensive option in health care plans. Often, if a group of employees insists on a POS option among the plan choices, the premium the employee pays is much higher than the premium for an HMO, managed care or PPO option.

Physician practice management companies (PPMCs):
This is the new kid on the block, created by health care providers who dislike the constraints on them in other types of plans. According to Davis Fansler, San Francisco-based consultant to Towers Perrin in New York City, PPMCs are building their strategies to become fully integrated medical groups that deliver care more cost effectively. They’re still in the capacity-building stage, but their goals include marketing services directly to employers.