Compensation and Benefits
Evaluating Health Plans
A health plan is an integral part of an employer's benefit package.
Deciding on which plan to offer and who will provide the plan can be
overwhelming. Below we will define the types of plans available and
discuss how to evaluate health plans.
The major types
of health plans are:
Indemnity Plan or
"fee for service" plan, which is defined as a health insurance program that provides
specific cash reimbursements for covered services. Payments may be made directly to
the patient or assigned to a provider. Although fee for service plans offer the most
freedom in selecting physicians, it's also the most expensive.
Managed Care
which can be broken doen into the following types:
-
Health Maintenance Organization (HMO)
is a prepaid managed medical plan. It provides specified services for a fixed premium
per person. Services are obtained through designated hospitals and doctors. You choose
a primary care physician from a list of participating physicians. The chosen physician
manages your health care and all specialty care referrals. There is usually a small
copayment and no deductible.
-
Preferred Provider Organization (PPO)
is a managed health care plan in which a network of providers agrees to serve a group of
employees in a fee-for-service arrangement. Fees are usually at discounted rates based
on volume purchasing power. It's considered a combination of indemnity and managed care
plans. You receive the most benefit from using network physicians, but have the
flexibility to go outside the network.
-
Point of Service (POS) is usually an HMO plan with the option of an out-of-network
benefit.
Employee input can be beneficial when reviewing available options. This will enable you
to better serve individual needs. Since your goal is to serve their needs, several plans
should be offered.
Once you have chosen the plan or plans appropriate for your organization, evaluate
providers. Standard questions asked of providers include:
- a list of participating physicians and clinics in your local area.
- a list of licensed primary care givers and specialists in your region.
- patient satisfaction statistics.
- a list of other employers using their services, preferably in your area.
- a copy of a sample agreement they would ask you to sign.
Other considerations of providers include:
- Financial stability
- Merger or acquisition status (This common occurrence can radically change a plan's
network of doctors.)
- Plan limitations and exclusions
- Administrative services
- Turnover rates (greater than 10 percent could represent a service problem)
- Greivance and appeals process
The Buyers Guide
offers advice on choosing the right health insurance for your employees. It includes:
Reference Material
Additional resources to consult when evaluating health plans:
American Accreditation HealthCare Commission (URAC)
lists accredited companies, particularly PPOs.
American Association of Health Plans
represents more than 1,000 HMO, PPO, and managed care plans.
Health Insurance Association of America
provides consumer information guides on health care and more.
National Committee for Quality Assurance (NCQA)
accredits managed care organizations, particularly HMOs and POS plans.
Their site
is accessible to members only.
For more information call (202) 955-3500.
