What HMO's Won't Tell You
Author: J Schipper

When a company enters into a contract with an HMO, employee
satisfaction as well as company money is on the line. Health
costs are rising annually, and employee health care is a major
expense for most businesses. The following tips will help you
select the best health plan for your business.

When companies out-source services, they usually monitor the
supplier to ensure that it consistently supplies the goods or
services which are specified in the contract. When dealing with
HMOs, however, many companies ignore this basic business
practice. At least once a year, compare your HMO with
nationwide HMO performance measurements.

To compare HMOs, use the Health Plan Employer Data Information
set, or HEDIS, available from the National Committee on Quality
Assurance (NCQA) in Washington, D.C. This database has
guidelines for comparing HMO performance in approximately 60
categories. Nearly all HMOs provide their own HEDIS data to
prospective clients. If an HMO refuses, this is a sign of
inferior performance.

Check to be sure the HMO is accredited by either the NCQA or
the Joint Commission on Accreditation of Health Care
Organizations in Oak Brook Terrace, Illinois. Both of these
organizations have rigorous standards for HMOs. While
evaluations are paid for by participating HMOs, one in eight
tested so far by the NCQA has received a failing grade.

If you are still confused by the parameters of the HEDIS
report, it may be worthwhile to hire a healthcare consultant to
teach company managers how to evaluate health plans. This
usually costs $5,000 to $10,000.

Several important criteria are used to compare HMOs. The first
is the medical-loss ratio, which refers to the ratio of HMO
medical expenses to the total premiums collected. A ration of
less than 80% denotes an inefficient health plan which spends
too much on marketing or administration. Also, be wary of an
HMO with a medical-loss ration which fluctuates widely from
year to year. A sudden decrease may mean that the health plan
has started to market itself more aggressively, perhaps due to
a sudden loss of members. A sudden upward surge may mean that
the HMO has incurred unexpected medical expenses which may lead
to insolvency. However, new HMOs generally have slightly more
unstable medical-loss ratios than those which have been in
business for many years.

Disenrollment ratios refer to the percentage of employees who
have discontinued the health plan. Some turnover always occurs
as employees change jobs or move away; however, higher than
average losses may indicate customer dissatisfaction.
Disenrollment rates of greater than 10%, or a steady rise in
disenrollment rates, invite further investigation.

The best medicine is preventative medicine. Be sure to check
for such services as childhood immunizations, prenatal care,
mammography and screening for high cholesterol. A lack of
coverage for these services can lead to higher costs in the
future. Also, ask whether the plan covers any alternative
therapies, which are becoming increasingly popular with the
public.

Find out what access the HMO offers patients seeking primary
care physicians. Don't be impressed by a long list of
affiliated physicians; the key is to check for practitioners
who are actively accepting new patients. Many HMOs have a large
provider directory of family physicians, internists and
pediatricians, most of them with full practices. A plan which
confines patients to a few available doctors is likely to
generate patient complaints. Many employees may already have
personal physicians who are familiar with their medical
histories, and will resent being forced to switch to an
HMO-approved doctor.

Check whether the available physicians are close by, whether
they provide services in evenings or on weekends, and what
percentage are board-certified.

Get references from existing customers. Widespread
dissatisfaction, despite good statistics, is a sign that you
will probably be unhappy with the HMO as well. HMOs frequently
conduct customer-satisfaction surveys, which should be done by
an independent organization so the results can be verified.
Sometimes "inessential" features, such as a live receptionist
rather than automated voice mail system, or a good
patient-education resource center, bring a great increase in
customer happiness.

The best HMO isn't necessarily the cheapest, but rather the one
which most closely matches a company's needs.


About The Author: J Schipper is interested in HMO's
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