What to know about choosing an HMO: faced with a multitude of options, deciding on a plan is more than just dollars -it's sense

Black Enterprise, Feb, 1996 by Marjorie Whigham-Desir

When Kevin Holston of Atlanta tore the tendons on his knee in 1993, he not only needed surgery, but eight weeks of rehabilitative therapy. Holston's company, CIBA Vision, manufacturers of contact lenses, had a self-insured traditional indemnity plan at that time. Although the plan covered 80% of his medical costs, Holston's bill totaled $4,000, including a $900 tab he picked up.

A year later, when his wife Waltina Perry-Holston suspected she might be pregnant, she made an appointment with the Ob-Gyn she'd been seeing since college, Dr. M. Gerald Hood. An economist in the Atlanta office of the U.S. Bureau of Labor Statistics, Mrs. Holston found her doctor while enrolled in her own traditional health insurance plan. Since then, however, both the Holstons and Dr. Hood have joined the ranks of those consumers and providers switching to managed care insurers.

The Holstons' insurer, United Health Care of Georgia, covered all Waltina's pre-natal visits, ultrasound, laboratory tests and hospitalization charges as long as Waltina saw any doctor affiliated with the independent network of physicians in the group. "I paid a $10 co-payment for that first visit to confirm the pregnancy," says Waltina, "but after that, I never paid another co-payment or a bill for the pregnancy or the hospital stay." The total cost of delivering now 15-month-old Darien was $8,000. The cost to the Holstons was only $10.

The Holstons are just one family among the more than 100 million Americans enrolled in managed care plans - the fastest growing form of health insurance in America today. At a time when everyone - employers, insurers and consumers alike - are to limit their out-of-pocket expenses, "managed care," also deemed "managed cost," has become the policy of choice when buying health insurance.

On one hand, this trend has increased the number and variety of health insurance plans available to consumers. On the other, it has spawned limitations in how health care service is rendered. Most Americans, 74%, get their health coverage through their employer. But, as employers look to shrink their health care costs and fewer consumers are willing to art with their eroding income dollars, expect the boom in managed care plans to continue. "Many of my co-workers are choosing their plans based not only on the doctors, but also on the cost of coverage," says Waltina. "Many people yo-yo from one plan to another because their doctor is in several different ones. So they look at the premiums," she adds.

But cost shouldn't be the only factor considered when choosing health insurance. Assessing the needs of our family, the range of benefits offered under each plan, the quality of the plan and its providers, along with the cost, should be the guideposts in making your decision. Here's how to size up your health care options before you need them.

CHOOSING THE RIGHT COVERAGE

In today's health insurance smorgasbord, there are over 1,000 different health plans to choose from. But they can all be categorized into four basic groups: traditional indemnity or fee-for-service plans, preferred provider organizations (PPO), point-of-service plans (POS) or health maintenance organizations (HMO).

The plans, which sound like alphabet soup, are different. Some allow patients access only to health care professionals in that specific plan, while more flexible plans allow patients to see doctors within that plan or pay more and see anyone they want. Sometimes, however, the lines of difference between policies are blurred.

Under traditional fee-for-service plans, patients can choose to see any doctor at anytime and pay them a fee directly for their service and wait to be reimbursed, as Kevin Holston did, usually for 80% of the cost. Because there are no restrictions on this kind of insurance, it is the most costly for employees and employers.

But under managed care, a typical plan offers its members a specific list or "network" of doctors and related associates who have agreed to treat plan members for a fixed rate plus a co-payment fee. In the HMO and POS versions of these plans, members must choose a "primary care physician" through whom all their health care and treatment is channeled. In most instances, plan members must first see their primary care doctor before they can go elsewhere for treatment. The concept is that most medical problems are non-emergency, routine conditions that can be handled by a general practitioner or internist. If a problem needs to be handled by a specialist, the primary care physician determines which specialist to refer the patient to.

Managed care insurance is paid the same way as fee-for-service, usually through payroll deductions. For consumers, there are fewer out-of-pocket costs when using a managed care insurer, usually a small co-payment fee ranging from $5 to $10 per visit. There are no deductibles or insurance claims to file. There are also a certain number of "well visits" that the plan allows each member, depending upon their age. For instance, most adults have one "fee" wellness checkup annually, while babies have several "well baby care" checkups during their first year. Costwise, this plan is the least expensive and often the choice of families or those who have health concerns that need regular monitoring.