One of the biggest health care benefits plan design trends of the past few years has been the decline of employers offering health maintenance organizations to their employees. With that has come the growth of preferred provider organizations and lately consumer-driven health care plans linked to health savings accounts.
Last year, for example, just 31% of U.S. employers with at least 500 employees offered HMOs, a big drop compared with the 43% of larger employers that offered HMOs in 2009, according to Mercer L.L.C. annual surveys.
But the School District of Palm Beach County, based in West Palm Beach, Florida, is one large employer that has stuck with HMOs. In fact, except for a few hundred employees enrolled in a new high-deductible health care plan, nearly all of the school district's 21,450 employees who have opted for coverage have chosen one of the two HMOs the district offers. Both HMOs are provided by UnitedHealthcare, with one known as the “low-option” plan because of greater enrollee cost-sharing, and the other called the “high-option” plan because of lower enrollee cost-sharing.
“In our area, HMOs work well. The networks are good, and most hospitals and physicians participate,” said Dianne L. Howard, the school district's director of risk management and benefits. “We've found that too many choices made it more complicated for employees.”
In addition, adding insurers really doesn't give employees more provider choices, since in the Palm Beach County area most health insurers “have all the hospitals and most of the same physicians in their networks, so the only thing differentiating the plans from the employee or member viewpoint is plan design and customer service,” she said.
What is especially appealing about UnitedHealthcare's HMOs is the design of the plans, Ms. Howard said. The insurer offers open-access HMOs, which means health plan enrollees can go directly to a specialist without having to first go to a primary care physician for a referral, saving time for the enrollee.
Another advantage for opting for UnitedHealthcare's HMO network is its size, Ms. Howard said.
“It is a nationwide network, so even though our employees all work in Palm Beach County, their children — who may be away, for example, at college — have access to physicians throughout the country,” she said.
The plan design the school district offers employees doesn't follow the traditional HMO format.
“For example, we have copays for office visits, but we also have coinsurance for any diagnostics, even if done during an office visit. We believe that this cost-sharing keeps skin in the game for members,'' Ms. Howard said. “We want our employees to care about the cost of an MRI. So, if they have to pay some of the cost, maybe they will check out the cost before they just go to the nearest hospital.''
The two HMOs the school district offers differ significantly in terms of enrollee cost-sharing and premium payments.
In the low-option HMO, monthly employee-paid premiums before any offset for participation in the school district's wellness programs are $50 for single coverage, $136 for employee plus children, $178 for employee plus spouse/ domestic partner and $302 for family coverage.
Monthly premiums employees pay for the high-option HMO are more expensive. Those premiums are $90 for employee-only coverage, $270 for employee plus children, $320 for employee plus spouse/domestic partner and $460 for family coverage.
The more costly premiums for the high-option HMO reflect its richer coverage of health care expenses. For example, the low-option HMO has a $500 individual deductible and a $1,000 deductible for family coverage. That compares with a $350 individual deductible and a $700 deductible for family coverage in the high-option plan.
Similarly, in the low-option HMO, a $40 copay is imposed for an office visit with a primary care physician, while a $60 copay is charged for an office visit with a specialist. By contrast, in the high-option plan, a $25 copay is charged for an office visit to a primary care physician and a $35 copay is required for an office visit with a specialist.
In addition, in the low-option plan, a 20% coinsurance requirement is imposed after the deductible is met, compared with 10% in the high-option plan.
The high-option plan is only available to employees after they complete two years of service. New hires are required to enroll in the low-option HMO or a recently introduced high-deductible health plan linked to health savings accounts. Currently, only 200 employees are enrolled in this plan.
Even though the high-option HMO plan is closed to new employees, overall enrollment is skewed in favor of the high-option plan, with 6,889 employees enrolled in that plan compared with 4,902 employees in the low-option plan.
The appeal to employees of the low-option HMO is the substantially lower monthly premium. “We thought if employees start in that plan, they would stay because of the lower premium they would pay,” Ms. Howard said.
And that, in turn, could generate cost savings for the school district. When employees pay a greater share of costs, through higher deductible and coinsurance, they should become more careful consumers of health care services, experts say.
“You want employees to think about costs. If they are going to have an MRI and they have to pay 20% of the cost, maybe they'll go to a place that will save them and the organization money. If there is no cost-shift,” it is much harder to get employees to comparison-shop, Ms. Howard said. “Making that copayment can influence employee behavior.”
To help employees make informed decisions when deciding in which plans they want to enroll, the school district has developed an interactive chart that lets them compare their total costs in both plans, factoring in premiums and out-of-pocket expenses.
“In most cases, the low option plan is a better financial choice for employees, even for those with as many as 15 doctor visits a year,” she said.