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California Department of Corporations officials recently questioned employers, insurance brokers and health plan operators during an informational hearing on group health plans that are being sold in the United States but primarily provide employees medical services in Mexico.
Because the so called "cross-border HMOs" operate in Mexico, they have so far escaped scrutiny by the Department of Corporations, which licenses U.S.-based HMOs. Yet observers expect membership in the health plans to spread as employers operating in U.S. border towns seek to provide low-cost health benefits to low-paid Hispanic workers (BI, Sept. 30, 1996). The workers either live across the border in Mexico but commute legally to work in the United States or live in the United States but regularly cross the border for other personal services.
"This hearing is an effort by the Department to gain input on an emerging trend in health care coverage, said Department of Corporations Commissioner Keith Paul Bishop in announcing the hearing held Sept. 29. in San Diego. The department is concerned the plans are operating in a regulatory vacuum, with little scrutiny over care quality or grievance procedures.
Not all the plans being sold along the San Diego border are backed by insurance, meaning they also escape Department of Insurance regulation, said E. Jack Phelps, president of San Diego based E.J. Phelps & Co. His company markets a plan named Care Mexico, which serves about 1,500 lives in the San Diego area. Care Mexico is fully insured for coverage on both sides of the border by Lake Forest, Ill.-based Trustmark Insurance Co.
But employers have a growing need to provide the health plans, testified John E. Vingas, a general manager for Service America, a food service company with 1,700 full- and part-time employees in San Diego.
In response to questions about who he would complain to if one of the plans he uses were to experience difficulties in delivering promised care, Mr. Vingas told regulators he would welcome some state regulatory scrutiny.
But he hopes such scrutiny is not overburdensome to the point of driving up costs, he said in a later private interview. Service America has "a few hundred" employees currently enrolled under a plan known as SIMSA, for Sistemas Medicos Internacionales de S.A. de C.V., a unit of San Diego-based International Healthcare Inc.
SIMSA has capitated HMO-style and preferred provider organization arrangements with hospitals and doctors in Mexico, according to company officials. Rates for employees are about 50% to 60% less than coverage by U.S. HMOs. Employers must pay at least 50% of the cost, but most pay 100%. The cost for family coverage is $169 a month. About 7,000 lives are covered under the plan.
Mr. Vingas told regulators his employees are pleased with the care.
"We are going through an open enrollment period, and the numbers are coming in significantly that these employees want to change to this type of provider that offers health care to their dependents in Mexico," he said.
Mark B. Allan, vp of the employee benefits division in San Diego for broker Robert F. Driver Co. Inc., told regulators his company knows of five such health plans.
Texas regulators are not looking into these issues and have not had complaints, a Texas Department of Insurance spokesman said.