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Insurers investigate medical tourism to save money on care

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Intrigued by the promise of up to 80% savings, many U.S. health insurers are at least investigating the possibility of allowing patients to travel overseas for certain major surgeries such as hip and knee replacements and heart bypass, insurers, consultants and travel arrangers say.

CIGNA HealthCare and Aetna Inc. are among major U.S. insurers exploring the concept of outsourcing some procedures to health care facilities outside the United States.

"At this point, we're really assessing (the option) so we can be in a better position to educate and consult with our employer groups," said Jackie Aube, vp of product at CIGNA HealthCare in Bloomfield, Conn. Although, she added, it's too soon to say how the company will proceed.

Meanwhile, Aetna is "starting to explore putting an offering together for our plan sponsors or individual members at their request," said Martha Temple, a vp and head of Aetna Global Benefits in Hartford, Conn.

Some insurers already allow members to seek care abroad as an out-of-network benefit, but few offer products that leverage international cost savings for their domestic clients. Whether insurers will forge ahead with new offerings or wait while self-insured employers test the waters is unclear.

"I think the health plans are still doing their homework," trying to understand the market and gauge demand, said Joseph Marlowe, senior vp and national health care practice leader for Aon Consulting in Radnor, Pa.

Testing the water

Still, there appears to be plenty of behind-the-scenes activity. One of the early adopters is McKee Benefits Service Corp., a unit of McKee Heritage Holding Co. Within weeks, McKee plans to roll out an overseas option to selected employers who receive group health insurance through one of its two insurance companies--Benicorp Insurance Co. in Indianapolis and Municipal Insurance Co. of America in Arlington Heights, Ill.

McKee Benefits was formed to partner with GlobalChoice Healthcare, an Albuquerque, N.M.-based medical travel arranger that has a hospital network including U.S. and international facilities that agree to McKee's global pricing structure. Gordon Larson, managing director of that McKee unit, said the global health alternative is a plus for the company's clients, mainly small to midsize employers.

"This is a way to hold down the loss expenses being incurred within the plan, and that absolutely translates into holding down premiums in subsequent years," Mr. Larson said.

Employees, too, would see some savings. Because of the cost differential, McKee intends to waive the deductible and coinsurance for individuals who opt to travel overseas or to another U.S. market for their surgery. All travel-related expenses would be covered and the company is "looking at the possibility" of providing participants with a cash stipend to cover lost wages, Mr. Larson added.

Although medical tourism has recently surfaced as a topic of discussion among medical directors, the insurance industry has not taken a formal position. "There are still too many unanswered questions," a spokesman for America's Health Insurance Plans in Washington.

Quality assessment

A key concern is the quality of care that people would receive overseas. Accrediting bodies, such as the Joint Commission International based in Oak Brook, Ill., are beginning to ease those worries by putting their stamp of approval on facilities that meet various standards for patient safety.

But the quality assessment process is still in its infancy.

The JCI, an affiliate of the Joint Commission on Accreditation of Healthcare organizations, began accrediting non-U.S. hospitals in 1999. It currently accredits some 100 hospitals in 22 countries, including Bumrungrad International in Bangkok, Thailand, a facility that has carved out a niche in medical tourism.

"Certainly some of the leading hospitals are differentiating themselves through accreditation," said Karen H. Timmons, JCI's president and chief executive officer, "but I would not say that the 100 that we have accredited was due to (medical tourism)."

It's also unclear how such a benefit would be incorporated into benefit packages provided by an employer. For example, under many plan structures, there are no financial incentives to encourage patients to select overseas hospitals, said David Frazzini, a principal with Mercer Health & Benefits in San Francisco. "If I've got a hospital copayment of $250, there's no reason for me to think about going to India to do this (surgery), unless I've got family there."

Union tensions over global outsourcing also threaten to derail medical tourism programs, some experts said. For example, union pressure stymied attempts by Blue Ridge Paper Products in Canton, N.C., to roll out an overseas surgical program with IndUShealth, a Raleigh, N.C., company that arranges for health care at hospitals in India. The program unraveled when union leaders bristled at the notion of overseas health care.

In retrospect, IndUShealth President Thomas H. Keesling insisted that the union's objection is not necessarily indicative of broader organized labor opposition. "We think that was just an isolated instance, certainly not representative of the discussions we've been having going forward," he said.

Despite potential hurdles, proponents of medical tourism say the cost advantages are too large to ignore.

"Sending people overseas for surgery is actually what I consider the magic bullet for health care because it's the only thing today that an employer can put his finger on and actually guarantee hard dollar savings," said Jonathan S. Edelheit, vp of United Group Programs, a third-party employee benefit program administrator in Boca Raton, Fla. The company's plan, called OptiMed Health Plan, includes an overseas surgery benefit.

UGP is partnering with PlanetHospital, a Malibu, Calif.-based medical tourism company on the offering, Mr. Edelheit said. The TPA also is developing proprietary products on PlanetHospital's behalf, and is working with self-insured employers ranging in size from 200 to 90,000 lives that are interested in exploring an overseas option.

PlanetHospital President Rudy Rupak said his company is in talks with a major unnamed insurance company to try to understand how to best use medical tourism. "I think they've already figured out that it makes sense for them to cover (overseas medical procedures), and what they want to do is understand just how much cost savings they could achieve as well as their employers could achieve," Mr. Rupak said.

Utilization

Meanwhile, IndUShealth's Mr. Keesling said he expects to finalize an agreement with an insurance company sometime this month. The undisclosed insurer is setting up a corporation to partner with the global health care service and offer the option to its customers.

Roger L. Ehrman, an Arvada, Colo., insurance broker with Ehrman & Associates Inc., suspects medical tourism will have particular appeal among employers in rural U.S. areas, where there is sparse competition among providers and little incentive to negotiate prices.

On a per-unit basis, the potential savings--the result of lower overseas labor and supply costs--are quite stunning. It might cost $10,000, including travel to have coronary bypass surgery in India vs. $70,000 to $80,000 in the United States, Mr. Marlowe said.

But how frequently does the situation present itself in a given company and how many people would choose the overseas option? "When all is said and done," Mr. Marlowe said, "it's not going to be as much as people might think. We're talking something considerably less than 5% in net savings, and it could very well be less then 2% or 3%."

He said the overall savings would be less, in part, because only a small percentage of patients would use the overseas treatment option.

Still, growing interest in medical tourism is a good development, he said.

"If it does get traction, I think it's going to serve as a wake-up call to the U.S. medical industry, particularly the larger hospitals that are doing complicated surgeries--that they have to be very serious about examining their methods, improving their efficiency and quality," Mr. Marlowe said.