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Rethinking medical tourism

Rethinking medical tourism

Employers’ interest in offering medical tourism coverage to their employees has remained steady in the past few years, but relatively few companies have incorporated it into health benefits strategy.

Once the subject of considerable buzz in the health benefits industry, global medical tourism has largely failed to catch on with the vast majority of employers, experts say.

Only 2% of employers polled in Chicago-based benefits broker Aon Hewitt’s 2015 Health Care Survey reported that their health benefit plans include coverage for high-cost medical procedures performed in foreign countries, down from 4% in 2012.

“Most employers have steered clear of global tourism programs for a few reasons, not the least of which being employees’ unwillingness to travel internationally,” said Dr. Bruce Sherman, medical director of population health management at Buck Consultants at Xerox in Cleveland. “There’s also the cost of administering the programs, which might not be appreciably different from the cost of domestic programs but are comparatively higher given the low utilization, as well as the liability issues tied to patient complications following procedures done outside of the U.S.”

Instead, experts said employers’ interests are shifting toward domestic medical tourism as a means of improving the quality and cost-efficiency of their employees’ health care, particularly as access to specialized medical centers of excellence becomes more widely available.

Twenty-two percent of employers polled in January by New York-based benefits consultant Towers Watson & Co. offer coverage for certain medical procedures performed in national or regional centers of excellence, and 16% plan to do so in 2016. Additionally, 37% of employers polled said they are considering adding the coverage by 2018.

“What’s happening is that health insurers are broadening their use of centers of excellence,” said Shari Davidson, vice president of the National Business Group on Health. “Each one of the health insurers has their own set of criteria, process for review and tracking methods for patient results. We’re also seeing a small but not insignificant number of large employers contracting directly with centers of excellence.”

The specific treatments and procedures covered under most employer-sponsored domestic medical tourism programs — as well as the number of centers of excellence in a given network — vary to some extent depending on an employer’s insurer or network provider, as do the types of health plans they offer employees and their historical medical claims experience.

The most common procedures for which employees can be directed to a medical center of excellence include organ and tissue transplants, joint replacement surgery, cancer treatment and major cardiovascular procedures — the average cost of which can vary by as much as $100,000 from one state to another.

To date, experts said adoption of domestic medical tourism has been limited mainly to larger employers, mainly due to the volume of patients needed to satisfy the hospital systems, specialty clinics and other health care providers designated as centers of excellence by insurers and third-party network vendors.

Olivia Ross, associate director of the San Francisco-based Pacific Business Group on Health, said the group’s Employers Centers of Excellence Network is open to employers of all sizes, “but with the caveat that we would do an ROI assessment with the employer ahead of time.”

“A lot of it depends on how strong their benefits steerage is going to be,” Ms. Ross said. “Right now, you still have to have right around 5,000 covered lives in order for the value proposition to be there. That’s coming down, but it’s the reason we don’t have smaller employers using the ECEN program.”

Aside from the prospective increase in patient volume and the general prestige that comes with the designation, most medical providers that contract with insurers or intermediaries as centers of excellence do so for the relative stability and ease with which they’re compensated for the care they provide, experts said.

In exchange for lower prices than would be available through traditional provider networks, insurers and third-party network vendors generally agree to pay medical facilities designated as centers of excellence a bundled, upfront sum for procedures performed in a given plan year.

Experts said that though reducing health care costs is often employers’ primary motivation for exploring the addition of out-of-state centers of excellence to their benefit plans, their decisions to add them is usually driven by a desire to improve the quality of care available to their employees.

Typically, domestic medical tourism benefits are voluntary, with employees free to decide whether to use a regional or national center of excellence rather than their local in-network health care provider.

However, experts said some employers are beginning to use financial incentives such as cost-sharing exemptions and travel expense coverage to drive higher utilization.

Nearly half of the firms that indicated they’re planning to offer coverage for knee, hip and spinal surgeries through centers of excellence said they also plan to attach some type of incentive to it, according to a survey of large employers conducted in May and June by the National Business Group on Health.

Other employers are even more assertive. According to Aon Hewitt’s 2015 Health Care Survey, 12% of employers have narrowed their benefit plan’s coverage for certain high-cost procedures to include only centers of excellence, and another 48% are considering doing so within the next three to five years.

“We believe employers should be requiring the use of centers of excellence for some procedures, such as transplants and bariatric surgery,” said Sue Willette, a Minneapolis-based senior vice president and health care strategist at Aon Hewitt. “It’s more about the long-term quality of care than it is about reduced pricing.”