December 1997 /
When initially offered, this option had the lowest cost of all the plans. Without clear explanation, the cost was rising, but last year it was still cheaper than option 2 (preferred provider organization, or PPO).
Like most people, I prefer to continue a long-term relationship with the physician of my choice. He doesn't happen to be one of the EPO (exclusive provider organization) physicians [in option 1]. With the old option 3 dropped, I find myself forced into the PPO plan. Since I'm just worried about major illness, I probably would want the flexibility of the PPO anyway. (I had this flexibility in the event of disaster with the old option 3.) However, the PPO is both expensive and inappropriate for me. As a healthy single person using an out-of-network physician, I would rarely exceed the deductible. UCAR and I are paying for coverage beyond that offered in the catastrophic plan that I don't want or need.
To me, this seems like an equity issue. The plans offered are probably cost-effective for families with children, but they don't make sense for me.
How can this be if the benefits under the catastrophic plan are much lower than the PPO's? There are two reasons this happened at UCAR.
The first part of the answer is in the cost of calamities and "almost-calamities." In the world of health care, groups can get significant discounts if there is a likelihood that a medical provider (like a hospital) will get additional business from the group. The way this works is that the medical plan for the group must have an incentive for the members to use the designated providers. The PPO plan has such incentives; the catastrophic plan does not. For that reason, providers do not give any discount for claims under the catastrophic plan. Without a discount, UCAR and the employee pay full "retail" for medical services. The employee's cost is limited by the out-of-pocket maximum, and UCAR pays the remainder at the full retail cost. The difference between retail and the discounted rate for even a short hospital stay can easily be over $10,000. So the catastrophic plan is not cost-effective for UCAR if the participants in the plan have significant medical claims. Over the past few years, the claims in this plan have been high, which has resulted in higher costs and premiums.
The second part of the answer is in the number of participants in the plan. This plan has never had high participation, and with the increase in costs, participation has dropped even further. UCAR's medical plan is self-insured, which means UCAR directly pays most claims. For this to work properly, there must be a significant number of participants in the plan; otherwise, the costs per participant fluctuate significantly. In 1997, projected premiums for the catastrophic plan were higher than for the PPO plan. The deductibles in the catastrophic plan were significantly increased in an attempt to keep premiums below the PPO plan. Participation dropped to just a handful and costs continued to increase. The only way to offer the catastrophic plan in 1998 would have been to raise premiums higher than the PPO, which made no sense. For that reason the catastrophic plan was dropped.
We hope that all of the plans are cost-effective for employees with various needs. The catastrophic plan was not cost-effective. To offer it at an acceptable cost to employees, we would have to increase the cost of the other plans. This would mean that UCAR, and other employees, would be subsidizing a plan with minimal participation.
--Bob Roesch, Human Resources manager
The Newsweek ranking is a new one for me. We use different tools to measure the quality and cost of health care providers, such as the Health Plan Employer Data and Information Set. HEDIS reports are prepared under terms established by the National Committee for Quality Assurance. Nearly all HMOs prepare HEDIS reports, and we get one each year from PacifiCare. NCQA has a Web site which has information about PacifiCare and its accreditation by NCQA.
Reading the article in Newsweek, I see they used many of the ratings found in the HEDIS report. For young and growing families, Newsweek used prenatal care during the first trimester, cesarean-section rates, and childhood immunization percentages. A summary of Newsweek's interpretation of each category and the most recent HEDIS data on PacifiCare follows.
Why does Kaiser rate higher than PacifiCare? Both plans provide about the same level of benefit (for example, both pay for immunizations), yet Kaiser has better statistics. My guess is that this is due to the makeup of the two HMOs, which are designed very differently. The Kaiser model is clinic-based (a staff model) and participants use Kaiser doctors for most care, especially for routine medical care. The PacifiCare model uses individual physicians or physician groups and participants may select from a list of primary care physicians. Obviously, Kaiser has much more supervision over its own physicians so it can ensure that procedures such as immunizations by the second birthday are better controlled. Kaiser also maintains strong relationships with patients and actively works on preventive care. If you look down the Newsweek ratings, Kaiser rates high in many parts of the country. We feel Kaiser offers high-quality care and believe it is a very good option for UCAR employees, especially those who are looking for a group-based HMO.
Employees who select PacifiCare as an HMO have more flexibility in picking physicians. With flexibility comes responsibility. All the physicians on PacifiCare's list have met quality standards but maintain their own practices. There is less of a consistent practice plan among these physicians than would be found under a Kaiser-type plan. Employees need to select physicians carefully and be involved with their treatments. We believe PacifiCare has a network of high-quality providers and is another very good option for UCAR employees, especially those who want to select their own primary care physician.
After saying all this, I should note that PacifiCare has a plan to raise its HEDIS ratings. In all cases, PacifiCare's goals are higher than the levels in the Newsweek rating. We will continue to monitor the HEDIS report for PacifiCare, and we hope to eventually have a custom UCAR report so we can monitor the effectiveness of our own group plan.
When it comes down to it, each of us needs to ask if we are happy with the care we are getting from our physicians. Kaiser's plan works for some employees, PacifiCare's HMO for others, and many of our employees opt for the PPO plan, which provides a great deal of flexibility and responsibility.
--Bob Roesch, Human Resources manager
|Questions and suggestions from the staff to management may be submitted in confidence to the Delphi coordinator, Rene Munoz (ext. 1173, ML room 135), in written form; they must be signed. Detailed procedures for submitting questions are given in the UCAR Policies and Procedures Manual, section 1-1-13. Questions and answers of general interest to staff are submitted to Staff Notes Monthly by Rene. They may be edited for publication. For more information, see the Delphi Service Web page.|