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Employers, health insurers play big role in patients’ decisions

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JAMES P. LEUTE
April 20, 2008
— The chief executive officers of two Madison-based health care providers couldn’t have been clearer.

Janesville residents have asked for more health care choices closer to home, they said while unveiling plans to build a $140 million hospital and medical complex on Janesville’s southeast side.


But for Sarah Worthing and thousands of other Janesville and Rock County residents, the new hospital won’t be an option under their health insurance plans.


For millions of people in the United States participating in their employers’ group health insurance plans, choice can be a selection of Health Plan A, B or C, which vary in their coverage and the cost.


In Rock County, 91 percent of the 153,000 residents reported in 2006 that they had some form of health insurance, according to the state Department of Health and Family Services. At the time of the survey, 117,000 said they had participated in an employer-sponsored plan.


Precisely what percentage of area residents would be allowed under their insurance to use a new Dean/St. Mary’s hospital in Janesville is not clear, because insurance plans, their costs and their coverage limits vary widely and often change from year to year.


Worthing’s husband is in the National Guard, so the couple—with three children and another on the way—have military insurance that offers less-expensive coverage if the family uses Mercy Health System in Janesville. The family can use Dean or other providers, but the costs are higher.


“If you are already paying out-of-pocket for your insurance premiums, which are generally more than most can afford, you can’t exactly choose to go somewhere ‘non-covered’ to pay the entire bill,” she said.


Experts agree that the level of choice depends on a person’s health insurance plan.


‘Perception of choice’


“The perception of choice is often more than the reality,” said Quint Studer, a national health care leadership consultant and former Mercy vice president.


When people select a managed-care plan, they often believe they have a wide range of choices, Studer said.


Technically, they do, but strict guidelines sometimes affect access to providers both in and out of the network, he said.


“While choice is perceived, the reality of getting the care or professional the patient desires may not be easy and will likely cost extra,” he said. “This is to keep costs down, and people understand it until it happens to themselves or a loved one.”


In other cases, he said, a network offers an extensive array of doctors, but the most desirable are so busy that they don’t accept new patients. If they do, appointments can be months away.


While a plan might restrict patients to one hospital, consumers have the responsibility to research and carefully select their doctors, said Cheryl DeMars, chief executive officer of The Alliance, an employer-owned and directed not-for-profit cooperative that helps companies manage their health insurance.


Based in Madison, The Alliance serves 13 counties, including Rock and Walworth. It works with more than 160 large to mid-size employers responsible for the health insurance of nearly 84,000 people.


Network options


In Rock County, The Alliance includes 21 employers that carry insurance on nearly 16,000 people. Alliance members have access to a broad array of health care providers, including Mercy Health System, Beloit Memorial Hospital and Edgerton Hospital, plus 44 other hospitals and nearly 5,000 physicians in Wisconsin and Iowa.


The Alliance network also includes access to Dean Health System and St. Mary’s Hospital in Madison.


The Alliance also works with three employers in Walworth County that add 3,681 lives to its coverage portfolio.


Nearly 88 percent of Alliance members in the two counties offer their employees the broad Alliance network or a choice between the network and some other plan, such as an Exclusive Provider Organization plan, which is often more restrictive but less expensive from a premium standpoint.


Employees who choose the broad Alliance network can use any provider they want within the network and in some cases pay more for out-of-network services.


But in an EPO, employees must use providers from a specified network of physicians and hospitals to receive coverage. There is no coverage for care received from a non-network provider, except in an emergency.


For example, employees at Bliss Communications in Janesville, which publishes The Janesville Gazette, can choose between two health care plans:


? A Preferred Provider Organization plan that offers provider choices in the full Alliance network.


? An Exclusive Provider Organization affiliated with Mercy Health System. That plan restricts employees to the Mercy network, but Bliss employees’ portion of their premium is about 30 percent less expensive than premium for the Alliance PPO plan.


Other large companies in the Janesville area have aligned with the Rockford-based Employers’ Coalition on Health.


Kelly Davit, ECOH’s member services director, said those employers offer their 1,600 workers access to a network similar to that of The Alliance. A few of those employers also offer specific EPO plans.


HMO restrictions


Not all employer-sponsored plans offer extensive options such as those included in The Alliance or ECOH networks.


In some cases, employers that don’t self-fund their plan might sign on with a Health Maintenance Organization that restricts employees to particular providers. Rock County is served by seven HMOs, including those offered by Dean Health Plan and MercyCare, according to the Wisconsin insurance commissioner’s office.


About 275 employers that are not self-insured offer their employees different versions of MercyCare, which is offered through independent insurance agents.


While an affiliation with an HMO is more common among smaller employers, larger employers also use it.


The General Motors plant in Janesville is a perfect example.


As a result of the national contract negotiated last fall between the United Auto Workers and GM, the automaker eliminated health care contracts with all of its preferred provider organizations and the majority of its HMOs.


In Janesville, that means the plant’s hourly workers and their dependents no longer have the Alliance network as an option. Nearly 5,000 GM employees and their dependents who last year were Dean customers through The Alliance were shifted to an HMO plan that restricts them to Mercy Health System.


As of Jan. 1, they joined about 3,400 other GM employees and dependents who had previously opted for coverage at Mercy.


“It all depends on who you work for,” said Tim Cullen of Janesville, a retired but respected observer of the health care and health insurance industries.


Cullen said health care providers typically have competed on services and not necessarily price or quality. But an era of transparency is coming that will allow consumers to find out easily which doctors are best on the cost side and which are best with their outcomes.


“It may still be a few years away, but things will really bust open,” he predicted.


Studer agreed, saying consumers, employers and health insurance providers will have better access to cost and quality data that will fuel competition and more choice.


“Transparency will put pressure on employers to make sure the plans they offer their employees as choices provide excellent quality and service,” he said.


While consumers such as Worthing may be locked out of a particular provider today, that may not be the case in a few years, Cullen and Studer said.



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