SBS XII: Choosing a Health Care Plan: Clearing Up the Confusion

Choosing a health plan is similar to choosing stocks-you could end up losing a lot of money, and the "expert" advice that abounds is both dizzying in its scope and contradictory in its conclusions. From Newsweek to the National Committee for Quality Assurance, numerous sources provide health care ratings, but they don't always agree. Furthermore, the health plan your business wants to consider may not even be rated.

The health care problem is growing: currently 68 million Americans are members of HMOs, and the average American is getting older. At the same time, the definition of health care is expanding to include more conditions as problems: the recent debate over Viagra is just one example. The journal Health Affairs projects that health spending will reach $2 trillion by 2007, fully 17 percent of the nation's Gross Domestic Product (GDP).

Cost is an essential ingredient in choosing a health care provider for small businesses. Yet knowing you will get what you pay for is not easily determined beforehand-if at all. Increasingly, however, small businesses have resources to which they can turn-if they know where to look-to find a plan that offers high value at a low cost.

Businesses measure value in a health plan differently than individual consumers. Consumers may wish to look at ease of access to health providers, quality and credentials of physicians, and data on average outcomes of different types of illnesses. While businesses should be concerned about these measures of quality, they will probably also want to know about customer service. Joel Hyatt, director of care management for the Southern California Medical Group of Kaiser Permanente agrees. "In the future, value will be most important. What do you get for your dollar? Can you get through a health plan's bureaucracy and find answers when you have a question? Will the plan generate complaints from employees?"

Small firms have two types of information resources when deciding among health plans: standardized data used in ratings, and non-standardized data available from the plans themselves. Consumer surveys, like those published by Newsweek and U.S. News and World Report, are based on standardized reports of patient satisfaction. They primarily use data gathered from other sources to summarize quality measures. Small business owners cannot use them to research employer satisfaction or outcomes of cases because this type of survey is meant for consumers.

The National Committee on Quality Assurance (NCQA) is the nationally recognized accrediting body for health plans. NCQA accreditation is one feature many health plan ratings systems weigh heavily. NCQA publishes a major survey called Health Plan Employer Data and Information Set (HEDIS).

Most health plans voluntarily make data available in the standardized format to NCQA. Some plans, however, withhold permission for their data to be used in ratings such as those published in newsmagazines. While the NCQA data is too expensive for most small businesses, some insurance agents or brokers may have the HEDIS data. Numerous organizations also publish health plan data at a regional level.

By calling a broker, agent, or the marketing and sales division of the plan itself, small businesses can gain access to studies the plans have done, or their studies for HEDIS, to see how they rank among their competition. Most plans will make this information available if you ask. While the data is not standardized across companies, it is useful for seeing time trends and past performance of the plan you are considering. "Small businesses need to see whether a health plan has a long history of quality and whether it is getting better over time," emphasizes Hyatt.

If a plan is unrated in consumer surveys, be sure to ask why, and whether you can see the data that would usually be found in those ratings. Three types of statistics can be used to judge plans: patient satisfaction, outcomes and employer satisfaction. Although all health plans may not be equally forthcoming, Hyatt believes, "the data is available if small businesses ask for it."

Outcomes is one useful type of statistic rarely seen in health plan literature, but available through HEDIS, a broker or health plans themselves. This class of data simply gives the percentage of patients with certain illnesses who live, or who are cured.

Small businesses have more buying power than ever before in the health care industry. They can demand the information they need to make decisions on health care, taking into account both quality and cost. Hyatt concurs. "Small business owners need to realize that they have the opportunity as do larger businesses to see the equation of value versus cost." If a health plan cannot or will not provide the information you need, its commitment to small businesses is questionable and should not be seriously considered.

California Entrepreneur Increases Employee Awareness of Benefits

Few people appreciate the value of health care more than those who pay for it. Geno DeVandry, president of DeKing Screw Products in Burbank, California, knows exactly what he gets for each health care dollar spent on his family and employees. "The problem," reports DeVandry, "is that I have young guys in my shop who have no idea what kind of coverage they're receiving."

DeKing, a company that employs 28 people, acutely feels the impact of labor turnover. But developing employee loyalty is difficult when the money invested in keeping help goes unnoticed. "Our older employees, who are married and have children, know exactly what their benefits afford them," comments DeVandry.

Standards for his employees are high: Devandry's motto is that if the coverage isn't good enough for his own family, it isn't good enough for his workers. And with the company's current plan, enough money is left over to provide additional health services that the plan itself doesn't cover. "Every winter we bring in a local clinic to administer flu shots to everyone in the shop," says DeVandry. "As a small business, we can't afford to have workers getting sick."

DeVandry has implemented some practical steps he hopes will increase worker awareness about the benefits they have access to. Employees who have made use of their medical benefits run meetings that address co-workers' concerns and ignorance about coverage. Another measure seems to be helping as well. "We used to cover 100 percent of our single workers' medical insurance," he explains. "Now we have them contribute 10 percent, so that when they get a paycheck they can stop and think about where the money is going."

Excerpted with permission from Small Business Success, Volume XII, produced by Pacific Bell Directory in partnership with the U.S. Small Business Administration.