Picking a plan getting harder

Blends of PPO flexibility, HMO restrictions can confound workers and employers


Choices among health insurance plans used to be pretty simple.

Once, almost everyone had old-fashioned indemnity insurance that let people go to any doctor or hospital they wanted. But as health care costs began to increasingly bite, employers began shifting workers to HMOs, managed-care plans that restricted choices.

HMOs, or health maintenance organizations, all worked pretty much the same. They had networks of doctors and hospitals with whom the insurer had negotiated discount rates. They required the patient to select a primary care physician, and that doctor, often referred to as a "gatekeeper," would decide when the patient got access to expensive specialty care.

A third variety emerged that's now the most popular form of health insurance. Preferred provider organizations, or PPOs, have networks like HMOs, although PPO networks are usually larger. PPOs allow members to go directly to specialists, without approval from a gatekeeper. And they offer coverage for care given outside the network. Compared with HMOs, they require the patient to pay more out of pocket, through co-payments and deductibles.

But things have gotten much more complex. As millions of Americans choose their health plans in open-enrollment periods over the next few weeks, it will be harder for them to tell whether they're choosing an HMO or a PPO or, if they can tell, whether it will behave the way they expect.

As consumers complained about barriers to care, many HMOs have become less restrictive, allowing patients to get more types of treatment without advance approval.

And as costs began to escalate, many PPOs have introduced more controls in an effort to hold down costs.

Insurers have produced a variety of blended products with some elements from each type.

One old rule still holds - you pay more for more flexibility. But it's getting harder to tell PPOs from HMOs, or to be sure how much flexibility a given plan will offer.

"We all have developed plans with multiple combinations and permutations," said Steven Matthews, a regional spokesman for the Minnesota-based insurance giant UnitedHealthcare. "Over time, in response to market pressures, we developed a whole variety of things."

There are HMOs with "open access," allowing patients to go to specialists without gatekeeper referrals. There are PPOs adding back more control over access to manage costs.

"There's a lot of mix-and-match going on," said Jonathan Weiner, professor of health policy and management at the Johns Hopkins Bloomberg School of Public Health. "I've even seen an indemnity plan with a primary care physician."

Adding to the potential for consumer confusion, some insurers have given their plans product names - most including some permutation of "choice," "select" and "options" - that aren't standard across companies and don't necessarily indicate clearly whether they're HMOs or PPOs.

UnitedHealthcare, for example, has products called "Choice," "Choice Plus," "Select," "Select Plus," "Options PPO" and "Managed Indemnity." CareFirst BlueCross BlueShield has "BluePreferred," "Select Preferred Providers" and "BlueChoice." Aetna's product portfolio includes "Aetna Select," "Elect Choice" and "Open Access Managed Choice."

Employers - or their consultants or brokers - can catch on to the distinctions among products quickly, said Michael Bucci, Aetna's regional vice president for large accounts. When explaining his products, Bucci said, "You say, `Open Choice - it's a PPO, you don't need a referral.' And they say, `OK.' "

All large insurers now offer a range of products - typically a tightly managed HMO, a loosely managed PPO and four or so hybrid products in the middle, said Peter Cole, senior vice president at Aon Consulting's Baltimore office, who advises employers about health benefits.

When insurers make a presentation, "Usually they start the spectrum on the left side, the tightly managed plans, and move to the looser end," Cole said.

The restrictions - or lack of them - have a bottom-line impact on premiums. For example, according to Cole, a plan that requires a patient to choose a primary care doctor might be 2 percent or so less expensive than one that doesn't.

The greatest difference in pricing, Cole continued, usually has to do with network size. A plan that has fewer doctors means more business from plan members for each doctor, with the result that doctors agree to lower rates - in effect, a bulk purchasing discount. This can drive premiums down by as much as 10 percent, Cole said. It means, however, the patient has a more limited choice of doctors.

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