Employee Group Health Insurance: HMO versus PPO

[honestagent]

Hi there,

I do not regularly post in this category but I hope you do not mind I post a few questions to you vets and experts who sell group on a regularly basis. I was recently approached by somebody for some answers and I could not deliver any adequate responses because it's not my niche but I thought I'd ask and get back to that person.

So if you don't mind answering a few questions, I would greatly appreciate it.

1. This person was just hired by a company and has to decide between joining Cigna PPO or HMO.

2. There are 4 differet rates. We're talking almost $400.00 difference a month between a basic and enhanced policy. It would be just for this person and no dependents.

3. What are the primary reasons for the difference in cost?

4. Besides having the network and referal thing, what are the disadvantages that you see if this person joins an HMO?

5. Who makes the overall decisions on an HMO plan for treatment; is it the PCP or the Specialist - if applicable here? Or somebody else?

6. If this person doesn't mind having to stay in network and would help keep more money in his or her pocket, do you suggest an HMO plan then?

7. Besides a deductible and copays if applicable, what else should I advise this person to look at and ask HR if she selects the HMO program in terms of out of pocket costs and how the HMO operates?

Basically, her overall concern is money. She's healthy. She doesn't go to the doctor too often and is open to changing doctors. She just wants to be certain she'll have adequate coverage and no surprise out of pocket costs and she wasn't sure if she'll have that if she joins an HMO. In the past, she has always opted for PPO.

Will treatments be different in terms of adequacy and what's best for the patient be different (in a bad way) if she joins an HMO?

I've just heard things from other people like: 'hmos suck. stay away. avoid hmos at all costs.' and I am wondering why now, especially because now I have been approached by someobody I know for answers that I'd like to provide.

I mostly specialize in the senior market and I've never personally participated in selling any kind of an hmo policy - hence my querry.

If any of you can please be so kind to share what you know and answer my questions and add to - ' hey don't forget to have her ask about ....' or 'plan for ...' that would be great.

Again, it's a matter of almost $200.00 a pay so $400.00 a month if she picks the PPO, over 4K a year!!! That makes no sense to spend that on a GROUP POLICY OF ALL for somebody young and healthy IMHO!

I thank you much in advance!

 

[somarco]

Without more details . . .

3. No clue. In general, HMO's deliver more value than PPO. A $400 difference tells me there is more than just the normal HMO/PPO spread.

4. Fewer providers in the HMO. Doesn't mean it is a disadvantage, just a difference.

5. Small case, the PCP in the HMO. Large case, the LCM in either the PPO or the HMO.

6. That is a personal choice. I know some here do not like HMO's. They do a better job of handling care than most PPO's do.

7. Sounds to me like you, and your friend, are over-analyzing. With a $400 spread the answer should be obvious. Almost no one is going to realize the full extent of the additional benefits (mostly window dressing) on the higher priced plan.

She doesn't go to the doctor too often and is open to changing doctors.

If they offer an HSA or HRA then that is what she should definitely give a hard look.

I've just heard things from other people like: 'hmos suck

Gee, I hear the same thing about all insurance companies. The issues with HMO's are mostly overstated. Most of those complaints come from folks who have no clue how care is managed by all carriers.

a matter of almost $200.00 a pay so $400.00 a month if she picks the PPO

Sounds like the decision is made.

Try it for a year. If she doesn't like it she can switch next year and pay the extra $$$.

 

[honestagent]

Thanks Somarco! I appreciate your reply.

 

[LGilmore]

3. What are the primary reasons for the difference in cost?

Choice. In a ppo the insured makes a choice of who to see from primary care to specialist w/o prior approval. HMO the primary doctor makes the choice, you must seek his/her premission to see specialist.

4. Besides having the network and referal thing, what are the disadvantages that you see if this person joins an HMO?

Freedom of choice. Asking permission for treatment. The possibility they could say no.

5. Who makes the overall decisions on an HMO plan for treatment; is it the PCP or the Specialist - if applicable here? Or somebody else?

PCP is the gate keeper. He makes the decision simply by allowing or not allowing the specialist to look at you.

6. If this person doesn't mind having to stay in network and would help keep more money in his or her pocket, do you suggest an HMO plan then?

IT's going to depend on the HMO, some are excellent, some are in the business of saying NO. I don't know CIGNA's track record. Where I live the HMO developed such a bad reputation three DECADES ago, they haven't been able to shake it, even though they've changed. People remember.

7. Besides a deductible and copays if applicable, what else should I advise this person to look at and ask HR if she selects the HMO program in terms of out of pocket costs and how the HMO operates?

Be aware of annual deductibles vs. copays per visit. Compare summaries side by side. Wording is a factor. Copays don't count towards deducts or co insurance in most cases.

?Basically, her overall concern is money. She's healthy. She doesn't go to the doctor too often and is open to changing doctors. She just wants to be certain she'll have adequate coverage and no surprise out of pocket costs and she wasn't sure if she'll have that if she joins an HMO. In the past, she has always opted for PPO."

Time to break out the pencil and pad and play what if? That's about all you can do. Also she has to look at how much she uses health care. Once a year or less, it doesn't matter. Once a quarter or more, it might because the PCP has to be seen BEFORE any specialist to gain covered access. So sometimes it is really making two appointments to really have one.

"Will treatments be different in terms of adequacy and what's best for the patient be different (in a bad way) if she joins an HMO?"

No way of telling except history of complaints.

"I've just heard things from other people like: 'hmos suck. stay away. avoid hmos at all costs.' and I am wondering why now, especially because now I have been approached by someobody I know for answers that I'd like to provide."

For some, it's a matter of being told or asking permission to use healthcare that sucks. If I know I need a certain treatment by a certain specialist, it makes me angry to have to work into my primaryPCP schedule first, before I can see who can really help me.

When the price goes down, you are usually giving up choice and in some cases quality. Whether that's OK or not, is an individual thing. There isn't a right answer.

 

[arnguy]

In my area, southeastern Pennsylvania, the HMO's have a good reputation, especially Keystone Health Plan East. It is highly rated in Consumers Report. KHPE is BX product. When BX came out with the PPO at first they were taking a lot of business from their HMO with a much larger network (many doctors preferred to be in the PPO panel for financial reasons and many switched from the HMO). Of course the idea of not having to obtain a referral to see a specialist was an attraction and the premiums were competitive. In the past few years, IMHO, the PPO plans have priced themselves out of sight while the HMO panel has grown. KHPE has made securing referrals easy----just a phone call to the PCP's office (assuming you have been under his/her care) and they electronically transmit the referral to the specialist. Gone are the days of the paper referral that you had to pick up at the PCP office. I haven't had any complaints about insureds having a problem securing referrals.