By Albert Kline, C.P.A.
There are several reasons why physicians may find themselves reviewing health insurance plans for their practices. Certainly, a desire for lower premiums is one. A merger with another practice may result in the need for a common plan for the new entity. A current insurer may decide to get out of the small business field as a result of the new health care act. The practice may decide to upgrade its plan to attract employees seeking to take advantage of the portability feature of the act.
If you’re in the process of choosing a health plan for your employees, or if you’re thinking about switching plans for any reason, here are some of the key questions to ask plan providers.
What are the minimum participation requirements? Often, an insurance company will require that a certain percentage of your employees agree to participate in the plan. A common participation requirement is 50 percent to 75 percent of your full-time employees. If you’re paying the full cost for all your employees, this particular requirement won’t be a problem, but if your employees must pay a portion of the cost, your ability to meet the minimum percentage may depend on how much of the cost you’re willing to pay.
Does the plan cover part-time employees? If you have part-time employees working for you, you may want to offer them health coverage, as well. Make sure you find out if a plan provider allows part-timers to participate and, if so, at what cost.
How does the plan define “experimental treatments”? Some plans deny coverage for treatments considered experimental. These may include bone marrow transplants, nutrient drinks for digestive disorders and treatment for sleep apnea and speech therapy.
What treatments are excluded from coverage? Some plans exclude coverage for treatments such as cosmetic surgery (unless treatment is due to an accident sustained while covered), oral surgery and treatments for obesity and infertility, among others. Again, you’ll want to know the exclusions ahead of time to prevent surprises.
What are the first dollar benefits? First dollar benefits are the services for which the insurance company pays all costs without requiring a deductible. These benefits may include preventative health care benefits for children.
How does the plan define “reasonable and customary charges”? Most insurance plans use an 80-20 co-payment ratio, so that once the deductible is satisfied, the covered individual pays 20 percent of the reasonable and customary charges for diagnostic procedures or treatments, and the insurance company pays the remainder up to a certain level. Beyond this level, the insurance will usually pay 100 percent of the charges.
The answer to this question is significant because some companies compute the reasonable and customary charges for a specific diagnostic or treatment procedure by using the average fees that are charged by hospitals or physicians in a particular region. If the region covered is an entire state or a number of states, the charges may not accurately reflect the cost for your area. Ideally, you want the region covered to be as small as possible, such as your zip-code area, so that the charges for your area are not influenced by costs from other communities or cities throughout the state or nation.
How are insurance claims handled? Knowing what is and isn’t covered by a plan provider is only part of the equation. You’ll also want to know how the plan processes claims. Does the provider itself handle the claims or does it contract the service out to another organization? Can a plan participant call and speak directly to a customer service representative or do participants have to deal with a voice mail system? And what happens if a dispute arises between your employee and the plan provider? Does the plan have an appeal process in place? A plan that looks good on coverage alone may not be appreciated by your employees if the processing of claims is burdensome or time consuming.
One final note. Before you make a final decision concerning health plan coverage, you may want to spend some time talking to your employees about what benefits they feel are most important. If you can provide you employees with the benefits they want and need, rather than with the benefits you think they need, you’ll probably both be happier in the long run.
The Delaware Valley marketplace is currently dominated by two insurers. This, of course, drastically reduces the bargaining power of most practices. There is, however, an ongoing trend for practices within a common group (i.e., IPA or single specialty group) to utilize their existing associations for purposes of obtaining a better deal where health care insurance premiums are concerned. Also, you should not overlook diligent search of the smaller insurers to determine what, if any, advantages can be negotiated.
Albert Kline, CPA, is partner-in-charge of the of the Health Care Service Division of Goldenberg Rosenthal Friedlander, LLP, Certified Public Accountants and Management Consultants.