Health Law & Policy Institute

Choosing a Health Care Plan

I. Preliminary questions to ask when evaluating a plan

I. Preliminary questions to ask when evaluating a plan

What factors should I consider in comparing health plans?

In evaluating or comparing health plans, you should consider several issues, including:

• services covered;
• cost;
• convenience (location of doctors/hospitals and whether you must file a claim to be reimbursed for covered services);
• choice of physicians or hospitals;
• referral policies (to specialists); and
• quality. (In measuring quality, consider the services covered, the choice of physicians and hospitals and the referral policies to specialists).

The "best" plan for you may depend on your life situations, such as whether you now have cancer or are at high risk for developing it, are starting a family or retiring, have chronic health conditions or disabilities, whether you need care for the elderly, or whether you need care for family members who travel frequently or attend college. Get answers to the questions that are important to your personal life circumstances.

• How does the plan treat pre-existing conditions?
• Does the plan provide for cancer prevention and early detection programs?
• Does the plan allow prompt and direct access to cancer specialists? If you have been diagnosed with cancer, does the plan allow you to designate an oncologist (cancer specialist) as your primary care physician if you choose?
• Will the plan pay for patient care costs associated with participating in clinical trials?
• What is the premium (cost) and under what circumstances can the premium be raised?
• How much are the deductible, co-payment, and maximum yearly expense (out-of-pocket)?

Some plans, particularly HMOs, cover physical exams and health screenings, i.e., preventive care. Most major medical plans provide coverage for hospital and physician fees, surgical expenses, anesthesia, x-rays, laboratory fees, emergency care, and maternity care. Some, but not all, plans cover mammography, chemical dependency, prescription drugs, dental, vision, mental illness or other psychiatric care, home health, nursing home and hospice care. In addition to seeing what is covered, consider any financial or other limitations on the coverage offered. For example, a plan may cover physical therapy expenses, but limit coverage to a certain number of visits annually.

Some plans provide coverage for cancer prevention and early detection programs. Prevention programs may include programs to help members stop smoking or stop abusing alcohol, or provide guidance on proper diet and nutrition. Early detection programs may include coverage for cancer screening and early detection tests, including genetic tests. Cancer patients should particularly note what coverage is provided for mammography and other radiology services, pap smears, outpatient physical and occupational therapy, and clinical laboratory procedures such as blood tests, urinalysis, and tissue cultures. Also consider whether plans provide cancer patients with access to specialized supportive care to improve patients' quality of life (powerful symptom control, optimum pain relief, mental health care, and end-of-life care).

What about coverage for "experimental" therapy?

Most insurance policies do not cover treatment that is experimental or investigational. However, virtually every treatment is "experimental" when first introduced, so the issue is really whether the proposed treatment is experimental based on current information. If your doctor believes you need a treatment that the insurance company has denied as experimental, the insurance company will need to be convinced that the treatment is recommended by experts in the field, that the patient will likely benefit from the treatment, and that the treatment is for the patient's benefit--not just for the benefit of furthering scientific research. For more information, see Cancer Treatments Your Insurance Should Cover, published by the Association of Community Cancer Centers.

You should consider whether plans allow access to high-quality clinical trials, and whether the plan will pay for patient care costs associated with participating in clinical trials.

What restrictions does the policy include?

You should review restrictions on coverage contained in any plan you are considering, especially restrictions on cancer treatment. Many plans restrict coverage for mental health benefits. Also, most plans have a lifetime maximum on what they will pay. Some plans have a lifetime maximum per illness, per member, and/or per family. Many plans require pre-certification (approval) before hospitalization. This means someone has to contact the plan's representative and get their approval before the plan will agree to pay for services. Plans have policy limits for hospital room charges, amounts paid specialists, the number of hospital days covered, and other restrictions and limits.

When can an insurance company or HMO cancel coverage?

• Group coverage-employers are not required to provide health care plans to their employees, and may legally cancel coverage for the entire group at any time. You could also lose eligibility for group coverage through reduction in hours worked, loss of your job, divorce, death or retirement of the covered employee, or claims of fraud and misrepresentation. The federal Health Insurance Portability and Accountability Act of 1996 (HIPAA) contains provisions designed to assist employees who change jobs or who become unemployed. Under HIPAA, employees who meet eligibility conditions must be accepted into a group or individual plan, ensuring that their health coverage is continuous. Also, the federal Consolidated Omnibus Budget Reconciliation Act (COBRA) may allow you to keep your coverage for 18 to 36 months if you lose your job for any reason except "gross misconduct," although you will be required to pay the premiums. Premium rates, however, are not guaranteed.

• Individual coverage in Texas must now be of the type known as "guaranteed renewable" (at the option of the policyholder). However, all policies can be canceled for failure to pay premiums, fraud, misrepresentation in obtaining coverage, and upon reaching any lifetime payment maximum. Policies may also be canceled if the insurance company stops selling individual insurance coverage, or if the policyholder no longer lives or works in an area where the insurance company is authorized to provide coverage.

You should consider:

• access (ease of obtaining appointment, waiting time in physician's office, telephone access to physician);
• continuity (do you see the same physician each time care is sought);
• coordination (how is care between your primary care physician and specialists coordinated); and
• flexibility (switching physicians, second opinions, denial of care).
• If you have been diagnosed with cancer, will the plan allow an oncologist (cancer specialist) to act as your primary care physician if you choose?

What choices do I have, and what plan is best for me?

No plan is necessarily best for everyone. Plus, if you are a cancer survivor, the complexity of choosing a plan may seem overwhelming when added to the stress of your illness. This discussion is designed to help. The two basic types of plans are traditional indemnity (fee-for-service) plans and managed care plans. There are several varieties of managed care plans including Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs), and Point-of-Service (POS) plans. Your total cost for health care includes both monthly premium costs and other charges for which you may be responsible, so it is important to understand the way the different plans work financially. You will also have to pay for services that are not covered by the plan. For example, most plans provide no coverage for cosmetic surgery, and many plans provide only limited coverage for psychiatric treatment.

• Indemnity or "fee-for-service" plans are traditional insurance plans. The insured patient pays a monthly premium, and the plan agrees to pay all or part of the cost of covered medical services. Usually, you first pay an annual deductible (often $200 to $500), after which the plan generally pays 80% of the "usual and customary" charge for the medical services. The 20% you pay is called "coinsurance." Plans usually have an annual maximum out-of-pocket limit. After this limit is reached, the plan pays 100% of the usual and customary charges for covered medical services. If the oncologist (cancer specialist) or other medical provider charges more than the insurance company determines is "usual and customary" you will have to pay the difference. Indemnity plans give you the most choice of doctors, hospitals, and other health care providers, but may be the most expensive type of plan.

• HMOs are the oldest type of managed care plan. In exchange for a monthly fee, the HMO agrees to provide health care services, including preventative services such as physical exams. There is generally no "deductible" payable in an HMO, and the patient's out-of-pocket costs are minimal. Members must choose their physician from a list of physicians in the HMO, and the plans do not provide reimbursement for physicians not associated with the HMO. Members must also go to hospitals associated with the HMO. Members first select a primary care doctor, often a general practitioner, who provides basic care and acts as a "gatekeeper" for referrals to specialists in the HMO. A fairly new type of health plan combines an HMO with indemnity insurance. These point of service (POS) plans allow you to go outside the HMO providers if you wish, but for the out-of-network charges you must pay a deductible and coinsurance (up to the annual maximum) like an indemnity plan.

• PPOs are another form of managed care plan. PPOs provide members with a list of "preferred providers." If you go to a physician on the list, you pay either a discounted fee or a fixed co-payment per office visit. You may still go to physicians not on the list, but a PPO plan will only reimburse a portion of charges for such "out-of-network" visits, often 80%. However, like indemnity plans, PPOs usually have an annual out-of-pocket maximum limit of $2,000 or $3,000. Some PPOs do not use primary care physicians as "gatekeepers," so you can go directly to a specialist if you like. But, such PPOs may reimburse a higher percentage of the specialist's charges when your primary care physician recommends the referral.

• Self-funded or "self-insured" health care plans are plans in which an employer assumes the financial risk of providing health care for its employees. In a self-insured plan, the employer pays the provider directly or indirectly through an administrator. Self-insured plans may operate in the same manner as indemnity plans, PPOs, or HMOs. Federal law excludes self-insured plans from state regulation by the Texas Department of Insurance (TDI) or any state agency. There are only limited federal protections, most of which require employees to adhere to the terms of the plan instrument. If you are unsure whether a plan provided by your employer is a self-funded plan, check with your employee benefits coordinator.

Special "cancer" policies pay only if you are hospitalized or treated for cancer. Although it may be tempting to purchase one if you have a family history of cancer, such policies are not necessary if you have a good major medical policy.

Are insurance companies and HMOs required to sell me coverage?

No. Neither HMOs nor insurance companies have to accept everyone who applies for an individual policy. Most employer-based group health policies require the insurance company to accept every employee who enrolls for coverage within a certain time period. HMOs that agree to cover a particular group (such as all employees of ABC company) may not reject individual members of the group.

What if I have a "pre-existing condition"?

• A pre-existing condition is a health condition that existed before the policy was purchased. Generally, if you have seen a physician within the previous 12 months, any condition diagnosed will not be covered for a specified waiting period, or you may be refused coverage or charged a higher premium for the coverage. The National Coalition for Cancer Survivorship (NCCS) points out that cancer survivors have a pre-existing condition from the time of diagnosis through the remainder of their life, since a cancer survivor usually needs to see a physician at least once a year for a checkup. Although this can be discouraging, especially to cancer survivors, it is an important point to keep in mind when shopping for a plan.

• The federal Health Insurance Portability and Accountability Act of 1996 (HIPAA) contains provisions designed to assist employees who change jobs or who become unemployed. Under HIPAA, employees who meet eligibility conditions must be accepted into a group or individual plan, ensuring that their health coverage is continuous. There is a maximum, one time 12-month exclusion for illnesses that were diagnosed or treated within the six months prior to enrollment, but individuals must be given a credit for time they were covered under another plan. No exclusions may be applied for pregnancy, newborns, or adopted children.

• Texas law prohibits insurance companies and HMOs from denying coverage because of a woman's diagnosis or history of a fibrocystic breast condition.

• Insurance companies may require that you pass a physical exam before offering coverage, or they may rely on information about your health history from your application if coverage may be conditioned on health status.

• HMOs seeking to cover a group, such as all employees of a company, may screen individuals for health conditions, but may only reject or accept the entire group.

As with pre-existing conditions, for individual policies and group policies not based on employment, insurers may decide to refuse coverage or charge higher premiums based on your individual health history.

How are health plans aware of my medical history or pre-existing conditions?

The application for individual insurance contains questions about your health history. The application form contains a release giving the insurance company access to medical records from insurance company files and physicians' files. The company may also learn about your health history from the Medical Information Bureau (MIB).

Can I obtain a copy of my Medical Information Bureau report?

Yes. The MIB is an organization that provides insurance companies with reports on the medical history of applicants. If you are denied coverage because of a report, you may obtain a free copy of your report by calling (617) 426-3660 or writing the MIB at P.O. Box 105, Essex Station, Boston, MA 02112.

What are my options if I am refused coverage?

• If you were denied coverage on the basis of a report from MIB, first obtain a copy and verify that the information in the report is accurate. If there are errors, advise the MIB in writing and work with them to get the errors corrected. Also, try obtaining coverage from other insurance companies or HMOs. Check with business, professional, or other associations that may offer group coverage, and check governmental options such as Medicare or Medicaid.

• You may be eligible to obtain health insurance from the Texas Health Insurance Risk Pool if you: (1) have been denied health insurance by at least two private companies, or (2) have access to insurance but it won't cover pre-existing conditions, or the rates charged are higher than the Pool's rates or (3) have been without employer-sponsored coverage for less than 63 days after having had such coverage for at least 18 months. In addition to these limits, people with certain conditions (including cancer) will automatically be accepted for coverage. The coverage costs about 50% more than other commercially available coverage. To obtain more information on the Pool, contact the Texas Department of Insurance.

Texas law allows a 10-day period from the time you receive a copy of an individual insurance policy for you to change your mind and receive a refund. The law does not apply to group HMO or group insurance policies.

What if I can't afford to purchase health insurance?

Governmental programs offer some assistance. Medicare provides coverage for senior citizens and some totally and permanently disabled individuals. Medicaid is a state-administered program offering health care for low-income individuals who meet eligibility requirements. The Veterans Administration provides some health care for veterans. The Texas Department of Health provides some services to the public and low-income citizens. Some disabled Texans are eligible for health care services provided by the Texas Rehabilitation Commission, and counties provide some indigent health care services for low-income citizens who do not meet the eligibility requirements of Medicaid. See References and Additional Resources at the beginning of this booklet for telephone numbers.

III. Evaluating Quality in a Health Plan

What factors should be considered in evaluating quality?

For insurance companies, quality refers mostly to financial strength and claims handling. AM Best and Co. rates insurance companies. You should try to purchase from a company rated A or A+. The AM Best and Co. directory is available in many public libraries. If you have Internet access, the web site for the Texas Department of Insurance (See References and AdditionalResources at the end of this booklet) has "links" for insurance rating companies. For managed care plans, quality is measured by:

• qualifications of physicians;
• preventive care;
• quality management; and
• member satisfaction.

You can obtain general information from a plan's marketing brochures, sample benefits contract, and questions to the plan's customer service office. Some HMOs have "report cards" based on member surveys and other information.

What is the National Committee for Quality Assurance (NCQA)?

The NCQA is an independent, non-profit organization that assesses and reports on health plan quality of HMOs. NCQA also "audits" report cards issued by HMOs. NCQA offers accreditation to HMOs, essentially a "seal of approval" granted after physician reviewers and quality experts evaluate how well a health plan manages its network. NCQA publishes an "accreditation status list" with a list of plans NCQA has reviewed together with accreditation status; i.e., full, one-year, provisional accreditation, or denial. About one-half of all HMOs have applied for accreditation, and about one-third have received full (three-year) accreditation. To find out the accreditation status of a plan you are considering, contact the NCQA.

What is the Health Plan Employer Data Information Set (HEDIS)?

HEDIS is a health plan survey that measures about 60 different health care areas to determine and quantify the quality of services offered by HMOs. Recently, member satisfaction was added to the areas measured.

What is a "report card"?

Health care plan report cards are a way to compare the quality of plans. Report cards review items such as rates of immunizations, cervical cancer screening, mammograms, and cholesterol screening provided by plans. Recently, report cards have added patient ratings of quality and satisfaction. Some report cards are issued by organizations such as U.S. News & World Report and Consumers' Checkbook. Some report cards are prepared by the plans themselves, usually based on HEDIS data. Some, but not all, plans have their report cards audited (reviewed) by NCQA. The State of Texas will issue report cards on Texas plans beginning in 1998.

Does the health plan have a report card?

Ask plan representatives whether they have any report cards available for the plan, or review publications such as U.S. News & World Report or Consumer's Checkbook. If the plan has a report card, obtain a copy and ask whether it has been audited by NCQA.

What information is contained in report cards issued by the Office of Public Insurance Counsel (OPIC)?

Texas legislation passed in 1997 requires the Office of Public Insurance Counsel (OPIC) to collect a variety of quality data on Texas HMOs and prepare a report card comparing Texas plans. The first report cards are scheduled to be published in the summer of 1998. Texas plans to use HEDIS data, together with another survey instrument known as the Consumer Assessment of Health Plans Study (CAHPS). CAHPS is similar to HEDIS, but places a greater emphasis on patients' assessment of the care process, including health care professionals, access, continuity, and coordination of care.

IV. Choosing a Physician

How do I choose a primary care physician?

Finding a good doctor as your primary care physician is important regardless of what type of health plan you choose. A primary care physician is usually a general practitioner, family practitioner, internist, or sometimes an obstetrician/gynecologist for women. A child's primary care physician is usually a pediatrician or family physician.  In an HMO, you will be limited in your choice of physicians. In a PPO, certain physicians will be "preferred," meaning that the cost of using such physicians will be lower than using an out-of-network physician. In an indemnity plan, you may choose any physician you wish. You will want to ask several questions in evaluating a physician. If you currently have a primary care physician, you may want to find out if that physician is a member of plans you are considering, although you should know that a specific doctor may not necessarily remain associated with a particular plan.

Is a physician board certified?

Other things being equal, choose a board-certified physician. Board certification requires several years of post-medical school training in a specialty, as well as passing an examination.

What training did the physician receive?

You may want to review what medical school a physician attended, date of graduation (to determine how many years experience the physician has), and where the physician's residency was completed.

Is the physician taking new patients?

If you find a physician you like on a preferred provider list or elsewhere, be sure to call his or her office to see whether the physician is taking new patients. Also, even if a physician is listed on a preferred provider list, check with the physician to see if the listing is accurate. Such lists are sometimes out-of-date.

Where does the physician have admitting privileges?

Hospital "privileges" determine whether a physician can practice at a particular hospital. If you prefer to use a particular hospital in your community, you should check to see whether a physician you are considering has the right to admit patients to that hospital.

Is the physician in a solo or group practice?

A solo practice may offer more personalized care, while a group practice can probably better handle situations where your primary care physician is unavailable at the time you need medical attention. Some group practices include physicians in different specialties, which is convenient for referrals and which can improve coordination of care, including a single, more comprehensive set of medical records.

What are the physician's office hours, arrangement for outside of office emergencies, policy regarding telephone advice?

You need to be sure a physician's office hours are convenient for you, especially if you are a cancer survivor, and it is also good to ask what arrangements the physician has for emergencies which occur outside of the office. Also, the ability to talk on the telephone with your physician (for example, to clarify instructions or determine whether an office visit is necessary) can be valuable and reassuring.

Will the physician directly bill your insurance carrier?

If you are in an HMO, little or no paperwork will be required when you have an office visit with your primary care physician. You may be required to make a "co-payment," but your physician will handle the paperwork. In a PPO, claims processing for routine office visits is also likely to be largely handled by your physician's office. In an indemnity plan, it is necessary to ask how the physician will handle billing. Most physicians will bill your insurance carrier directly, but some may expect you to pay the bill and seek reimbursement from the insurance company for the charges.

V. References and Additional Resources

Agency for Health Care Policy and Research (AHCPR), Choosing and Using a Health Plan, Executive Office Center, Suite 501, 2101 East Jefferson Street, Rockville, MD 20852. 1-800-358-9295.

American Cancer Society, 1-800-ACS-2345.  Managed Care and Cancer Control.  http://www.cancer.org

Association of Community Cancer Centers (ACCS) Cancer Treatments Your Insurance Should Cover, 11600 Nebel Street, Suite #201, Rockville, Maryland 20852.

Consumers' Checkbook Consumer's Guide to Health Plans 1-800-475-7283, http://consumer.checkbook.org/consumer/health/hmo.htm

County Indigent Health Insurance: Check with the local county courthouse.

Health and Human Services in Texas: A Reference Guide (available at some public libraries-contains detailed information on federal and state health care programs).

Medicaid: 1-800-252-8263

Medicare: 1-800-772-1213

National Coalition for Cancer Survivorship (NCCS) What Cancer Survivors Need to Know about Health Insurance, 1011 Wayne Avenue, 5^th Floor, Silver Spring, MD 20910. (301)-650-8868.

National Committee for Quality Assurance (NCQA) Choosing Quality: Finding the Health Plan That's Right for You (NCQA's Guide for Consumers). 1-888-275-7585, http://www.ncqa.org/consumer.htm

Office of Public Insurance Counsel (OPIC), 333 Guadalupe Street, Suite 3-120, Austin, TX 78701, (512) 322-4143.

Texas Department of Health: 1100 West 49th Street, Austin, Texas 78756-3199. The phone number is 512-458-7111 or 512-458-7714 (hearing impaired) http://www.tdh.state.tx.us/

Texas Department of Insurance Questions and Answers about Your Health Care Coverage 333 Guadalupe, Austin, TX 78701 (Mail - P.O. Box 149104, Austin, TX 78714-9104). (512) 463-6169 or 1-800-578-4677 http://www.tdi.state.tx.us/index.html

Texas Rehabilitation Commission: 512-483-4067 1-800-628-5115 (hearing impaired)

Veterans Administration: 1-800-827-1000