Employer's Corner: HMO or PPO

Employer's Corner: HMO or PPO

Over three-quarters of employees with health insurance are enrolled in either HMO or PPO plans, according to the 2000 National Survey of Employer-Sponsored Health Plans by Mercer/Foster Higgins. Only eight percent of employees are enrolled in traditional health insurance plans.

Until recently, small business owners who were looking for relatively inexpensive health insurance had tended to go with HMO plans. Now, however, HMO expenses are rising at a higher rate than PPO expenses. The average cost per employee per year for an HMO plan rose 9.6 percent to $3,713 per year, according to Mercer/Foster Higgins. PPO costs rose 7.7 percent to $4,032 per employee per year. Traditional health insurance costs rose to $4,498 per employee per year.

Evaluating HMO vs PPO

When evaluating either a PPO or an HMO network, ask about the company's screening process when signing up physicians. Ideally, a screening process should include background checks and an analysis of any previous malpractice issues.

Ask how many network physicians are certified by the American Board of Medical Specialties. A physician must demonstrate competency in a specialty by passing tests or meeting training requirements. Ideally, more than 85 percent of the physicians in the network should be certified.

And to get a sense of the availability of the doctors in the network, ask how many are accepting new patients.

Also inquire about how second opinions are handled, and how disputes over a treatment are settled. The company should have procedures in place for airing disagreements before a grievance board.

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