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New HMO Plan Rewards Employees for Engaging in Their Health

A new kind of consumer-driven Health Maintenance Organization plan that rewards employees for making healthier lifestyle choices is garnering high marks , in theory.

An actual positive impact of the new plan has yet to be seen in the real world, however.

On the market now for a month, Health Net of California’s new Optimizer HMO plan is unlike other consumer-driven plans because it does not come with a high deductible or a health-savings account that the employee must pay into. Instead, it involves the use of a special Visa debit card in addition to a basic HMO plan.

The card is connected to the medical account that employers pay into

on behalf of each individual employee. The amount each employer pays in

is up to the individual employer, and the balance in the account remains with

the employer when an employee quits.

Employees, who can check their balance online, use the card to cover those out-of-pocket medical expenses not covered by a basic HMO plan, including

co-payments for office visits, prescriptions or even such things as acupuncture.

“Extra” money is added to the account when employees reach various benchmarks, such as when they complete a health-risk questionnaire or if they have used Health Net’s health-coaching program.

By engaging employees to get involved in their health, the plan could, in theory, lead to lower claim costs. It also allows employers to choose less expensive HMO plans without cutting back on employee benefits, because though co-payments may be greater, the debit card account would help offset them.

“It brings together the best of both worlds, the HMO and the commercial product,” said Mark Morgan, Health Net’s chief commercial officer. “The main point here is to get the employee engaged in their own health care.”


Spreading The Word

Health Net, which insures 170,000-plus people in San Diego County, is educating brokers to introduce the plan to businesses with 51 or more employees. Those brokers include Steve Finden, principal with Barney & Barney LLC, a La Jolla/University Towne Center-based firm founded in 1909.

“San Diego employers have been used to using the HMO concept strategy for the past few decades,” Finden said. “This is something new but not so new, they have to start all over.”

Morgan said Health Net plans to market the new plan to businesses with 50 or fewer employees early next year.

“It’s really just about our launching cycle, eventually we will move into that,” Morgan said, referring to why Health Net chose to start with small- to mid-sized companies as opposed to really small businesses.

So far, Health Net has received “hundreds” of inquiries from brokers about the Optimizer plan in a three-week period, Morgan said.

“I think it’s very important in the sense that there are many drivers in the areas of health care cost but certainly the lifestyle/health status of the population is at the forefront,” Morgan said.


Crunching The Numbers

Health Net spokesman Brad Kieffer estimates that the new Optimizer HMO could save business as much as 18 percent a year, if chosen over a traditional HMO plan.

According to Finden, health care costs in San Diego County are expected to go up 12 percent next year. In recent years, costs have been rising 10 percent to 15 percent a year, he said.

“I’m getting positive responses from clients about the concept (of the Optimizer plan),” Finden said.

Finden said he is currently talking to a hotel and school district about the Optimizer plan, as well as some professional services organizations, but declined to provide names.

“It’s running the gamut so far,” Finden said. “Lots of white-collar businesses are interested in learning more, but so are some that are what you’d call blue-collar types. Everyone wants to find a way to save on health care costs.”

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