B of A Employees to Have to Choose From Fewer HMOs
BankAmerica Corp. said Friday that next year it will offer access to only six of the 15 health maintenance organizations now included in its health-care plan for California-based employees.
The San Francisco-based bank holding company’s decision follows similar actions taken by other large California employers who are drastically cutting the number of HMO options offered employees. They say fewer options help to cut the overall cost of health care and provide for better monitoring of the HMOs’ performance.
Besides narrowing employees’ choices, the trend has implications for how many HMOs will survive.
In announcing its decision to employees, BankAmerica cited the $48-million annual cost of the HMOs. The company’s success and competitive position required a redesign of the health-care plan to “ensure that employees and their family members have access to quality health care that is cost-effective and affordable,” a company letter said.
Those factors, as well as number of enrollees, breadth of services and overlapping HMOs in the same service area, helped to determine the cuts, the company said.
Only about 3,500 of about 30,000 BankAmerica workers enrolled in HMOs will have to switch plans, said company spokesman Peter Magnani. The remainder of the company’s 56,000 workers are enrolled in a traditional indemnity insurance plan.
The HMOs BankAmerica will keep are Kaiser Permanente Health Care Program, Maxicare Health Plans of Los Angeles, Woodland Hills-based Health Net, Sacramento-based Foundation Health Plan and the two HMO options offered by San Francisco-based Bridgeway Hospital. Among the plans that won’t be offered next year are Cypress-based PacifiCare, FHP Corp. of Fountain Valley, Woodland Hills-based Cigna, Emeryville-based HEALS Health Plan, TakeCare of Concord and Santa Rosa-based Health Plan of the Redwoods.
Thus far, Kaiser is the clear winner in the consolidation trend, which analysts say will soon become more widespread nationally. The common pattern has been for the companies to retain the Kaiser HMO and choose “some alternative because they have to have something else,” said Peter Boland, a Berkeley-based health-care consultant. The plans that appear to be emerging as alternatives to Kaiser are those with statewide networks, or those that offer a broad selection of services, he said.
In the BankAmerica situation, big winners are also Foundation and Health Net, said Alfred Lowey-Ball, a Sacramento-based HMO consultant.
The HMOs that appear to be the losers in the consolidations are those that are in financial difficulty or have an unstable future, analysts said.
Some financially troubled HMOs were dropped by BankAmerica, but it retained Maxicare, whose future is cloudy despite its apparent return to financial health after Chapter 11 bankruptcy reorganization. Industry sources said the retention of Maxicare was the big surprise in the selection process. The number of enrollees may have been a factor in Maxicare’s survival as well as the elimination of some financially strong and stable HMOs, they said. Also, unlike Pacific Telesis and Wells Fargo, which also have eliminated many HMOs, BankAmerica did not retain any plan associated with a major insurance carrier, such as Cigna Health Plans.
Some other factors may have also been at work in BankAmerica’s selection, some industry sources said. “Health Net right now appears to be offering some very favorable rates,” said one industry source.
Boland said BankAmerica conducted a “fairly simplified analysis.” The company eliminated the obviously troubled HMOs and appears to have chosen the rest based on enrollment. “It does not appear that they looked closely at performance . . . This kind of analysis doesn’t force the HMOs to make their case based on cost and performance,” he said.
