Picking Right HMO Can Be a Tough Challenge : Health plans: Lack of information on care providers makes it hard for employers and employees to decide.

Through her employer here, Debbie Davis has chosen a health maintenance organization to provide her family’s medical needs.

She doesn’t mind that the HMO restricts what doctors and hospitals they can use. More important is that by joining an HMO, Davis no longer has to deal with the hefty deductibles and reimbursement forms common to traditional medical insurance.

Also, the far smaller co-payment required by HMOs softens the financial pinch when Davis frequently takes her teen-age daughters to the doctor for the flu, sore throat or a sports injury, she said.

“I don’t even have to bat an eye when I know I am just paying $5 for each visit,” said Davis, a marketing coordinator at Bank of America’s district office in Newport Beach.

Davis isn’t alone in her preference for HMOs. In the last decade, HMOs, which provide their own network of health-care providers or contract with independent physician groups and hospitals at a discounted monthly fee, have made great strides in Southern California. They now claim 32% of the population as members.

But deciding to enroll with an HMO is just a first step for many employees, who often must choose among several plans offered by their employers.

“It’s a big challenge,” Davis said. “It ranks right up there with doing taxes.”

The choice frequently has little to do with quality of care--information that is difficult to come by. As a result, employees often make the decision solely on cost, convenience or co-worker recommendations.

Many expect their employer to provide them the information they need to make an informed decision. But many employers are as helpless as their employees when it comes to evaluating medical plans, health benefits officials said.

“I believe there is a certain sense on the part of the consumers to trust that the company (their employer) is going to select good HMOs,” said Patricia Miller, who administers group employee benefits for McDonnell Douglas West, based in Long Beach.

Increasingly, companies--which in Southern California might look at 30 plans or more--are demanding data from HMOs that can be used to evaluate them.

Medical benefits consultants say larger employers, those with 1,000 or more employees, increasingly are hiring them to undertake comparative studies of HMOs in an attempt to make more responsible choices. These studies are costly--up to $100,000 depending on the extent of the investigation and the number of HMOs compared, said Robin Weiner, an analyst at A. Foster Higgins, a medical benefits consulting firm in Los Angeles.

She said HMOs are under particularly intense scrutiny right now because some of the state’s larger employers are trying to cut costs by reducing the number of health plans that they offer.

Choosing an HMO for employees is even more daunting for small businesses, whose time and resources are often in short supply. Many small businesses rely on the expertise of health-care benefit plan brokers.

“It is critical to find a broker who will not just try to sell you one plan, and one who will talk to you about your needs instead of just price,” said David Duker, spokesman for Word & Brown Insurance Administrators Inc., a general insurance marketing agent in Orange.

Just how employers--small or large--should evaluate HMOs is a matter of dispute. Foster Higgins last year did a comparative study of 19 HMOs for the California Employees Retirement System (CalPERS). The consultant recommended that CalPERS drop the seven HMOs that were rated worst.

But the report, which was made public, prompted howls of protest from the lowest-rated HMOs. Those organizations complained that the study relied on incomplete data. Under pressure, CalPERS decided not to drop any of the HMOs but to extend the study.

Companies place different emphasis on the criteria they use to select HMOs. But high on everyone’s list is the plan’s financial stability, especially since several California plans went bankrupt a few years ago.

“You don’t want somebody to go out or go into bankruptcy in mid-year. It makes for bad employee relations,” said Norm Snell, vice president and director of compensation and benefits for Bank of America.

Another obvious concern for employers is premium cost. “Price is always going to be one of the considerations,” Weiner said. “But for some employers it is sometimes the only consideration.”

More sophisticated employers are demanding that HMOs provide information about their rate of hospital admissions and average length of hospitals stays.

Also, each employer looks for an HMO with a network of hospitals and doctors in geographic proximity to its work force.

Most significantly, health benefits consultants say that more companies are beginning to ask questions that relate to the quality of medical care.

Dr. Tom Mayer, a principal with the William M. Mercer medical benefits consulting firm in Los Angeles, said allegations that HMOs may jeopardize the quality of medical care by their efforts to control costs has spurred concern.

“There is concern that quality is compromised (at HMOs),” he said. “So people want to measure it.”

Mayer said some companies examine the credentials of physician groups and hospitals within an HMO network or investigate the quality assurance procedures that an organization has established.

But benefit consulting firms and employers generally acknowledged that so far no reliable technique has been established for comparing the medical quality of various health plans.

A program to devise measurements for comparing the medical quality of various HMOs was launched two years ago by the Rand Corp. in Santa Monica and the UCLA College of Medicine.

Dr. Robert H. Brook, vice chairman of medicine at UCLA and director of the health sciences program at the Rand Corp., said the program is working with a dozen HMOs around the country to develop a set of tools to compare the organizations.

“There is data to show that the average care given in the average HMO is equal to the average care given by fee-for-service doctors,” Brook said. “But also we know there are big differences within both systems.”