Indiana manages, thank you.

• Author: Dunlap, Phil
• Position: Indiana's health management and preferred provider organizations

Profiles of the major HMOs and PPOs serving Indiana

With health care a major (and often hot) topic of discussion among politicians and citizens alike, it is important to note that companies in Indiana have been seeking to get a handle on it for years.

Driven by the need to restrain spiraling costs, these Hoosier firms and thousands more across the country are following a free-market trend toward health-care provider networks. In fact, more than half of all insured U.S. employees are now in some kind of managed-care plan. And the trend is upward.

Managed-care systems such as HMOs--short for health-maintenance organization--offer medical services to their membership for a predetermined flat fee (usually annual) per patient, an incentive to deliver the most cost-efficient care possible. If patient services exceed fee revenue, the HMO incurs the loss (likewise, it enjoys the gain if the cost of services is less than anticipated). Thus the incentive to maintain an equitable balance is always present.

Preferred-provider organizations--PPOs for short--negotiate discounted rates for services from the providers of those services, such as doctors, clinics, hospitals, pharmacies and the like. The PPOs in return agree to direct their membership to these preferred providers, and costs become more predictable for both patients and such payers as insurance companies.

Since PPOs incur no underwriting risk, conventional wisdom would suggest they might be somewhat less efficient than HMOs in controlling health-care costs. A 1993 study by the employee-benefit firm Foster Higgins confirms that HMOs do indeed save slightly more per patient on a yearly basis, though the average savings is less than $50. It is interesting to note that with acquisitions and mergers becoming commonplace, many HMOs are now coupled with PPOs.

Point-of-service or POS providers allow a patient to choose "in-network" providers or, for a lower level of benefits, to go "out of network." Several Indiana HMOs are in concert with a POS.

Indiana is served by many managed-care organizations. There are 40 health-maintenance organizations licensed to serve the state's population, and 48 preferred-provider organizations are registered (HMOs must be licensed by the Indiana Department of Insurance, while PPOs need only be registered). The listing that follows includes major players among HMOs and PPOs who provide medical and other services to a significant number of Hoosiers.

HMOs

Anthem Health...