Does Your Hmo Stack Up?

AT FIRST WE COULD IGNORE THEM. THEN we noticed a neighbor joining one. Finally, a fat, forbidding package from the benefits department landed on our desk. Now we know the truth: HMOs rule. The revolution that has already shunted 53.3 million people from Marcus Welby style medicine into the Wal-Mart model of health care will convert an additional 50 million by the turn of the century. If you haven't already been asked to leave your cushy indemnity plan, you will be--soon.

Good luck. Chances are you won't be ready. Why? Because the hundreds of HMOs swashbuckling across the country are indistinguishable from one another--yet you're going to have to choose one. Of course, they're not really identical. But even a savvy shopper would have trouble knowing a good HMO from a bad one. There's no central source of information on HMOs and no authoritative rankings. The industry can't even agree on a definition of quality. "People have almost no ability to compare health plans," says David Lawrence, Kaiser Permanente's CEO.

Why the information vacuum? Though the industry is old, most of the country's 593 HMOs are still in their infancy. Measuring planwide quality is still more an art than a science, too. Despite those challenges, NEWSWEEK thought it would be worth investigating HMO quality and singling out the exceptional plans. The result: ratings of more than 40 of the country's largest HMOs.

The first step was to consult David Lansky, president of the Foundation for Accountability, an influential nonprofit group in Portland, Ore., that helps consumers and corporations make health-care decisions. Together we designed a survey to gather information directly from the HMOs. Of the 75 plans surveyed, 43, covering 24 million members, responded. While that's a good response, it shows how uncomfortable comparison shopping makes HMOs. It also reflects HMOs' low opinion of today's rating tools. That's why United HealthCare, which operates more than 40 plans, with 14 million enrollees, wouldn't participate. "Everyone in the industry is finding problems with these quality measures. They're not appropriate for comparing plans," says Lee Newcomer, United's chief medical officer. Humana answered only part of the survey because it, too, believes that the measures can be misunderstood.

While evaluating HMOs is still an inexact exercise, these ratings provide a good start. At the very least, they allow consumers to differentiate between an HMO that's great at answering the phone from one that's doing a great job of detecting breast cancer. Even if you don't find your HMO on the list, you--or your employer--can use these criteria to evaluate your plan.

Why don't consumers already know this stuff? Because HMOs sort of snuck up on us. They were invented in the 1930s to give doctors an incentive to keep their members healthy. But we don't know much about judging them because HMOs didn't take off until the 1980s, when employers began relying on them to slash costs. Now HMOs and their cousins, preferred provider organizations (PPOs) and point-of-service plans (POS)-are scrambling to dominate markets so that they can wring more costs out of doctors and hospitals. "What's scary is that there's no system in place to detect harm to people while the shakeout is occurring," says Lansky.