Pet Insurance vs. Human Insurance (Managed Care)

Doug Kenney, DVM
Written by:
Published: July 21, 2011
Pet Insurance vs. Human Insurance (Managed Care)

Last week, I wrote that a pet health insurance policy is a contract between the pet owner and the insurance company. Veterinarians and veterinary organizations want it to remain that way because they have seen the human health professions drift toward "managed care" and they want no part of that healthcare model.

In the managed care model, the contract is between the insurance company and/or PPO network and the providers (doctors, dentists, pharmacies, or hospitals). Since most of us purchase our own health insurance through our employers, and in many cases the employer pays the bulk of our premium, we generally don’t fully appreciate the true cost of our own healthcare.

If you were to ask doctors, dentists or pharmacists how they feel about the "managed care" model, most will tell you they don’t like it. In fact, a few will tell you that they have been frustrated enough with managed care to consider giving up their medical careers or to refuse to take patients with insurance or Medicare, etc. If you have medical insurance for yourself or your family, then you may not know what managed care is, but you are familiar with terms like HMO, PPO, Medicaid, Medicare, in-network, out-of-network, etc. Perhaps you have also experienced frustrations with the current human health insurance industry.

Here are some of the characteristics of managed care: 

  • Health care providers (doctors, dentists, pharmacies, hospitals, etc.) join a network that negotiates discounted fees at which the providers will be reimbursed in exchange for patients who are part of the network.
  • Limits the patient’s choice of doctors, dentists, hospitals and pharmacies to those who are in the network. If they decide to go to a provider "out-of-network," they are penalized by having to pay a higher portion of the bill. Doctors in a managed care environment aren’t inclined to have a strong doctor-patient relationship because their patients are chosen for them by the network.
  • The providers may have to deal with several layers of bureaucracy in order to receive payment. It can take weeks to months to receive reimbursements from the insurance company. Most providers have separate departments just to handle insurance claims and billing. This increases the costs of providing medical care.
  • Sometimes the decisions about appropriate diagnostic tests and treatment are taken away from the doctor actually seeing the patient and made by an employee of the network in another city. This can be detrimental to the quality of healthcare.

I recently ate dinner with an elderly couple. The husband has several major medical problems. He is diabetic and has an insulin pump for which he has to order supplies to keep it working. He said that Medicare is refusing to pay for any more supplies, saying that he no longer needs it. They made this decision despite his doctor and two endocrinologists saying that he does. His comment to me was, "I think they just want me to go ahead and die so they won’t have to pay any more medical costs for me."

What are some considerations when thinking about the current state of pet health insurance vs. managed care? It is likely that:

Clients want:

  • To choose their own veterinarian
  • Insurance that is easy to understand and provides high reimbursements
  • Fast claim payment with no hassle
  • The option to have routine wellness procedures covered
  • Few exclusions/limitations

Veterinarians want:

  • The ability for the client and treating doctor to determine the level of care — no third party dictating the quality of care (overruling the treatment decisions of the treating doctor by disallowing or limiting benefits)
  • Little or no paperwork in filing claims
  • No contractual schedule of fees or benefits dictating or implying what to charge. Individual practices must have the freedom to set fees that suit the style and level of care that they provide their clients and patients
  • Clients who are able to choose where to take their pet for care including specialists

Pet health insurance differs from human health insurance today in that there aren’t well-established networks (HMOs or PPOs). This is considered an advantage for pet owners since they aren’t required to go to a particular doctor or hospital in a “network.” They can go to any veterinarian, emergency center or specialist and their insurance company will reimburse them for part of the costs.

It seems that every other healthcare field has eventually gravitated away from a fee-for-service insurance toward managed care. Fortunately, pet health insurance is still fee-for-service insurance, and premiums are well within the reach of almost all pet owners. If pet owners (who seek healthcare for their pets) and veterinarians (who provide the healthcare for pets) want to keep the freedoms and choices they now enjoy with pet health insurance as it is, then both must diligently resist any drift toward managed care. This is best done when neither of them joins a network that would limit the pet owner’s choice of veterinarian or that would dictate what level of care the veterinarian could provide and the reimbursements he or she would receive for doing so.

Dr. Doug Kenny

Image: Anne Worner / Flickr

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