SIMPLIFYING THE PLAN, ENHANCING THE EXPATRIATE EXPERIENCE

Health Issues

Culture, Infrastructure and International

Health Benefits Delivery by Allen Koski, CEBS

When selecting a health insurance carrier for international employees, it is advantageous to recognize that valid assumptions made when selecting domestic benefits simply do not apply in the international realm and can lead to costly errors. This article examines some scenarios and cultural anomalies that invalidate commonly accepted domestic health insurance practices. It explores strategies for simplifying benefit design, providing access to quality care abroad, assessing costs, minimizing overseas risks and understanding the cultural impact on health care delivery.

SIMPLIFYING THE PLAN, ENHANCING THE EXPATRIATE EXPERIENCE

C opayments and deductibles are widely accepted domestically, but they can be problematic when exported overseas. International health professionals aren’t accustomed to accepting a com- bination of cash from patients and pay- ment guarantees from insurance com- panies. They may view the requisite international phone calls and currency exchange as unnecessarily burdensome,

and may be reluctant to treat individuals if the insur- ance plan requires member out-of-pocket administra- tion. Employees may face the difficult decision of paying for services upfront or seeking treatment with another health professional. On a recent visit to four countries in the Persian Gulf, the author heard multi- ple firsthand anecdotes from very vocal employees lobbying against plan designs with copayments and deductibles. Employers have the opportunity to over- come some barriers to medical care delivery by se- lecting a plan without point-of-service member cost sharing.

The table compares a typical domestic-type plan against a model that provides greater consideration to the needs of expatriate employees and interna- tional health care practitioners. The recommended in- ternational model eliminates deductibles to simplify the expatriate experience, but does not provide expa- triates with a free ride. In exchange for eliminating the deductible, the out-of-pocket maximum increases by the same amount as the deductible, $200/$400 in this example. Although the table provides a basic model that demonstrates deductible and out-of- pocket manipulations only, the same tactic can be ap- plied to other elements of member cost sharing, such as copayment and coinsurance. The objective is to en- hance the expatriate’s health care delivery experience by shifting member cost sharing away from the point of service to administrative transactions that are transparent to the provider.

Language, currency and culture complicate the administration of health benefits for international employees, resulting in issues and challenges that domestic employees do not face. Benefits managers can alleviate the complexity by selecting an insur- ance company with the experience, resources and global presence necessary to negotiate the intricate

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cultural norms that can inhibit appropriate delivery of care.

“Dealing with additional layers of complexity and stress are normal conditions for expatriates living and working in a foreign culture. The last thing they need is the added burden of sorting out ambiguous insur- ance benefits and tricky administrative protocols while undergoing medical treatment in a foreign en- vironment,” suggests Noel Kreicker, president, IOR Global Services.

DOES NETWORK SIZE MATTER?

Health practitioner network size is one common benchmark for selecting a domestic benefits carrier. Benefits managers can safely assume that domestic plan network professionals meet minimum licensing and credentialing standards as plans strive to com- ply with regulation, quality accreditation and indus- try standards. The same minimum quality standards do not necessarily apply in other parts of the world. A large list of unscreened practitioners is not nearly as valuable as a network that has been subjected to rigorous physician-reviewed quality standards.

Elizabeth Hermann, IOR Global Services’ direc- tor of training, notes the importance of health prac- titioner quality, particularly in an emergency: “Some of the foremost expatriate concerns are around health care and coping with medical emergencies. Many employees curtail their overseas assignments because they and their families are adversely affected by health care professionals that are sub- standard.”

It is also important to consider the geographic dis- tribution of the practitioner network. If the network has high concentrations of practitioners in large in- ternational cities but few choices in smaller cities and remote areas, the network may not meet the needs of the employer’s expatriate population. Travel time and expense for health care appointments in major metropolitan areas can be hidden factors that esca- late the true cost and negatively impact employee satisfaction.

THE COST OF OVERSEAS CARE

Benefit managers who have witnessed a continu- ing trend of double-digit annual rate increases may assume that the cost of health care is more expensive in the United States compared to overseas locations. While this may be true in some cases, it is inaccurate to make that assumption across the board. In Japan, for example, immunizations are much more expen- sive due to the lack of local manufacturing. Most vac- cines must be imported, thus raising the delivery cost.

Highly compensated expatriates in a medical need scenario are not necessarily the most cost-conscious consumers. In an unfamiliar environment facing a real or perceived urgency, they will likely seek care through health professionals and facilities that allevi- ate their concerns and approach the standard of care they are accustomed to receiving in their home coun- try. They will often seek care from prominent, presti- gious health professionals and facilities, with com- mensurate fees.

The cost of care may also be impacted by the availability of local specialists. In remote locations, specialty or even primary care may not be readily available. Transportation and evacuation costs must be considered when evaluating the overall cost of care.

Expatriate members may also experience increased administration costs due to local infrastructure limita- tions. In Qatar, there is no international telephone ser- vice provider, such as AT&T, to facilitate overseas call- ing. Further, toll-free telephone calls to U.S. numbers are not accessible from many overseas locations. Calls to the United States to resolve claims issues, for exam- ple, may exceed $3 per minute. A low-cost alternative, if accepted by the insurance carrier, is to send scanned claims as an e-mail attachment.

The cost of international health care is indeed high, but the expense can be alleviated by selecting a specialized international benefits carrier. Their ex- pertise can achieve efficiencies and savings that

! TABLE

DOMESTIC VS. INTERNATIONAL BENEFITS DESIGN MODEL

Typical Recommended Domestic Model International Model

Deductible $200/$400 N/A

Out-of-Pocket Maximum $1,000/$2,000 $1,200/$2,400

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nearly always result in lower overall premium cost than carriers that offer benefits based on the U.S. do- mestic model.

BEST PRACTICES: INTERNATIONAL CLAIM EXPERIENCE REPORTING AND ANALYSIS METHODOLOGY

When examining expatriate claim experience, em- ployers should avoid generating reports based on the current population of the group’s domestic plan, as it may result in faulty analysis. For example, consider a scenario in which an employee leaves international as- signment due to health issues in March, incurring $20,000 in claims. If a claims experience report is gener- ated in July using the current domestic population data, the claim data would be artificially low by $20,000. Even if this expatriate were included in the population, the home office staff may not recognize that the host country operations may enroll the expatriates into the local group medical plan or pay for an individual med- ical policy due to assignment necessity, legal issues or service issues. In such a case, the claims paid by an alter- nate plan would not be captured in the reporting that considers only the group’s primary coverage.

Reporting may not capture claims data for carved out programs’ prescription drug and employee assis- tance plan (EAP), as well as amounts above the stop- loss threshold, claims covered by the previous medical carrier and claims put on corporate expense accounts.

Maurice “Beau” Gable, a broker with International Insurance & Investments observes, “The hidden expenses of international health care are typically greater than what the home office has anticipated. When comparing an international medical plan to the current U.S. domestic plan, benefits managers should consider the nonbudgeted items that impact the total cost such as reimbursement charges, staff time for claims assistance, expatriate time resolving administrative issues, increased costs resulting from treatment delays, and expensed items. If the finance department determined the true total of how much they spend per year for the international claims and interest, they would change plans overnight. The cost can be further inflated if expatriates use credit cards to pay for health services, because many credit card companies now charge 1% for foreign purchases. In- ternational health care expenses are like an iceberg. The hidden expenses of corporate staff time, local staff time, expatriate time, medical claims cost shifting, postponed treatments, taxes and fines, health related returns, reimbursements and local coverage costs might actually be larger than the cost of the budgeted premium equivalent.”

NAVIGATING INTERNATIONAL RISKS

Self-insurance is an option that many large employ- ers entertain as a cost-saving strategy. By adopting the risk, self-insurers potentially can save thousands of dollars. In the international arena, self-insurance isn’t as attractive an option. In the United States, it is rela- tively easy to void, trace, reissue and reconcile lost checks. Tracing lost checks internationally is fre- quently not feasible. This puts the international self-in- surer at risk of not only paying the claim, but also co- ordinating with international banks and postal systems in a reconciliation effort that is often much larger than anticipated.

International employers and expatriate employees are typically subject to the numerous rules and regu- lations of the host country. Covering international as- signees on an insurance plan that is designed for U.S. domestic employees is likely to be an inadequate strategy from a benefits delivery and legal compli- ance perspective. Some insurers have established re- lationships with local insurers in countries that may have restrictions or prohibitions on foreign insurance carriers, which enables them to comply with host country laws and obtain network discounts while pro- viding members with comprehensive, worldwide cov- erage and extensive access to local health care provider networks. Direct provider payment agree- ments may be in place, reducing the likelihood that members will have to pay out of pocket and submit a claim for reimbursement.

Prescription medications require special handling and attention. Importing a long-term supply may compromise efficacy. Mail ordering may result in customs challenges and some FDA-approved prescription drugs are illegal in certain countries.

! THE AUTHOR

Allen Koski, CEBS, is CIGNA International’s director of international sales for the mid- Atlantic region. He has been actively involved in developing and supporting international health care, dental, disability and travel medical plans that multinational employers provide to inter- national assignees, traveling executives and key local nationals employees. Mr. Koski earned a bachelor of arts degree from Drew University and has attained his Certified Employee Benefit Specialist (CEBS) designation. He is a fellow of the International Society of Certified Employee Benefit Specialists.

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It is important to select a benefits carrier experi- enced in assisting members with overseas pharmacy fulfillment.

CULTURAL CONSIDERATIONS

Culture plays a role in health care delivery and payment. For example, a U.S. domestic plan typically would not cover acupuncture, but coverage for these services would be expected in China. Similarly, a claim from a doula, or nonmedical midwife, would likely be rejected on a U.S. domestic claims model, but payment would be appropriate if care was deliv- ered in Singapore, where doulas are common. Even obtaining routine care is more difficult and complex while on assignment abroad.

“In a foreign country, a simple bout of influenza seems more serious than it does in the home country. Expatriates greatly value the assurance that they will be supported in matters of life and death by a caring and responsible health insurance company that will en- able them to consult quality health care suppliers with minimum hassle,” Ms. Hermann observed.

When selecting an international health benefits carrier, it is important to choose a carrier that has

built its infrastructure specifically to handle issues re- lated to international health delivery and recognizes the importance of cultural issues in facilitating and fi- nancing health care delivery.

Greg Kirkwood, vice president, business develop- ment with RELO Direct, Inc., notes, “Applying do- mestic health care plans to international assignments just doesn’t work for today’s global work teams, ex- patriates and their families, and third-country nation- als. Employers want to attract and retain their top candidates to accept foreign assignments and must now provide comprehensive health and welfare ben- efits, including evacuation services if necessary, to get acceptance.”

An understanding of the health system in the host country is necessary to effectively manage delivery of care. In the United States, it is safe to assume that publicly funded institutions are less expensive than those in the private sector. In Switzerland and several other locations, expatriates can expect to pay more at a public hospital than a private hospital. Health sys- tems vary widely throughout the world. It is impor- tant that the member have the resources and guid- ance of an insurer with an international presence so that he or she can receive the most appropriate care locally available.

CONCLUSION: SELECT AN INTERNATIONAL PLAN DESIGNED FOR EXPATRIATES

Seasoned expatriates are increasingly sophisti- cated and have elevated expectations regarding health benefits while on assignment. Mr. Kirkwood observes, “Top foreign assignment candidates are aware of and are demanding true international health and welfare benefits before accepting assignments abroad. Expatriates talk in a global community so employers must constantly stay competitive by offer- ing true international benefits.”

Noel Kreicker, president of IOR Global Services adds, “Industry norms are closely monitored by overseas populations. If a company provides a sub- standard benefits package, the result is a negative image overseas accompanied by a barrage of com- plaints to HR.” !

. . . a claim from a doula, or nonmedical midwife, would likely be rejected on a U.S. domestic claims model, but payment would be appropriate if care was delivered in Singapore, where doulas are common. !