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Great-West Enters Defined Contribution Market

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NU Online News Service, Oct. 15, 2003, 7:23 p.m. EDT – Great-West Healthcare, Denver, is introducing the Consumer Advantage plan, a program that seeks to combine health reimbursement arrangements with the best features of managed care plans.

Instead of simply setting up HRAs and providing catastrophic indemnity health insurance for strokes and liver transplants, Great-West will supply health insurance that pays 100% of the cost of preventive care and office visits.

The insurance will pay 70% to 90% of the cost of emergency care and catastrophic care, but it will pay only 50% to 70% of the cost of many types of routine, scheduled services.

Members who use doctors and hospitals in the Great-West provider network will get in-network discounts and receive higher levels of reimbursement than members who go out of network will receive.

Great-West, a unit of the Power Company of America, Montreal, hopes the structure of the insurance plan will encourage plan members to seek preventive care and shop carefully for other types of discretionary care without punishing members who are facing genuine crises, according to Cindy Donohoe, the company’s vice president of marketing.

“If you’re on the way to the emergency room, you can’t be expected to stop and shop,” Donohoe says. “There’s too much going on.”

Great-West is aiming the program at employers with more than 50 employees.

Other large insurers also have been trying to compete with the defined contribution upstarts in recent months by introducing programs that combine employer-funded HRAs and other types of personal health accounts with insurance plans that resemble traditional preferred provider organization plans.

Great-West is trying to set itself apart by designing its HRA so that plan members always have to spend their own cash to draw on HRA funds.

Because that design eliminates the financial incentive that healthy employees might otherwise have to waste HRA funds, it can lower HRA costs 5% to 15%, Donohoe says.