Going the Distance for Health Savings

Having some nonurgent medical procedures done overseas could become an option in health plans.

By Betty Liddick Mar 1, 2007
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HR Magazine, March 2007 Carl Garrett had packed his new suitcase and was ready to go to the hospital. But the night before he was to leave—to fly to India for two surgical procedures—his trip was canceled.

Garrett, a machine shop technician at Blue Ridge Paper Products in Canton, N.C., was prepared last year to take part in the small but growing health care trend called “medical tourism”—traveling abroad to take advantage of health care prices far below those of U.S. health providers.

Blue Ridge Paper was set to pick up the tab, but Garrett’s union objected to the trip, indicating it was too drastic a means of reducing an employer’s health costs.

The costs of Garrett’s planned trip to New Delhi, including travel and other expenses in addition to the health care, were estimated to be no more than half of what the procedures—gallbladder and shoulder surgeries—would cost in the United States. And the company even planned to award Garrett a percentage of its savings as an incentive to make the trip.

But the United Steelworkers union complained that sending an employee halfway around the world just to cut employers’ costs for surgeries that are commonly performed in the United States was too risky. After the union objected, the company scrubbed the plan for the trip. Blue Ridge Paper said it was supporting Garrett’s trip to make a statement about the high costs of U.S. health care. And the statement was loud: Garrett gave more than a dozen interviews to news media around the country, and a TV network news crew stood ready to chronicle his trip.

The planned trip enjoyed broad support, Garrett says. “My family was all for me. Some of the guys I work with were excited—they have to have surgeries and were anxious to find out how mine was going to turn out.” When the trip fell through, he was “devastated,” he says.

Although Garrett’s trip collapsed, it succeeded in drawing national attention to medical tourism, which some employers and insurers have been considering as a voluntary option (for nonurgent medical procedures) in employer-sponsored health plans.

But when such considerations are undertaken, health coverage experts say, HR professionals and benefits specialists should take into account a number of issues, including various medical, legal and financial questions.

The Big Issue: Quality

The key question that medical tourism raises for employers, insurers and employees is whether the quality of care in participating overseas hospitals is equal to that of care available in the United States.

No one knows the answer to that,” says physician Arnold Milstein, who is a national health care thought leader for Mercer Health & Benefits and is considered a pioneer in employer efforts to improve the quality of employees’ health care. “Frankly, we’re not in a position to meaningfully evaluate and compare American hospitals, let alone offshore ones.”

Evaluating domestic vs. overseas quality of care is challenging even for an enormous insurer such as Aetna, which has significant experience in overseas health care. Aetna has contracts with hospitals around the world for coverage of 200,000 U.S. expatriates. Those overseas hospitals where expats receive care are high-quality, says Martha Temple, head of global benefits at corporate headquarters in Hartford, Conn.

But the question that Aetna wants to answer is how the overseas hospitals where medical travelers would receive care—hospitals that do not have contracts with Aetna—stack up against U.S. facilities. “We are looking to figure out how to compare the quality of what someone would get in the United States at our high-quality facilities in our network, compared to what they would get outside the United States,” Temple says. “We’re concerned that they have the same quality of care.”

Answering the Question

One way that overseas hospitals themselves are attempting to answer the quality-of-care question is by seeking certification from the Joint Commission International (JCI), an affiliate of the Joint Commission on Accreditation of Healthcare Organizations, which accredits U.S. hospitals and health care programs.

Foreign hospitals that earn JCI accreditation apply high standards for patient care and safety, says Karen Timmons, CEO of Joint Commission Resources Inc., another affiliate, which, among other responsibilities, oversees international accreditation from its headquarters in Oakbrook Terrace, Ill. “Accreditation provides a visible commitment by an organization to … ensure a safe environment and continually work to reduce risks to patients and staff,” she says.

JCI accreditation is valid for three years, she adds.

Accreditation is also a key factor relating to the growth of medical travel, says Paul B. Ginsburg, president of the Center for Studying Health System Change, a nonpartisan health policy research organization in Washington, D.C. “People have to have confidence that those are really good facilities abroad.”

In fact, to ensure quality of care, employers should contract only with hospitals accredited by established groups such as the JCI or the International Organization for Standardization, says Marcia S. Wagner, president of the Wagner Law Group in Boston, whose specialties include benefits and employment law.

Another fact that may inspire employer confidence in overseas facilities is that many doctors and other health professionals in other countries have been trained in the United States, have worked in U.S. health facilities and have obtained U.S. board certifications. And many doctors overseas use state-of-the-art technology. 

In addition, some overseas hospitals are affiliated with top U.S. medical facilities. For example, the Wockhardt Hospitals chain in India has ties with Harvard, and the Adventist Hospital in Penang, Malaysia, is part of a network that includes Loma Linda University and Medical Center in California.

Handling the Health Care Handoff

Even if an overseas facility is equal in quality to a U.S. counterpart, medical tourism does raise the issue that care may be affected when patients shift from domestic to overseas doctors—and back again—and when doctors treating the same patient are separated by oceans.

While the American College of Surgeons doesn’t have an official stand on medical travel, its Statements of Principles says the operating surgeon has a responsibility to establish communication to maintain proper continuity of care. “This certainly can become challenging when patients travel great distances for elective surgery,” says Cory Suzan Petty in the organization’s public information office in Chicago.

Medical travel companies say they support coordination of care with clients’ primary physicians. A plan offered by PlanetHospital, a medical travel provider based in Calabasas, Calif., enables U.S. doctors to accompany their patients who go overseas for medical care.

While follow-up care can be a concern when surgery is performed far from home, it may be less of an issue than it might seem initially, says Patrick Marsek, a founder of MedRetreat, a medical travel company in Vernon Hills, Ill. Because patients often can have longer hospital stays abroad than in the United States, he says, “By the time they come back, they pretty much have recuperated and are out of harm’s way.”

Lawyerly Perspectives

Besides the quality of care, there are liability issues that employers should take into account when weighing the pros and cons of medical tourism. Of course, “anybody can sue anybody about anything,” Marsek says. If litigation is a concern, he advises, “Don’t even consider it.”

Wagner says clients have approached her in an exploratory fashion about outsourcing medical care. She tells them the No. 1 risk, as in any emerging industry, is that many questions will be decided in court.

“A covered individual could sue the group health plan, arguing that it encouraged the individual to seek medical care in a risky environment and possibly even offered a financial incentive to do so,” Wagner says. Employers offering incentives should have participants sign a release stating they’re responsible for their own due diligence, she says, adding a caveat: “This release may or may not be valid in a court of law, depending on the facts and circumstances of a particular case.”

Another potential problem is that other countries are not bound by HIPAA—the Health Insurance Portability and Accountability Act, which, among other things, is designed to safeguard the privacy of individuals’ medical records. “Contracts with hospitals and health care providers in foreign countries should contain language that complies with HIPAA’s privacy and security rules,” Wagner says.

Tax and Financial Matters

In claiming federal tax deductions for expenses they pay when employees go to other countries for health care, employers must be careful. They cannot include expenses for meals that are not part of inpatient care, says Theresa D. Branscome, a public affairs specialist for the Internal Revenue Service in Washington, D.C. They may include lodging expenses up to $50 per night if the visit meets the following criteria:

  • It is essential to medical care.
  • It’s in a facility that is related to or is the equivalent of a licensed hospital.
  • It is not “lavish or extravagant under the circumstances and has no significant element of personal pleasure, recreation or vacation in the travel away from home.”

Prescribed drugs can be deducted if they’re legal in both the other country and the United States. Also deductible are the transportation costs for a “nurse or other person to give injections, medications or other treatment required by a patient who is … unable to travel alone,” Branscome says. 

(On the question of who foots the bill for a friend or companion to make the trip with a medical traveler, Wagner says: “It is up to the terms of the employer’s plan if it will pay for a friend. It is doubtful this is deductible.”)

In addition, employees can use their health savings accounts—HSAs—for their costs for treatment, Branscome says. “Our staff hasn’t seen anything saying that where they received the treatment should be a factor” in whether or not an HSA could be used.

Final Analysis

Certainly the potential cost savings of medical tourism can be attractive to employers, but before settling on this option, a final cost-benefit comparison is in order. Such an analysis should consider nonmonetary drawbacks as well as financial costs. (See “Potential Drawbacks, ” at right.)

Employment lawyer Wagner suggests that in weighing costs and savings, employers should determine if an employee’s extra time away from the job for medical travel—and the costs associated with that lost productivity—would outweigh the medical cost savings derived from the trip.

Jonathan P. Weiner, professor of health policy and management at the Johns Hopkins Bloomberg School of Public Health in Baltimore, suggests that HR professionals avoid looking solely at dollars and cents when considering medical tourism; they should ask for documentation such as JCI or other accreditations pertaining to the level of health care quality abroad, he says. “Understand the quality implications.”

Although Weiner doesn’t see medical travel as a huge trend or a panacea for the U.S. health care system, he says employers should not ignore it. “Don’t have your head in the sand,” he advises. “It’s here to stay.”

Betty Liddick is a freelance writer and editor in Bradenton, Fla.

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