Eddie Toohey knew it was time to make a change in his company's indemnity health plan. The 18 employees at his Brown Hearing Aid Centers, based in Orange, Tex., had complained repeatedly about the high co-payments and limited coverage. While Toohey wanted to switch over to a managed-care plan and was even willing to pay a little more for a good one, he didn't know how to choose. What he needed was a set of benchmarks to help judge a plan's quality.

To get started, Toohey obtained several pamphlets from the Employer Quality Partnership (EQP), a Washington (D.C.) business consortium spearheaded by the Business Roundtable to address the health-care needs of smaller employers. These guides, which are also available on the Web at www.eqp.org, helped him ask the right questions when comparing health plans. Now, Toohey says, "I am requesting turnover rates. If members are dropping out, that's not a good sign."

EASY ACCESS. Almost 60% of large companies with more than 10,000 employees routinely use quality indicators to choose their health plans, according to a 1998 survey by the Washington Business Group on Health and Watson Wyatt Worldwide, a benefits-consulting firm in Bethesda, Md. But small employers haven't always had easy access to such data or even known of its existence. Recent efforts by such groups as the EQP consortium are helping to disseminate the information.

Quality is gauged by a number of factors, such as access to care, which includes the ability to see specialists or use an emergency room while out of town. It's also measured by the coverage of specific clinical treatments and by consumer satisfaction. "Good quality doesn't necessarily cost more," says EQP Executive Director Peter Segall.

How can you judge a particular plan? One of the best sources is the National Committee for Quality Assurance (NCQA), a nonprofit Washington think tank that publishes the industry bible, Quality Compass, available on a $2,500 CD-ROM. The think tank's data, which are purchased for the most part by large corporations and insurance brokers, compare plans by rating member satisfaction and treatments for specific illnesses. However, you can get a free synopsis of this information, "The State of Managed Care Quality." Available at the NCQA Web site (www.ncqa.org), this report reviews 300 managed-care plans.

SEAL OF APPROVAL. For example, check out the clinical measures of quality, such as the rate of mammography screening. The Web site gives a national average for all the plans in its database. Then you can ask your insurance broker or a plan administrator for a specific plan's screening rate and do your own comparison (table).

At the Web site, you also can click on a summary of the NCQA's accreditation report. This rates each health plan on its degree of compliance with six quality measures, including access to care and responsiveness to members' complaints. "NCQA accreditation is like the Good Housekeeping seal of approval," says Carl Dickerson, secretary treasurer of the California Association of Health Underwriters Foundation.

A handful of states' health departments are doing their part to help small businesses, too, by translating the NCQA data into managed-care report cards. Sherrin Altiere, who handles employee benefits at Gordon's Corner Water Co. in Marlboro, N.J., finds her state's report card useful. "I can now tell exactly how our Prudential HMO stacks up against 11 other HMOs," says Altiere. Maryland, Texas, Utah, and New Mexico are also issuing the reports, with New York and Missouri set to join this spring.

Some critics fear that all this data could be overwhelming to consumers. And to be sure, these resources won't eliminate the headache of choosing a health plan. But they could help ease the pain.

By Joshua Kendall in Baltimore

This article was originally published in the March 1, 1999 print edition of Business Week's Enterprise.

TABLE: Weighing a Plan
To: STAFF & BENEFITS