HMOs Not Just for Humans Anymore

Fluffy and Muffin have gotten into managed care. A number of local companies are offering membership services for dogs and cats that operate somewhat like a health maintenance organization including concerns among experts about billing procedures and what’s covered. Several factors are cited for the recent growth in pet coverage: rising veterinary costs, pets living longer and contracting more serious diseases, more single people buying pets for companionship, and pet owners treating their animals as part of the family. “We’re really growing,” said Dr. Jack Stephens, founder and president of Anaheim-based Veterinary Pet Insurance, which is regarded as the industry leader and is licensed through the Department of Insurance. “We had a lot of years that were very difficult and very problematic, keeping our reserves up and satisfying the Department of Insurance.” After generating $8.5 million in revenues in 1997, VPI almost doubled that to $15.5 million in 1998 and projects $25 million for this year. Stephens said membership has been especially strong in the Los Angeles area, with VPI insuring about 18,750 L.A. pets among its total of 125,000 pets nationwide. “We’re a fee-for-service company, what insurance used to be before managed care,” Stephens explained. VPI charges customers $8.25 a month per pet for routine care coverage. Its more extensive policies cover treatments for everything from ear infections to leukemia. Coverage is pegged to a predetermined industry standard. Customers may go to any vet or hospital they wish. They initially pay for the treatments out of their own pocket, and then are reimbursed by VPI. Since opening its doors to customers last year, Encino-based Pet Saver Health Plan of America has sold “memberships” to cover the dogs and/or cats of some 2,000 families. About 40 veterinary offices participate in the plan, which is similar to that of an HMO. “It’s growing, it’s going word of mouth,” said Pet Saver Vice President Yiffat Ruboevich. While Pet Saver is not a licensed insurance company, it operates along the same lines. Customers pay a “lifetime membership fee” of $36, regardless of the number of pets, and then a flat monthly fee ranging from $8 to $13 for a single pet, depending on the extent of coverage. The coverage includes twice-a-year physical exams and routine preventive care, for no extra charge. Discounts are available on more complicated procedures. “We have a set fee schedule for certain procedures, pre-negotiated with the doctors,” she said. While Pet Saver’s plan is oriented to healthy pets, VPI coverage involves more serious and costly procedures. It does not cover animals with certain pre-existing conditions. Helping fuel the growth of pet insurance is the increasing number of employers that offer it as part of their benefit package. Last year, the Los Angeles City Employees Association began including VPI pet insurance as a payroll-deductible benefit for current and retired L.A. city employees. “It’s taking some time to educate employees as to what it is,” said Kevin Dyer, the association’s member services manager. “They’ll say, ‘What the heck is pet insurance?’ But especially if they have dogs or cats and they’re the type to get into the care of their animals, those people just love it.” Despite the growing popularity, animal experts raise several concerns. Most plans only cover cats and dogs, leaving exotic animals and even birds and fish uncovered. Services covered are often limited as well. “I’m waiting for the perfect policy myself There isn’t a lot to choose from,” said Madeleine Bernstein, L.A. president of the Society for the Prevention of Cruelty to Animals. “There are a lot of exclusions and limits in these policies, so they have to be read very carefully.” In addition, animal hospitals and veterinarians are sometimes reluctant to sign up for a system that requires third-party billing due to the additional paperwork such systems require, said Paul Brentson, hospital administrator at the Veterinary Medical Teaching Hospital at UC Davis. “It is still not well known in the community that (pet health insurance) exists,” Brentson said. “Secondly, what does typically exist is the type of insurance that may pay for certain amounts of the procedure, but there is a lot left for the pet owner to pay.”