Paying Workers to Go Abroad for Health Care

By M.P. MCQUEEN

Insured Americans are starting to see some unusual options in their health-provider networks: doctors and hospitals in Singapore, Costa Rica and other foreign destinations.

In an effort to control rising costs, a small but growing number of insurers and employers are giving people the choice to seek treatment in other countries, a practice known as medical tourism. Until recently, most Americans who traveled abroad for medical care were uninsured, or were seeking procedures not covered by insurance, such as cosmetic dentistry or aesthetic surgery. Now, a handful of plans are beginning to cover treatment overseas for heart surgery, hip and knee replacements and other major surgical procedures.

While medical tourism isn't expected to be a solution to the country's soaring health-care costs, the practice is intended to produce savings for insurers, employers and workers. Open-heart surgery, which can cost roughly $100,000 in the U.S., can be done at an internationally accredited hospital in India for just $8,500, for instance. Proponents note that many international hospitals are staffed with American and European-trained physicians. Many facilities also are accredited by an affiliate of the Joint Commission, a nonprofit group that is the main accrediting body for U.S. hospitals.

Whatever the qualifications of doctors and hospitals abroad, some U.S. health practitioners remain concerned about such issues as the safety of blood supplies for transfusions and tissue for bone grafts. Long-distance travel also poses special risks to patients, including blood clots from airplane flights and lack of legal recourse for negligence and malpractice, critics say. And follow-up care can be difficult to find once a patient returns home; many U.S. physicians and dentists are reluctant to treat such patients for fear of being exposed to malpractice lawsuits because of possible poor treatment abroad.

To be sure, most traditional employer health plans offer little incentive for workers to endure long flights overseas for treatment: The plans usually cover 100% of the cost of medical treatment once workers reach an out-of-pocket limit for co-insurance and co-payments.

So to make travel abroad more attractive, plans that offer medical-tourism programs often throw in a bonus for employees if they agree to undergo elective surgeries abroad, or they offer to split the cost savings between the employer and worker. Travel and accommodation costs also are sometimes reimbursed.

Maine-based supermarket chain Hannaford Bros. Co. this year began allowing its 18,000 insured workers and dependents to travel to an internationally accredited hospital in Singapore for surgical hip and knee replacements. The company's self-funded plan, which is administered by Aetna Inc., waives out-of-pocket expenses, which can save patients up to $3,000, and reimburses all travel costs.

Hannaford, a unit of Belgium's Delhaize Group, expects the plan will reduce the cost to the company of each procedure by about 10%, says Peter Hayes, director of health-care strategy. He said a hip-replacement surgery in the U.S. averages $45,000 to $50,000 but can be performed for $12,000 in Singapore. Mr. Hayes said the program is still new, and no employees have yet opted to have surgery abroad.

Corporate Synergies Group Inc., which advises companies on worker benefits, says at least a dozen of its clients with 250 to 2,000 employees are considering adding medical tourism programs in the next few years.

Among insurers, Blue Cross & Blue Shield of South Carolina created a subsidiary for medical tourism called Companion Global Healthcare Inc., which maintains a network of international doctors and hospitals. Among the listings: Bumrungrad Hospital in Thailand, and accredited institutions in Costa Rica, Ireland and Turkey. Anthem Blue Cross & Blue Shield, a unit of WellPoint Inc., says it plans to roll out a medical-travel benefit with Serigraph Inc., a graphic arts company in Wisconsin, in January. Serigraph says it plans to provide incentives for its 700 workers to travel to a hospital in India for certain elective surgeries under its health plan.

However, Medicare, the federal insurance program for older and disabled people, generally doesn't cover treatments abroad.

Some individual policies offer medical-tourism options. Ben Schreiner, a retired executive for Bank of America, recently traveled to Clinica Biblica in Costa Rica for a hernia operation that cost $3,900. His policy with Blue Cross & Blue Shield of South Carolina has a $10,000 deductible. Surgery would have cost about $13,000 in his state, he says, so he saved about $6,100. The 62-year-old traveled free using frequent-flier miles. "The hospital is state of the art. The stuff is really up to date and modern and the doctors couldn't have been better."

Estimates vary of the number of Americans who travel abroad for medical care. The Deloitte Center for Health Solutions, a consulting group, figures 750,000 patients traveled abroad in 2007 for in-patient and outpatient procedures, including cosmetic and dental care. A study by McKinsey & Co. that counted only in-patient procedures, mainly orthopedic and general surgery, found that 8,500 Americans travel to other countries annually. ParkwayHealth, the largest private health-care provider in Singapore, says it treated 407 U.S. patients last year, nearly double the number from a year earlier.

Though some foreign facilities may be top-notch and some physicians may be certified by U.S. boards, some health-care officials still advise caution. Evan Falchuk, president of Best Doctors Inc., an international physician-referral service, says, "if something does come up, Americans are set up to handle a complication that other places are less capable of dealing with."

Adds Joshua Jacobs, spokesman for the American Academy of Orthopaedic Surgeons: "There are some potential patient-safety concerns with having surgery overseas. We don't have data but we do have concerns in a number of areas like blood safety. Many patients need blood transfusions. Can you be sure it is free of viral pathogens like HIV or hepatitis C?"

The American Medical Association in June unveiled its first set of medical-tourism guidelines to state lawmakers, suggesting them as model legislation. The guidelines would require that travel be voluntary, and that financial incentives not limit patients' alternatives. They also would require patients to be advised of the medical and legal risks, and that provisions be made for follow-up care at home.

"The AMA is not at all opposed to having people go overseas to get medical care. Our major concern is that they do it in a safe, high-quality way that doesn't take away their ability to get the best care they possibly can," says Joseph Heyman, chairman of the AMA board of trustees.

Some patients travel abroad when they feel they can get superior care. Anne Grant, 60, who is covered under her husband's employer's group health plan from Guardian Life Insurance Co., flew to India's Apollo Hospital in Chennai last year for a hip-resurfacing operation, a procedure that had only recently been approved by the Food and Drug Administration in the U.S. The surgery was performed by a surgeon who had done more than a thousand hip-resurfacings, for about $7,000. That compares with an estimated cost of as much as $55,000 in the U.S.

Although the Grants' insurance didn't offer a medical tourism program, Guardian agreed to reimburse Ms. Grant $5,900, which was slightly more than the insurer's out-of-network rate. The Grants' airfare and expenses, which totaled $3,000, weren't reimbursed. "It was very smooth. I was very impressed," Ms. Grant says of the experience.

Labor unions have opposed some efforts to set up medical tourism programs. One such plan at Blue Ridge Paper Products Inc., which merged last year with Evergreen Packaging Group, was stopped by the United Steelworkers in 2006 as the first patient prepared to fly to India. The plan offered to share half the cost-savings with employees, but the union said it was a unilateral change in "terms and conditions" of employment. "You create a slippery slope where medical tourism starts out as an option, maybe even an attractive option, but over a short period of time I believe will become mandated," says Stan Johnson, a union director in Nashville, Tenn.

Pamela Garrett, Evergreen's benefits analyst, says the previous owner of the company "was very aggressive in finding ways to cut costs." She says the current owner isn't that interested in medical tourism.

Write to M.P. McQueen at mp.mcqueen@wsj.com