What'll Hillary think of this HMO?

As Congress scraps over people health care, some focus on cats and dogs 

While Washington gears up to tackle health care reform for America's human population, local forces are devising new ways to handle the high cost of health care for pets.

The latest attempt is the National Pet Plan, a health maintenance organization program for dogs and cats.

J. Scott Bold, designer and co-owner of the fledgling HMO for pets, says his National Pet Plan is the first reduced-fee-for-service program providing health care for the family pet.

To date, about 26 veterinarians have agreed to become National Pet Plan providers in L.A., Orange and Riverside counties, according to Bold.

MGA/Associates, a Temecula-based marketing firm co-owned by Bold and his partner George Linder, has already begun marketing the plan in Riverside County and plans to start marketing it in Los Angeles County in January.

Under the plan, subscribers would be given a list of participating veterinarians, who would provide examinations, rabies shots and certain lab tests in exchange for a flat annual fee.

Other vaccinations and lab tests, surgery and radiology would be offered at reduced prices. For regularly scheduled care by NPP-contracted vets, there would be no limit on the amount of services covered under the plan, no deductible, and no pet would be precluded for pre-existing conditions.

The proposed plan would also cover $50 of emergency care costs for services rendered more than 50 miles from the nearest NPP-contracted vet.

The annual cost of the plan would range from $39 for one pet to $99 for four, with another $31 fee levied for each pet in excess of four.

The proposed plan, according to MGA, would be sold by contracted breeders, pet stores, pet grooming salons, independent insurance brokers and agents and a select number of veterinarians.

For Bold, who owns two cats and a dog, the National Pet Plan is literally a pet project. It is also his second attempt to launch the concept.

"Back in 1978," relates Bold about his prior venture, "the concept was way ahead of its time." The problem, he explains, was that veterinarians were unwilling to adopt a fee schedule in 1978 because they faced little competition back then. As a result, they had plenty of pet patients and could charge pretty much whatever they wanted.

But pet care is characterized by dog-eat-dog competition today. So vets are more amenable to the HMO proposal, Bold says.

Unlike the 18-year-old dentistry HMO, Continental Dental Plan, that MGA has been marketing, National Pet Plan would not be registered with the state Department of Corporations. "Right now there is no licensing requirement for the veterinarian programs we're establishing," says Bold.

The pet plan has already passed a review by the general counsel for Sacramento-based Veterinary Board of Examiners, which licenses veterinarians to determine compliance with an industry regulation that bans referral services.

Although the VBE's review was limited to this particular regulation, one VBE official stated, "In cursory review, it (the National Pet Plan) appears to have some validity and could help the consumer."

Neil Tauber, a principal at Santa Monica-based Veterinary Centers of America, a public corporation that owns and operates 21 veterinary hospitals and a vet lab, says he is skeptical that the National Pet Plan holds promise.

"I've been approached by two or three groups about discounting our fee schedule to their patient population," relates Tauber. In return, he says, these proposed HMOs pledge to deliver new clients to his company.

So far, says Tauber, "I haven't seen a fee schedule that's been acceptable, and I'm not convinced that these people can deliver the clients they promised."

Interestingly enough, Tauber says his company is also contemplating an HMO-style endeavor, which he says would be more effective because "we own the hospitals; we have the employees as our partners in this thing."

Using an analogy to put the comparison into perspective, Tauber explains, "We'd be like a Kaiser, they would be more like Maxicare."

According to a 1992 study commissioned by the Chicago-based American Veterinary Medical Association, U.S. households spent about $7.4 billion during 1991 on vet bills for dogs, cats, birds and horses.

The average household spent $131.84 on dogs, $79.85 on cats, $34.24 on birds and $163.23 on horses.

The study notes that more households visited vets in 1991 than in 1987, and they sought help more often, particularly for preventive care.

Despite this, the findings also indicate that "at least 20 percent of dog, cat and horse owners and 80 percent of bird owners do not currently have a veterinarian."

One explanation for the hold-out is cost.

Edward C. Cubrda, chief executive of the Los Angeles Society for the Prevention of Cruelty to Animals/Southern California Humane Society, says the high cost of pet care often results in animals ending up in shelters.

According to Cubrda, "What we see are people that are able to keep up with payments for food and shelter get hit with a bill for $500, $700, $1,000 if an animal breaks its leg."

So, rather than pay those hefty prices, some owners abandon their pets at the nearest shelter, he says.

Pet insurance provides an existing approach to cost containment. At least three pet insurance carriers currently operate nationwide: Anaheim-based Veterinary Pet Insurance, Medipet (through the Novato-based Fireman's Fund Insurance Co.), and Chicago's American Pet Care Association. "It's possible that there are also some regional companies," says Medipet's John Kozaro.

The oldest and largest carrier, VPI, has sold policies for 11 years. VPI claims it has sold more than half a million policies, with an 82 percent rate of renewal.

Veterinary Pet Insurance President Jack Stephens says, although his competition is limited, new pet insurers crop up every so often. He is wary of insurers not licensed by the state, since customers have no recourse for complaints and could be out thousands of dollars. "We're very cognizant of making customers happy," he adds.

According to Elena Stern, spokesperson for the State Insurance Commissioner, VPI is the only licensed company in California that sells pet insurance. "They currently operate under a court-approved rehabilitation plan implemented in March 1992," said Stern, adding, "The insurance department has some financial concerns about the company, but they are not deemed insolvent."

Through three different plans for dogs and cats, VPI covers everything from simple treatments for ear infections and skin rashes to high-tech therapies. Subject to policy terms, services can include office calls, injections, prescriptions, lab fees, x-rays, surgery, hospitalization and euthanasia.

Policies range in price from an annual $59 base for puppies and kittens to $250 for a 20-year-old animal. The policies generally cover 80 percent of the first $180 of care and 100 percent of all subsequent care.

Per problem deductibles are either $20 or $40, and coverage ranges from $1,000 per incident and $5,000 per year to $2,000 per incident and $7,500 per year. A new plan, which is awaiting government approval, would extend coverage to $4,000 per incident and $12,000 per year.

The California Veterinary Medical Association in Sacramento has long endorsed carrying pet insurance. That group's president, Dick Sullivan, who practices in Torrance says, "As with any insurance, it spreads the risk and the expense of the cost of veterinary medicine." This is important, he says, because it "allows us to work up cases more thoroughly and completely."

Norman Agustin, manager of a Pet City pet store in Torrance, says his store offers free insurance policies on purchases of certain pets. "When you buy a dog under three months old here in Pet City," says Agustin, "then we provide you with a policy that is good for three months."

If the animal is older than three months, there is a $12 fee for a three-month trial policy. Agustin says his customers get to choose their own veterinarians and Pet City provides the first claim form. Subsequent claim forms are provided by VPI.

VPI's Stephens says the pet store program is also conducted with Ohio based-Petland Inc. franchises and a number of independent pet stores which meet VPI's standards of cleanliness, proper vaccinations and good working relations with local veterinarians.