Massachusetts tests 'cost sharing' health insurance plan
A Massachusetts health insurance company is trying a health care experiment: Will members be willing to stick to certain hospitals and health care providers if they can save themselves (and the insurance company) some money? Will patients steer clear of more expensive health care facilities if the insurer refuses to provide as much coverage as it does for less expensive facilities?
Blue Cross Blue Shield of Massachusetts (BCBSMA) suspects the answer to those questions is "yes" -- and has developed a new plan called the Hospital Choice Cost-Share plan.
How the plan works
BCBSMA claims its Hospital Choice Cost-Share option provides an average annual premium savings of about 5 percent. It also offers incentives for members to seek care at hospitals that the health insurance company has determined provide the most cost-effective care, according to BCBSMA.
Hospital Choice Cost-Share enrollees will pay discounted co-payments if they receive care from one of BCBSMA's 53 "high value" hospitals or an independent center. If patients go to one of the 15 "high cost" hospitals in BCBSMA's network, however, they will pay certain penalties in exchange for coverage.
Policyholders still will pay a lower premium if they opt for care at a high-cost hospital, but they will pay a higher co-payment in some cases. For instance, inpatient treatment at a high-cost hospital will mean a $1,500 co-pay. The same service at an in-network hospital will be $500. Other co-pay differences include:
- Outpatient hospital day surgery: $250 under the new plan, $1,250 at a high-cost hospital.
- High-tech radiology: $50 under the new plan, $500 at a high-cost hospital.
- Laboratory: Zero under the new plan, $35 at a high-cost hospital.
- X-rays and other imaging: Zero under the new plan, $100 at a high-cost hospital.
- Physical, occupational or speech therapies: $35 under the new plan, $70 at a high-cost hospital.
This cost structure does not apply to emergency care, however.
If certain hospitals are charging more for care, could it mean that the care they provide is better? And what if BCBSMA is using this plan to simply encourage patients to use hospitals that provide cheaper, low-quality care? This does not seem to be the case, according to a January 2010 report by the Massachusetts Office of Attorney General, which said it could not find a link between the quality of care and higher prices. Instead, vast difference in prices among hospitals in the same state results from the bargaining they do with health insurance companies.
According to BCBSMA, all hospitals in both the high-value and high-cost categories adhere to nationally accepted quality standards.
According to the Kaiser Family Foundation, the average annual premiums for employer-sponsored health insurance in 2010 were $5,049 for single coverage and $13,770 for family coverage. And covered workers on average contribute 19 percent of the total premium for single coverage and 30 percent for family coverage, the company says.
As a result, according to Kaiser, quality health care is moving beyond the reach of many Americans. Health care costs are spiraling out of control, and the economic downturn and rising federal deficit are straining the health care system.
According to BCBSMA, its cost-share plan will lower costs for employers and individuals alike. By excluding pricier hospitals, the insurer has found a way to cut costs. Plus, with a 5 percent annual savings, those enrolled in the Hospital Choice Cost-Share plan can get health insurance premium discounts while having an incentive to cooperate with BCBSMA in using cost-effective care. However, members who already have providers in the high-cost category either will have to switch providers or pay more out-of-pocket costs.