Blue Cross Blue Shield of Massachusetts, for example, has begun offering a plan that imposes hefty copayments for going to the most expensive hospitals. The Blue Cross Hospital Choice plan charges members an extra $1,000 for an inpatient stay or outpatient surgery, and $450 more for an MRI or CT scan, at 15 high-cost hospitals, including Massachusetts General Hospital, Brigham and Women's Hospital, Children's Hospital Boston, and UMass Memorial Medical Center in Worcester.
Choose cheaper care, pay lower premiums
Employers and individuals who choose this plan will see their rates rise 4.5 percent this quarter instead of the 10 percent increase they would have gotten in a traditional plan. Not surprisingly, 30 percent of the small firms and individuals who re-enrolled with the Massachusetts Blues picked Blue Cross Hospital Choice.
Provider organizations are already yowling -- especially Partners, the parent organization of Mass General and Brigham and Women's. Thomas Lee, head of Partners' physician group, said that when plan members get sick and can't go where they want, "They will be mad at Blue Cross and their employer. There will be some painful moments down the road.'' Lee added that if Partners' hospitals get paid less, they'll have less money to spend on unprofitable services like rehabilitation and children's mental health care.
Allow me to wipe away a tear. As Massachusetts' government and many of the state's employers have made abundantly clear, they can no longer afford the huge increases in health costs that insurers pass onto them every year. Unless Partners and many other healthcare providers stop living off the fat of the land, they're going to find out that there's no fat left, because no one's going to be able to afford their product.
Insurers' Holy Grail is in sight
What's really interesting about this story is that, for years, insurance companies across the country have been unable to interest employers or consumers in limited-network plans or "tiered" plans, which charge people different amounts for using different providers. But now that's changing, at least in Massachusetts, the only state that requires everyone to be insured.
Last year, enrollment in a more extensive tiered product from the Blues, covering both hospitals and physicians, grew 120 percent. A similar plan from Tufts has also been very successful, according to the company. And Harvard Pilgrim launched a limited network in Worcester last month after offering one to state employees in July. That, too, is expected to grow by leaps and bounds.
Tiered plans are the future
These kinds of plans may soon spread outside of Massachusetts. Although consumers have long resisted any limit on their freedom to choose providers, the rapidly escalating price of insurance may finally be convincing people that it's worth giving up some choice in return for lower costs.
If that indeed is the case, hospitals and doctors are approaching a day of reckoning. They have one of two choices: fight pay cuts to the bitter end or figure out to reduce the cost of care.
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