Massachusetts employers are migrating to new health insurance plans that limit premium increases by encouraging customers to seek quality care at reasonable rates, The Boston Globe and WBUR report today.
AIM applauds the trend. The association has for months urged employers to use tiered networks to control the spiraling cost of health insurance. AIM will make the case this spring to members that these products provide value and make both employees and providers aware of the cost of care.
The Globe article reports that hundreds of small businesses have signed up for a new tiered product offered by Blue Cross Blue Shield of Massachusetts, making it the fastest product launch in the insurer’s history. Tufts Health Plan and Harvard Pilgrim Health Plan also report significant interest in their new tiered offerings.
The trend will likely accelerate in the spring when the health cost control law signed by Governor Deval Patrick in August takes effect. The law requires Massachusetts health plans to offer at least one limited or tiered network product that is at least 12 percent less expensive than a comparable full-network offering.
The idea behind limited networks is simple – find quality medical care at reasonable prices. That means avoiding high-cost providers for procedures that can be performed just as well in lower-cost, community settings.
In a tiered network plan, the patient’s ability to choose where to have care provided is preserved, however, he or she may have to pay more to receive care at more expensive medical facilities. In a limited network product, access to those high cost facilities is prohibited altogether.
“These innovative products that differentiate between providers give employers the opportunity to control health care expenses that have in some cases been rising as much as 20 percent to 40 percent per year,” said Richard C. Lord, President and Chief Executive Officer of AIM.
Limited and tiered networks begin to address one of the leading cost drivers in Massachusetts – the gaping disparity in rates among doctors and hospitals within commonwealth for the same service and same quality outcome. A recent report by the Massachusetts Attorney General concluded that the primary driver of health costs is the variation in rates that certain hospitals and physician groups are able to charge relative to their peers.
The growing popularity of tiered-network plans is one of several recent developments that together show considerable momentum building for controlling health care costs in Massachusetts.
- The chief executive of Blue Cross Blue Shield of Massachusetts is urging hospitals to adopt a new global payment system and warned that providers who hold onto traditional fee-for-service arrangements face level or reduced payments.
- The Patrick administration is preparing to file health cost legislation that is widely expected to institute a payment system under which medical care providers are put on an annual budget and given incentives to control costs and improve care instead of being paid for individual doctor visits and procedures.
- The governor and the business community appear to be on the same page when it comes to helping struggling cities and towns reduce their cost of providing health insurance. The administration filed a bill last week that would require all cities and towns to either join the state-run Group Insurance Commission or institute a program “of equivalent value and cost.”