blue cross blue shield

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Herald: Member Defends Blue Cross Board; Says AG Meeting On Payout Soon

The Boston Herald nabbed a member of the Blue Cross Blue Shield board at the State House today, and — well done! — actually managed to get his response to widespread outrage at the $11 million payout to former CEO Cleve Killngsworth and disclosures of hefty “stipends” to board members — stipends that look an awful lot like a generous year’s salary. Hillary Chabot reports here:

Massachusetts AFL-CIO President Robert J. Haynes defended his $72,700-a-year salary as a board member for Blue Cross Blue Shield today — saying it doesn’t jack up premiums as public outrage continues over an $11 million golden parachute for the healthcare giant’s former CEO.

“The cost of health insurance is not affected very much. It’s about $1 million that board members get paid, with $13 billion in revenue it’s like pennies a year,” said Haynes, who said he’ll continue to take his salary until a committee made up of Attorney General Martha Coakley and Blue Cross Blue Shield officials weigh in on the issue.

“I want to sit with the board. I want to talk to Martha Coakley. I want to put a community together to talk about whether or not that’s a reasonable thing to do,” said Haynes, who said Coakley and the health care company are going to meet in the next couple of days to put together a committee to explore health care compensation for board members and executives.

The story is bringing the expectable outpouring of hostility from readers on the Herald’s Website; a couple of the gentler comments say that Haynes is trying to justify an unjustifiable position and “incest knows no bounds.”

The Herald reports here and here on the high salaries that go to health insurance board members and executives, and points out the contradiction with their public statements about the need to cut health care costs. Other Blue Cross board members have remained mum on the board’s financial decisions, despite public demand for explanation.

Globe’s Kevin Cullen Takes Patrick To Task On Blue Cross Payout


In case you missed it, Globe columnist Kevin Cullen perfectly captures here the public outrage over Blue Cross Blue Shield’s $11-million payout to former CEO Cleve Killingsworth. Kevin’s anger extends beyond Blue Cross to the governor who has failed to denounce that “big fat wet kiss” as obscene when so many are struggling to pay for health insurance:

Cornered by reporters Friday, Deval Patrick sounded like Peter in the Garden at Gethsemane, rejecting chance after chance to speak the truth about the money Blue Cross hands its big shots.

“It doesn’t matter what I think,’’ the frustrated governor said. “I’m not going to get into managing individual companies or individual compensation.’’

Hmmm. That doesn’t sound like the same guy who threatened to withhold state business from Hyatt Hotels after the chain crudely and cruelly replaced 100 housekeepers at its hotels in Boston and Cambridge with people who were forced to work more for less pay and benefits.

“You tell me that there are sound financial reasons for the company’s decision, and I accept that,’’ Patrick wrote Sept. 22, 2009, to Mark Hoplamazian, the chief executive of Hyatt Hotels. “But the manner in which these workers were discharged is so inconsistent with both the expressed values of the Hyatt organization and basic fairness.’’

Blue Cross flunkies can bleat as much as they want about the compensation packages they give their CEOs and board members being commensurate with the marketplace and blah blah blah. The truth is, to paraphrase the governor, it is inconsistent with both the expressed values of a nonprofit and basic fairness.

Big Three Health Insurers All End Year In The Black

Considering the angst between insurers and regulators last year over capping premiums, the state’s top three health insurers all made out pretty well, according to year-end financial reports. WBUR’s Martha Bebinger offers a few details:

Tufts, the 3rd largest health insurer ended the year $65 million ahead with a slight increase in membership and no debt. Tufts paid CEO Jim Roosevelt, $1.2 million. Eric Schultz at Harvard Pilgrim earned just under $800,000 as did Andrew Dreyfus at Blue Cross Blue Shield. Harvard Pilgrim also added members and had a net income of $50 million dollars. Blue Cross Blue Shield membership was down slightly and the state’s largest insurer closed the books with $14.3 million in profits.

The fourth largest insurer, Fallon Community Health Plan, based on Worcester, posted a loss for the year and saw membership fall about 6%. CEO Patrick Hughes (who moved from division president of health plan operations to chief executive in February 2010) received $754,012 in total compensation in 2009 and $649,581 in 2010.

Premium Pay: Ex-Blue Cross CEO Compensation Is Closer To $11.3M

Wow, health care costs are really rising fast.

Just a few hours ago we posted that former Blue Cross Blue Shield CEO Cleve Killingsworth received a pay package worth $8.6 million when he abruptly resigned as chief of the state’s biggest health insurer last year.

Well, on closer inspection, WBUR’s Martha Bebinger reports that Killingsworth’s total pay package is closer to $11.3 million. Here she is on All Things Considered earlier this evening:

Here’s how the deal breaks down: Cleve Killingsworth received $8.6 million dollars last year, most of which was his retirement benefit. The remaining $1.4 million was the first of three severance payments. Killingsworth will receive two more severance payments for a total of $11.3 million.

We asked Blue Cross Senior Vice President Jay McQuaide how the company could justify this expense at a time when rising health care costs are one of the state’s most pressing problems.

“There’s no questions that this is a significant amount of compensation and we would be the first to recognize that,” says McQuaide. “We also understand that affordability is the central issue facing the community today and that we need to lead by example.”

That example, says McQuaide, is a less generous payment package for the current CEO Andrew Dreyfus. His base salary is 25% less than what Killingsworth earned and the company is reducing the retirement and severance pacakages as well. But that attempt to say “we’ve learned our lesson,” isn’t persuading some critics.

“This kind of compensation package is outrageous, it’s inappropriate and it’s one of the exact reasons why health care costs are skyrocketing,” says Dierdre Cummings, the legislative director for MASSPIRG. It “leads the public to lose faith that we can actually be serious about driving down the cost of health care.”

“Frankly I think they lose all credibility that they are struggling financially when they grant these packages,” says Jon Hurst, president of the Retailers Association of Massachusetts. Hurst says this deal is out of line with the state of the economy.

“We’ve gone year after year with double digit premium increases for small businesses and working families in a very tough economy,” Hurst continues, “and we think the health care industry needs to better reflect what’s happening in our economy.”

Many low wage health care workers are also angry. Jeff Hall, spokesman for 1199, Service Employees International Union, says this deal is frustrating at time when members are making sacrifices to control costs.

“This sends a troubling message from the insurance industry,” says Hall, “and somebody ought to take a closer look given the situation around costs, it’s troubling.”

Attorney General Martha Coakley said in a statement, “While Blue Cross may be required to meet its contractual obligation to its former CEO, we continue to be concerned about high levels of executive compensation at health care organizations given current fiscal condtions and efforts to control costs in health care.”

The Patrick administration says it is reviewing the deal to see if it warrants further scrutiny or action.

Why Is Andrew Dreyfus Smiling?

Andrew Dreyfus was practically cheek to cheek with the governor this morning, answering questions from reporters about the big health care cost-cutting plan introduced today. Perhaps Dreyfus, president and CEO of Blue Cross Blue Shield Massachusetts, is grinning because he appears to be ahead of the curve on payment reform: nudging providers to improve care while reducing costs, and introducing a new plan requiring members to pay more if they choose to get treatment at a “high-cost” hospital, among them the Brigham & Women’s and Mass. General. Dreyfus says doctors will ultimately embrace a new system that takes a “whole-person” approach to medicine because it will “liberate them from the treadmill,” of the current model which, at its core, rewards quantity over quality.

Here’s Dreyfus’ initial take on Gov. Patrick’s proposal:

Starbucks Vs. Dunkin’: What Are You Willing To Pay For Medical Care?

Impassioned comments keep pouring in on Martha Bebinger’s story today about a new insurance plan that makes members pay up to $1,000 more for care and treatment at “high cost” hospitals, such as Massachusetts General and Brigham and Women’s.

Some consumers wonder whether this plan, introduced by Blue Cross Blue Shield of Massachusetts, will further divide an already unequal system of health care that benefits the rich. “Sure looks like a tiered system where the wealthy will get better care,” writes dkin02025.

Patients who can afford it will continue to pick and choose where they get health care. For instance, Patfleming1, writes: “I absolutely would pay more for these ‘first’ class hospitals. I now go to MGH for all of my care and my family’s care. We got there because no one could diagnose my daughter—finally got to MGH and after years she was diagnosed with a rare non-inherited genetic syndrome. My ssecound daughter went to local doctors/hospitals for 5 months with extreme pain—she was consistently told it was a virus that would work itself out–when I finally got her to go to MGH–within hours she was diagnosed with lymphoma—treatment started within hours after that.”

But others will have to cut ties to doctors and hospitals where they have deep connections and long-standing relationships: “I live and work in Boston and all my doctors are at MGH because this is the most convenient hospital for me – I can walk to it,” writes Sev. “I have seen my doctors for 10 years now and I wouldn’t be able to afford an extra fee, especially up to $1000 for a procedure. This plan doesn’t take into account the personal relationships we have with our doctors, which is a fundamental basis to health care. This is absurd. How much more abuse do we need to take from insurance companies?”

Karen adds: “I have always gone to BWH. I have had three successful surgeries there, my doctors are there. This is just one more example of how insurance companies control health care and intrude into our long-standing relationships with our doctors. When one lives in downtown Boston, BWH and Mass General ARE our community hospitals!”

MSophelia says Blue Cross’s determination of the 15 “high cost” hospitals is completely unfair, particularly for patients on Cape Cod, for instance, who have little real choice of where to get care. “One thing I took from hearing the story on the radio this morning is that BCBS would like to push patients to smaller/less expensive hospitals,” she writes. “All well and good, as we sometimes overlook our local resources – but what if the only hospital you have access to is on the high cost list? I have family on the Cape, and CCH is it for them. if they were to end up under the high co-pay system, they would effectively be penalized for not being able to get to another hospital. while i understand wanting to contain costs, this doesn’t seem fair to the patient.”

And, like David Ofsevit, we’d like to know where the executives (from politics, health care, insurance and business) take their families for medical care:

“Inquiring minds want to know: If Rick Lord at A.I.M. needs hospital care, does he care which hospital he goes to? It’s easy for someone at the top to be condescending to people for whom a $1000 co-pay may be a choice between life and death. The whole idea that health care is something you can go shopping for is bogus. Hospitals don’t tell you what things cost, insurance companies have skewed scales where they pay specialists too much and generalists not enough, and people with insurance wind up subsidizing people without it. Blue Cross is part of the problem, not part of the solution.”

Personal View: Would I Forego ‘High Cost’ Hospitals? I Don’t Quite Dare

Readers, please answer Martha Bebinger’s question here: Would you pay $1,000 extra to go to Brigham and Women’s for an uncomplicated delivery?

I had a nasty dream the other night: I was pregnant, and thought I might be in labor, so I went in to see my obstetrician at Massachusetts General Hospital. The nurse told me that I would need an ultrasound, but that because ultrasounds were considered very expensive at Mass. General, I would have to leave the hospital and go to a smaller community facility to get it done. “But I might be in labor!” I cried — to no avail.

This was clearly an anxiety dream, and the anxiety was not just about pregnancy, a state that I’m deeply done with forever in waking life. It’s about health economics, and the fact that I never did quite understand how I could choose to go to a premium hospital but pay as little in health insurance or out of pocket as I would at a more modest community hospital. And now, there are signs that the era of that particular free lunch may be on the wane. Most of us remain insulated from the real costs of our care, but the writing is on the wall, and it says, “Your care costs more, you pay more.”

As WBUR’s Martha Bebinger reports here this morning, Blue Cross Blue Shield of Massachusetts is offering a new health insurance plan that offers about a 5% savings on premiums, under this key condition: If you go to one of the most expensive hospitals on the list below, you pay extra for it — $1,000 more for surgery, $450 more for imaging tests. Other insurers offer similar “tiered” plans, and say they’re popular.

Blue Cross says that all the hospitals in its plan meet quality standards, but I still think of this as the “outlet mall” option of medicine: You can pay premium prices for a Brooks Brothers suit in a real Brooks Brothers store, or you can go to an outlet and get a comparable product, but not perhaps quite the fanciest goods, for a significant discount. Medically, I’ve become used to getting real Brooks Brothers suits at outlet prices, but I always wondered how that was possible. (Readers, is this analogy off? Please suggest a better one!)

Thus far, Blue Cross says, the response to the “Hospital Choice Cost-Share” plan has been enthusiastic. Blue Cross says it’s “encouraging care in the right setting” and working to “make cost and quality information transparent to consumers.”

The problem, it says, is that health insurance plan design didn’t encourage the concept of medical consumerism. There was no need for the member or patient to understand the cost of service because there was very little cost-sharing. Even with the ever more popular high-deductible plans, patients so quickly exceed their deductibles that there’s little reason to shop around.

The idea of the plan is not just to confront patients like me with a dilemma, but to increase hospitals’ incentives to cut their prices. “We hope some of the higher-cost facilities will start to rethink and reexamine some of their pricing policies,” Blue Cross chief Andrew Dreyfus said, “and a few have.” Other high cost hospitals, he said, respond, “We believe we have a better product and we believe people will pay for it.”

Will I pay for it? I have to confess that for years, I’ve gotten my primary and other care at Mass. General, which is on the Boston most-expensive list. Let me think this through as a patient.

Would I be attracted to an insurance plan that charges 5% less, or would my employer? Sure. But if I were diagnosed with cancer, would I want to go to Dana-Farber, which is on the most-expensive list? Heck, yes. Continue reading

Signs That Second Stage of Mass. Health Reform Is Shifting Into Second Gear

Whoops. It took my politically attuned WBUR colleague, Ben Swasey, to point out that there’s been a heck of a lot of Massachusetts health care news lately, a confluence of mounting political pressure and changes in the industry itself. I’d been too deep in the trees to see the forest. And I’d been so focused on waiting for the Patrick administration’s upcoming bill on payment system changes, I’d somehow failed to register that the next stage of Massachusetts health care reform — global payments and cost-cutting — is already upshifting, bill or no bill.

Let’s just take a moment to wrap up this month’s events so far:

Newly Re-Elected Deval Patrick Says Cutting Health Costs A Priority

Boston Mayor Menino Says Cutting Health Costs A Priority

House Speaker DeLeo Says Cutting Health Costs A Priority

Tufts Health Plan and Harvard Pilgrim Health Care Explore Merger

Tufts/Harvard Pilgrim Merger Could Help Control Costs

Blue Cross Blue Shield Reports Promising Results on its Global Payments Plan

Blue Cross Says Providers Must Control Costs, Or Else

And this is a bit further back, but:
Partners Planning Reduction Of Costs

Readers, would you add any? Send them in and I’ll add them to the mix. And do you share this sense of acceleration, or am I deluded?

Health Insurance Shakeup: Reaction, And What Does It Mean For You?

With news today that Harvard Pilgrim Health Care and Tufts Health Plan — the number two and number three insurers in the state — are planning to merge, we wondered what that might mean for consumers and how the competitive landscape might shift. (Here’s the press release. And a Tufts spokesperson summed up the immediate bottom line like this: “NO CHANGES for members or employers at this time.)

This morning, WBUR spoke with Jay McQuaide, a vice president at Blue Cross Blue Shield of Massachusetts, the top insurer in the state, who said the pending merger will provide “welcome” competition. But the real question is: Will the deal improve affordability of health care? “The central question in the community today is how do we as a community reduce the growth in healthcare costs, and I think that will be the measure by which the community considers this particular transaction,” McQuaide said.

Brian Rosman, research director of the consumer advocacy group Health Care for All, agrees that the major questions for state authorities who will review the merger proposal will be: What will the deal do for choice, access and competition? Here are his top three thoughts:

1. Consumers May Not Even Notice — At First

Rosman points out that both Harvard Pilgrim and Tufts are highly rated plans, and this is not a case where each brings its own network of vastly different providers (at least in Eastern Mass.) Actually, there is a great deal of overlap in these networks, in terms of access to doctors. Rosman himself said he switched from Harvard to Tufts and then back, and he never once had to switch physicians or specialists.

2. The Brave New World of Payment Reform Will Overshadow All

As we enter the world of payment reform, Rosman says, ACOs (you can read our primer on accountable care organizations here ) will have much more responsibility for arranging care and referrals, and which health plan you’ve got may matter less. Continue reading

Ten Interesting Points About Blue Cross ‘Dazzling’ Results


Stop! Read no farther if you’re a normal person! All you need to know about the latest news from Blue Cross Blue Shield of Massachusetts is that they’re getting very positive results with their global payment plan. And that means that it’s even more likely that the state, your insurer and your health care providers will be shifting to one like it in the coming months or years.

(What is global payment? Instead of providers being paid for each procedure, which is known as “fee for service,” they’re paid a “global” sum for each patient, and can earn bonus money if they stay within that budget while keeping quality high. Okay, now really stop if you’re normal.)

But if you’re a more wonkish type who’s deeply interested in the turgid ins and outs of payment reform, I’d like to offer you the following brain-dump from a Blue Cross Blue Shield of Massachusetts briefing on the global payment plan last week. I’ve tried to digest it into palatable bits, but you know how it is. For example, there’s no avoiding the jargony “AQC” for Alternative Quality Contract, the Blue Cross name for its global payment program. Warning: What follows is purely the Blue Cross point of view. See Martha Bebinger’s excellent story for a more balanced report.

1. It’s spreading steadily, faster than expected.

Said Blue Cross spokesman Jay McQuaide: When we started talking about this in ’07, if you’d said we’d be sitting here in the second week of January, 2011, with a little less than half our members in the AQC, no one would have believed you.
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