tiered plans


As Premiums Rise Slowly, More Employers Shift Some Cost To Patient

Readers, are you trying to figure out how a tiered or limited-network health insurance plan works? WBUR’s Martha Bebinger wants your story. Tell it in the Comments section or click on “Get in touch” below. She’s aiming to air more on this topic soon.

Employers across the state sit down this month for an annual meeting that many dread. It’s a briefing on how much their health insurance premiums will increase come January. WBUR’s Bob Oakes spoke with reporter Martha Bebinger about what employers can expect.

Bob Oaks: The bad news is that premiums, on average, are still rising. But the good news is that many businesses will see about the same increase or slightly lower increases than last year. What’s the range?

Martha Bebinger: Last year premiums rose 4-10 percent. This year, the increase is expected to be slightly lower, 3-6 percent. Keep in mind that these are so-called base rates. The actual rate for your company could be higher or lower, depending on the age of the employees, how much care they use and a few other factors.

(Note: Fallon Community Health Plan declined to provide their expected rate increases).

But what about this new state law that says health care costs aren’t supposed to rise any faster than growth in the state’s economy overall? With these premium increases, health care is still growing faster than most other costs. What happens?

Nothing right away. The state will eventually require hospitals, physician groups, insurers and others who deliver health care to submit plans for bringing their costs down if they exceed the state health care spending targets. But that won’t start until 2015 or 2016.

So premiums for most of us are expected to rise 3-6 percent, more or less depending on our health and the health of our colleagues. Why will we see slightly lower increases? Is Mass. figuring out how to get a handle on health care costs?

It’s not clear Bob. There are a number of things happening to slow the rise in health care premiums. Hospitals and doctors are agreeing to lower increases in the contracts they sign with insurers. And patients are seeking less care. This could be the ongoing effects of the recession, and patients putting off elective knee surgery, for example. It could also be that more and more of us have health insurance that doesn’t cover all the costs of a test or treatment. Some patients with a high deductible or higher co-pays, are putting off or just not going to the doctor or hospital to avoid those costs.

Brian Pagliaro, Senior Vice President for Sales at Tufts Health Plan.  (Courtesy of Tufts Health Plan)

Brian Pagliaro, senior vice president for sales at Tufts Health Plan. (Courtesy of Tufts Health Plan)

More employers are buying coverage with high deductibles or other types of insurance to save money. What kind of changes should patients be ready for?

High deductible plans are a common way that employers save money. These plans are cheaper because they shift some of the cost to the patient. Employers can save even more money by cutting expensive hospitals out of their coverage. This is what’s known as a limited network plan. And the fastest selling product for a few insurers is what’s known as tiered coverage. With tiered health plans, patients can go wherever they want, but they might pay $2,000 or more to deliver a baby at Brigham and Women’s Hospital for instance and nothing at, say Melrose Hospital. Continue reading

Health Policy Insiders Propose What They Call ‘Smart Tiering’

Rep. Steve Walsh, House chair of the Joint Committee on Health Care Financing in the Massachusetts legislature

Some of our friends and neighbors in Massachusetts pay a lot more to go to Massachusetts General or Children’s Hospital Boston than they do for Metro West or Tufts Medical Center. They have insurance that assigns hospitals to a high, medium or low cost tier with co-pays to match. The difference in co-pays can be more than $2,000. We’re pretty used to this idea when it comes to drugs, but there’s a lot of confusion about using the same model for doctors and hospitals.

Now for a new layer of complexity. Some health care insiders are also wondering if it makes sense to label a hospital “high cost” for everything they do. What if we set high, medium and low co-pays for specific surgeries such as having your gallbladder removed, your hip replaced or repairing a ruptured hernia?

The idea comes from Steve Walsh, House chair of the Joint Committee on Health Care Financing,  who says: “Tiered health plans have become the most popular product for driving down health care costs.” But “tiering by service rather than by facility might be a better way to reduce costs.”

Amitabh Chandra, economist, Harvard Kennedy School of Government

Walsh and Amitabh Chandra, an economist at the Harvard Kennedy School of Government, call this idea “smart tiering.”

In “not smart” tiering, insurers charge the same co-pay for everything at a high or low cost hospital, not taking into account that some hospitals are better at some things than others. “If you do smart tiering,” says Chandra, “you can say to a hospital, you’re quite cheap or much better for cancer treatment or radiation oncology, but people should not go to the expensive hospital for a vaginal birth or an appendectomy. They should go to a community hospital for more routine services.” Continue reading

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