HMOs eyeing surcharge for high-end care
By Liz Kowalczyk, Globe Staff, 8/28/2001
Some '02 plans affect visits to medical centers
Rising medical costs soon may force consumers - many of whom already pay extra for brand-name medications - to pay more for treatment at brand-name academic medical centers or other high-cost hospitals.
Several managed-care companies, including Tufts Health Plan in Massachusetts, will introduce plans in 2002 that level a surcharge on consumers who choose to visit more expensive hospitals. Aetna is planning a similar product in Massachusetts next year and the HMO giant Pacificare in California will introduce a surcharge on certain hospitals in eight states. The charges, or copayments, will be in the range of several hundred dollars per visit.
Health plan executives say employers are begging for these types of plans as a way to control premiums, which in Massachusetts are expected to grow from 8 to 15 percent next year - the fourth straight year of significant increases. The new plans also are part of a growing movement in managed care to give consumers more choices, which they have demanded, but at the same time to make them more financially responsible for their decisions.
It is unclear how many consumers will pay the higher hospital fees; it all depends on how many employers decide to buy the plans. But those who do purchase them will receive a discount on their insurance premiums. Health plans also expect to save money if more patients end up in community hospitals, which generally charge insurers less for their services than do teaching hospitals.
One reason medical costs are climbing, HMO executives and industry analysts say, is that patients in health maintenance organizations have little financial incentive to visit a primary-care doctor instead of consulting a specialist, seek an X-ray rather than a more expensive MRI, or book knee surgery in a lower-cost community hospital instead of a teaching hospital. This is a particularly significant factor in Massachusetts, where residents use teaching hospitals far more heavily than in other areas of the country.
''This is what our employers want,'' said Kevin Counihan, Tufts senior vice president for sales and marketing. ''They're looking for a greater level of consumer engagement. And they're interested in anything that lowers costs.''
But some hospital executives - mostly those at teaching hospitals - employers, and consumer groups are concerned that the new plans will hurt some patients, particularly those who need the expertise of an academic medical center but cannot afford to check in.
''My gut reaction is that there are times when it's appropriate and necessary to go to a teaching hospital, and to say you can only go if you can cough up $500 ... that just sticks in my craw,'' said Dolores Mitchell, who oversees health benefits for 263,000 state employees and retirees and their families. She wants insurers to develop products that charge more when employees visit hospitals that score low on quality measures.
Ellen Zane of Partners HealthCare, the parent company of the Harvard-affiliated Massachusetts General Hospital and Brigham and Women's Hospital, said she supports ''the right care in the right place.'' But she said she's concerned that patients will have to pay extra for a heart transplant at the Brigham or Massachusetts General, when the procedure is not even offered at community hospitals.
Tufts, which has 880,000 members, will continue to offer employers existing HMO plans that don't charge members extra for visits to teaching hospitals. Employers who purchase the new plan will help decide the actual copayments, but Tufts executives expect most will charge members $250 for a community hospital admission and $500 to go to a teaching hospital. Most Tufts members currently do not pay a copayment when they are admitted to a hospital.
Tufts has defined the following hospitals as teaching hospitals: Baystate Medical Center in Springfield; Rhode Island Hospital in Providence; UMass Memorial Medical Center in Worcester; Lahey Clinic in Burlington; and in Boston, Beth Israel Deaconess Medical Center, Boston Medical Center, Children's Hospital, Dana-Farber Cancer Institute, Massachusetts General Hospital, Massachusetts Eye and Ear Infirmary, New England Baptist Hospital, New England Medical Center, and Brigham and Women's Hospital.
Tufts' new plan also will charge consumers more for outpatient procedures at these hospitals, and will charge a $25 to $35 copayment for a visit to a specialist, versus a $10 to $15 charge for seeing a primary-care doctor. In return, employers will receive discounts on their health insurance ranging from 2 or 3 percent to 8 or 9 percent.
Pacificare, which has 4 million members, will take a different approach. The HMO will divide hospitals into two groups - lower cost and higher cost. Consumers will pay $100 to $400 when they visit a higher-cost hospital. In 2002, the HMO will introduce hospital quality data, charging less for hospitals with high scores.
''We're not talking about bankrupting people here,'' said Jon Kingsdale, Tufts senior vice president for planning and development. ''We're not talking about the kind of out-of-pocket spending people used to face with major medical fee-for-service plans, $1,000 or $2,000 for one admission. These are still generous benefits.''
At the same time, Tufts executives said they must find new ways to control medical costs. About 40 percent of the admissions the plan pays for in the Boston area are to teaching hospitals - which have high overhead because they purchase more expensive technology, train medical students, and conduct research - compared to 18 percent nationally. Meanwhile, a number of community hospitals, which have been asking HMOs to develop these new products, have gone out of business in recent years.
''We're not advocating in any way, shape or form a loss of choice,'' said Stephen Laverty, president of Northeast Health Systems, which includes Beverly Hospital. ''At the same time we have to figure out how to keep community medicine vibrant.''
Liz Kowalczyk can be reached by e-mail at firstname.lastname@example.org
This story ran on page A1 of the Boston Globe on 8/28/2001.