Health insurers offer patients the option of paying extra for higher-priced care

When consumers and employers pick health plans, some increasingly are being offered a trade-off these days: They can get a hefty break on their premiums if they agree to pay more out-of-pocket when they use certain high-cost providers in their network or if they cut those providers out of their network altogether.

Blue Cross Blue Shield of Massachusetts this year introduced a "Hospital Choice Cost-Share" option. It tacks on extra charges when patients get certain services at 15 hospitals that the insurer says have higher costs than other providers. Patients pay an extra $1,000 for inpatient care or outpatient surgery at one of these hospitals, for example, and an extra $450 for high-tech imaging services.

Among the hospitals on the high-cost list are Harvard teaching hospitals Massachusetts General and Brigham and Women's in Boston as well as UMass Memorial Medical Center in Worcester.

Small businesses and individual policyholders who choose the new option can expect their premium increases to be reduced by half, to about 5 percent, says Jay McQuaide, a senior vice president at the insurer. "We believe our members can get the same quality of care in the lower-cost, high-value category," he says.

A report last year by Massachusetts Attorney General Martha Coakley found that although the prices negotiated between hospitals and insurers for services varied considerably, there was no correlation between higher prices and better quality of care.

Insurers say that businesses and individuals are increasingly interested in so-called "narrow" or "select" or "preferred" network plans. Like the BCBS of Massachusetts option, insurers generally first evaluate providers based on quality benchmarks. Those that meet standards are then segmented based on cost. Depending on the plan, pricier providers either don't make it into the network or are placed in tiers with higher out-of-pocket charges for consumers who use them.

Thomas Lee, a physician and the network president for Partners HealthCare, an integrated health-care system founded by Massachusetts General and Brigham and Women's hospitals, doesn't argue that people have to pay higher rates to get good care. Products such as Blue Cross's hospital choice option push providers to become more efficient, he says. "I don't think that's a bad thing."

The potential downside, he says, is that more-expensive hospitals often use the higher payments to subsidize less lucrative services, including burn units and pediatric mental health. When the market puts pressure on those higher payments, "what inevitably happens is that institutions look at what they're subsidizing and ask whether they can keep this going," he says.

That's a valid argument, but only up to a point, says Ha Tu, a senior health researcher at the Center for Studying Health System Change. "The difference in rates is not nearly explained by the subsidization of less profitable services or the teaching mission," she says.

For patients, the potential downside is that they may lose access to their doctors if they or their employers choose a plan with a narrower network. A doctor who only has admitting privileges at one of the higher-cost hospitals might not be a good choice for someone with the new Blue Cross plan, for example.

"The biggest thing is to educate consumers so they know what they're getting into," says Suzanne Curry, policy coordinator at Health Care for All, a Massachusetts-based consumer advocacy group.

In Minnesota, some people insured through HealthPartners have been getting an education in the new trade-offs. Last year the insurer introduced a network called Perform, which had only one difference from its other products: It excluded the Mayo Health System and its vaunted Mayo Clinic in Rochester. If any of the 34,000 customers in the Perform network want to include Mayo, their premiums could increase by up to 20 percent, says Andrea Walsh, executive vice president at HealthPartners.

Is it worth it? It depends on the situation. Barbara Gurstelle's older sister, Sally, died several years ago at age 50 after struggling for years with von Hippel-Lindau syndrome, a rare genetic disorder that causes abnormal blood vessel growth. Mayo Clinic doctors were the ones who finally were able to diagnose her illness. Over the years she received treatment elsewhere, but she returned to Mayo every so often for a workup. "It really contributed to her understanding of the disease," says Gurstelle, who lives near Minneapolis.

On the other hand, as a principal at a mid-size IT consulting firm who has taken part in trying to find affordable health insurance for the company, Gurstelle says she might be willing to accept Mayo as an out-of-network provider if the cost differential was big enough.

Her employees might agree. "Over time, employees faced with high out-of-pocket costs have become more willing to trade off some choice of providers for cost savings," says Tu.

Besides, networks aren't everything. "Most people want the option to go to Mayo, but if [a disease is] that bad a thing, you're going to find the money to go there anyway," Gurstelle says.

This column is produced through a collaboration between The Washington Post and Kaiser Health News. KHN, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health-care-policy organization that is not affiliated with Kaiser Permanente. E-mail questions@kaiserhealthnews.org.

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Doctors try new models to push health insurers aside

Just about everyone agrees that the way we pay for primary care needs fixing. Under the current insurance model, doctors get paid for procedures and tests rather than for time spent with patients, which displeases doctors and patients alike and increases costs. Now some medical practices are sidelining health insurers entirely, instead charging patients a moderate membership fee each month. The approach gets a nod in the health-care overhaul law. But not everyone agrees it's the right way to go.

Seattle-based Qliance Medical Management's three clinics typically charge a patient about $65 a month for unlimited access to the practice's 12 physicians and nurse practitioners. (Fees vary depending on the level of service and the patient's age.) Office appointments last up to an hour, and clinics have evening and weekend hours, with e-mail and phone access to clinicians as well. Routine preventive care and many in-office procedures are free; patients pay for lab work and other outside services "at or near" cost, and they get discounts on many medications.

The average $700 to $800 per patient that Qliance receives annually in membership fees is up to three times more than a doctor in a standard insurance-based practice might make per patient, says Norm Wu, the company's president and chief executive. "So we can have a third the number of patients and get the same revenue per clinician, but with much less overhead," he says. The approach, he says, allows Qliance to funnel more money into the care itself - through longer office hours, for example, or better diagnostic equipment.

Bruce Henderson joined Qliance when its first clinic opened in 2007. Although at the time he had health insurance through his job, Henderson, now 63, was soon laid off. Now he pays Qliance $79 a month for primary care and carries a catastrophic medical plan with a $10,000 deductible, for which he pays $225 a month.

Henderson has high blood pressure, high cholesterol and Type 2 diabetes. Working with his Qliance doctor, he switched to lower-cost medications and reduced his monthly out-of-pocket costs from $500 to $100. He goes in regularly for blood work and exams to keep his diabetes in check. Periodically he also has early skin cancers removed and last month was in three times for a cyst removal. "The doctors will sit there with you as long as you need them to," he says. "They don't rush in and out."

A 2007 Washington state law encourages "innovative arrangements between patients and providers," such as direct-pay primary care.

There are 15 other direct-pay practices in Washington state, according to a 2010 report to the legislature from the state's insurance commissioner. Some are more conventional "concierge" practices, which are aimed at well-to-do patients, charging as much as $850 a month for personalized, high-touch services. But the biggest growth is in practices that charge fees in the $85 to $135 range, according to the report.

Although Washington state may be a hotbed of direct-pay activity, primary-care physicians in many other states are offering similar services. At Access Healthcare in Apex, N.C., for example, members pay $39 a month plus $20 per visit for unlimited primary-care services, says the practice's founder, Brian Forrest. Having run the subscription-based practice for 10 years, he is now expanding and expects the first franchises to open this summer.

Forrest, a physician, says that half of his clients have insurance, with their typical copayments for primary-care visits averaging $35 to $50. "For lots of insured patients, it's actually cheaper for them to see us," he says.

Washington state's representatives in Congress and its governor, Chris Gregoire (D), successfully pushed to involve direct-pay practices in the federal health-care overhaul. Under a provision in that law, insurers selling plans on the state-based insurance exchanges that will open in 2014 will be allowed to "provide coverage through a qualified direct primary care medical home plan . . . ."

As envisioned by Qliance, direct-pay practices like the one it operates will link to custom "wraparound" health insurance policies that would pick up where Qliance leaves off, providing specialist care, hospitalization and the like.

"What we're inventing here is a new relationship between primary care and insurance," says Garrison Bliss, chief medical officer for Qliance Medical Management. Patients would essentially have two monthly health-care fees: one that they'd pay to a doctor's office for their primary care and another they'd pay to an insurer for all their other care. Providing better primary care should reduce insurance claims for emergency care and hospitalization down the road, Qliance's Wu says.

This idea raises a host of questions, policy experts say, including how direct-pay primary-care practices could charge monthly fees for preventive care services that under the new law are supposed to be provided free.

Some experts have more fundamental reservations about this approach. While agreeing that the current payment model for primary care doesn't work very well, Robert Berenson, a fellow at the Urban Institute, says "it doesn't make any sense" to provide primary care outside the health insurance system. "This is not going to work for a lot of patients who can't afford the out-of-pocket subscriptions."

This column is produced through a collaboration between The Washington Post and Kaiser Health News. KHN, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health-care-policy organization that is not affiliated with Kaiser Permanente. E-mail questions@kaiserhealthnews.org

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