Area Hospitals On Insurer's Expensive List
For the past few months, Ed Moore, president and CEO of Harrington Memorial Hospital, has been grappling with the unpleasant fact that the largest health insurer in Massachusetts now classifies his hospital as more expensive than the majority of its peers.
“I would be dishonest if I said I didn’t worry about it or care,” Moore said. “We’re having debates with Blue Cross as we speak.”
Under a new health plan for small businesses announced by Blue Cross in February, certain medical services at Harrington’s Southbridge and Webster campuses as well as both campuses of UMass Memorial Medical Center in Worcester will cost more for patients who elect to go to those facilities.
The medical center and Harrington are on a list of 17 hospitals in the state that the insurer, under Blue Cross Blue Shield’s Hospital Choice Cost-Share plan, classifies as high-cost.
That’s compared to 58 other hospitals that are deemed “high-value” under the plan, which has captured about 30 percent of Blue Cross’s small business renewals since February, said Larry Croes, vice president of commercial markets for Blue Cross.
Croes declined to say how many people have enrolled in the plan so far but expected another big bump this month. April is typically a busy re-enrollment period for small businesses.
Mixed Reviews
The Associated Industries of Massachusetts has hailed the plan as an innovative way to reduce costs.
The hospitals on the high-cost list, left with what amounts to a scarlet letter, are not as thrilled.
Moore said that a recent evaluation of his hospital by Tufts Health Plan found that Harrington’s costs were in line with 93 percent of other hospitals in the state. He said his efforts to figure out the difference in methodology between the two insurers have not been successful.
Moore said he has asked Blue Cross for information on its formula but has not received a satisfactory answer.
“What I don’t find fair is there’s not a full level of transparency,” he said. “Am I in the tier forever? How do I get out of it and improve?”
Jenna McFee, a spokeswoman for Blue Cross, insisted that the insurer has been open with hospitals questioning their status.
“Senior leadership has offered to speak with the CEO personally,” McFee said.
Robert Brogna, a spokesman for UMass Memorial Medical Center, said leadership acknowledges that as a tertiary medical center and teaching hospital, it will always have higher costs than a community hospital. But he said UMass Memorial Medical Center cut costs last year and hopes to cut $89 million this year.
The effects of the Blue Cross plan on the two hospitals are yet to be seen. Both Harrington and UMass say they have not yet seen any decline in their respective inpatient admission rates.
“While we are concerned, we have not noticed any significant impact yet other than some increase in bad debt and we do attribute that to patients who choose to utilize our services and pay a higher co-pay,” Brogna wrote in an email.
He said UMass usually ends up eating those costs.
Brogna also said that medical center officials feel that the Blue Cross plan penalizes the sickest patients who seek out UMass specialists. He said the hospital has been trying to mitigate the effect by working with its network of partner hospitals, all of which are on the lower-cost list.
Douglas Crasper, Harrington’s chief operating officer, has similar concerns. He noted a recent study from the Rand Corp. about higher deductible plans. The study found that patients who need care may elect to skip it because of higher costs.
Crasper used the example of a screening mammogram, which is free under state law. But if a hospital finds a potential problem with a patient’s mammogram, that patient is advised to get another, called a diagnostic mammogram, which is not free.
Crasper said that longtime patients have called his office upset that they are being offered a financial incentive not to go to Harrington. Some have told him they may have to go to Saint Vincent Hospital in Worcester, which is on the lower cost list.
Harrington ranks among the highest in the state for Medicare and Medicaid reimbursements, which means that a disproportionate amount of its clientele is needier than that of most hospitals. Since the state does not reimburse fully for those programs, Crasper said, Harrington must make up the difference from private plans.
Crasper said that he has been discussing the new plan with brokers, who tell him they think it will gain more traction in the market compared with previous tiered plans.
Blue Cross isn’t the first to come up with the idea. Fallon Community Health Plan, Tufts Health Plan, and Harvard Pilgrim and Harvard Community Health Plan have all introduced limited or tiered network plans.
Such plans don’t appear to be going anywhere. The Rand Corp. study predicts that plans with higher deductibles and co-pays will become more prevalent as providers, insurers and the government seek to control premium costs.
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