Health Tip of the Week: September 28, 2009

Problem: My carrier tells me how great their discounts are with medical providers; however, my health care cost continue to rise at double digit rates!!

Many people now believe that PPO’s have outlived their usefulness. For example, a recent Boston Globe article talks of collusion between BCBS and Partners Health to artificially raise reimbursement rates while providing BCBS with a “great discount” off artificially high rates! The employers are left to pick up the tab.

The solution: There are two solutions to overcome this issue. (1) Identify medical providers, both locally and nationally, with the lowest reported cost to Medicare, and arrange financial incentives in the plan to steer patients to these facilities. If a patient needs to travel more than a reasonable distance (Perhaps 125 Miles) to a high quality hospital for care, the plan would pay for the cost of transportation and accommodations for both the employee and a companion. The plan language would also need to be adjusted to reimburse, for example, 125% of the hospitals cost as full and final payment for services rendered. Hospitals that do not accept this payment, as payment in full would be eliminated from the “virtual PPO Network”. This plan design takes advantage of “pure Competition” both locally and nationally and can result in savings of 50% and more on many surgical procedures.

(2). Another solution is to amend the self insured plan document regarding plan reimbursements. Under this solution, the plan allowance for any surgical procedure will not exceed the “best price” that the plan can negotiate at a quality facility anywhere in the U.S. This model creates “pure competition” locally since local providers are offered the opportunity to match the plans best available rate for this procedure. Only hospitals with a HealthGrades rating of 3-5 (five is the highest rating available to hospitals) will be asked to bid for the procedure. If local hospitals will not meet the competition, the employee can either pay the difference or travel, at plan expense to the destination where the services will be covered in full. The plan also covers the cost of travel for both the employee and a companion.

Please contact AMF Risk Management solutions for more information. 617-770-0917 ext. 301.