Frequently Asked Questions: New Insurance Plans & Products
The 2006 health reform law that mandated health insurance coverage for all adults in the Commonwealth of Massachusetts has led to the state having the highest percent of insured citizens in the US (98%) and among the nation’s highest health care costs.
Over the last three years, health care reform has given way to payment reform as the state, providers, payers and individuals struggle with how to afford universal coverage. Massachusetts is now seeing experiments in payment models, care integration models and care delivery models. New insurance products, such as Tiered Plans and Limited Networks have also come onto the market in the last three years.
Below is a list of Frequently Asked Questions that may guide you through the new health insurance landscape in Massachusetts.
What is the new product called a Limited Network?
A Limited Network product, also called Select, Narrow or Focused Network product, is an insurance plan that limits where employees receive health care, usually in exchange for lower premiums. These plans prevent access to or “limit out” more expensive doctors and hospitals. Examples of these networks include the recently proposed Harvard Pilgrim Health Care’s Focus Network MA; Steward Health Care’s Community Choice; and the state’s Group Insurance Commission’s (GIC) Spirit and Primary Choice products.
How is that different from a Tiered Network or Plan?
Tiered Networks or Tiered Plans rank doctors and hospitals into tiers based on cost and quality (where there is quality data available). Members are able to choose from a wide selection of doctors and hospitals, but the amount of their copayment and/or deductible will be higher—often significantly higher—if they choose a higher-tier physician or hospital. Examples of these products are Blue Cross Blue Shield’s Hospital Choice Cost-Share, Harvard Pilgrim’s Choice Net and Tufts Health Plan’s “Your Choice”. The GIC also has tiered products.
Global payments, ACOs and AQCs are regularly mentioned in the news. What are they?
Another approach to lowering health care costs is to change the way doctors and hospitals are paid. The traditional way health care is paid for is the “fee-for-service” system: Doctors and surgeons bill for office visits, tests and procedures. Hospitals and health centers bill for inpatient stays, tests and equipment usage. This system incents caregivers to provide more services to make more money.
In mid-2009, the Massachusetts Special Commission on the Health Care Payment System recommended that the state adopt “global payments” within five years as the predominant form of provider payment within a five-year timeframe.
A variety of strategies and insurance products are structured to shift the financial risk to health care providers (primary care physicians, specialists and hospitals), in an effort to better coordinate care and reduce unnecessary utilization or duplication of healthcare services.
Global payments give providers an annual budget to cover a patient’s care during a set period of time, similar to what was known traditionally as capitation. At the end of a year, providers may be rewarded if they stay within their budget and and meet quality standards, or risk penalties if they do not.
Bundled payments, a type of global payment, issue a single payment for a package of services related to an episode of care
Accountable Care Organizations are formed by groups of providers (primary care physicians, specialists and hospitals) to care for a given population of patients. Primary care physicians direct and coordinate care in what is known as a Medical Home model. The providers are paid according to quality metrics and reductions in the total cost of care for the assigned patients. This makes providers themselves accountable for care management and shifts the incentive to them to limit unnecessary expenditures.
Alternative Quality Contract (AQC) is an ACO offered by Blue Cross Blue Shield of Massachusetts. BCBS sets five-year contracts with physician practices and hospitals, paying them based on the quality, not just the quantity of the care they provide to plan members. Payment includes performance incentives based on health outcomes to limit incentives to provide less care when more is needed. In January 2012, Boston Children’s Hospital entered into an AQC contract with BCBS.