By Julie
Appleby MARCH 13, 2019
One
health plan from a well-known insurer promises lower premiums but warns that consumers
may need to file their own claims and negotiate over charges from hospitals and
doctors. Another does away with annual deductibles but requires policyholders
to pay extra if they need certain surgeries and procedures.
Both
are among the latest efforts in a seemingly endless quest by employers,
consumers and insurers for the holy grail: less expensive coverage.
Premiums
are 15 to 30 percent lower than conventional offerings, but the plans put a
larger burden on consumers to be savvy shoppers. Even with those concerns, the
offerings tap into a common underlying frustration.
“Traditional
health plans have not been able to stem high cost increases, so people are
tearing down the model and trying something different,” said Jeff Levin-Scherz,
health management practice leader for benefit consultants Willis Towers Watson.
New
types of insurance plans are sprouting up as employers face rising health care
costs and individuals who buy their own coverage without an Affordable Care Act
subsidy struggle to pay premiums. That has led some people to experiment with
new ways to pay their medical expenses, such as short-term policies or
alternatives like Christian sharing ministries, which are not insurance at all,
but rather cooperatives where members pay one another’s bills.
Now some
insurers — such as Blue Cross Blue Shield of North Carolina and a Minnesota
startup called Bind Benefits, which is partnering with UnitedHealth Group — are
coming up with their own novel offerings.
Insurers
say the two new types of plans meet the ACA’s rules, although they interpret
those rules in new ways. For example, the new policies avoid the federal law’s
rule limiting consumers’ annual in-network limit on out-of-pocket costs: one by
having no network and the other by calling additional charges premiums, which
don’t count toward the out-of-pocket maximum.
But
each plan could leave patients with huge costs in a system where it is
extremely difficult for a patient to be a smart shopper — in part, because they
have little negotiating power against big hospital systems and partly because
illness is often urgent and unpredicted.
If the
plans prompt doctors and hospitals to lower prices, “then that is worth taking
a closer look,” said Sabrina Corlette, a research professor at Georgetown
University’s Health Policy Institute. “But if it’s simply another flavor of
shifting more risk to employees, I don’t think in the long term that’s going to
bend the cost curve.”
Balancing
Freedom, Control And Responsibility
The
North Carolina Blue Cross Blue Shield “My Choice” policies aim to change the
way doctors and hospitals are paid by limiting reimbursement for services to 40
percent above what Medicare would pay. The plan has no network of doctors and
hospitals.
This
approach “puts you in control to see the doctor you want,” the insurer says
on its website. The plan is available to
individuals who buy their own insurance and small businesses with one to 50
employees, aiming particularly at those who cannot afford ACA plans, said
Austin Vevurka, a spokesman for the insurer. The policies are not sold on the
ACA’s insurance marketplace, but can be purchased off-exchange from brokers.
With
that freedom, however, consumers also have the responsibility to shop around for
providers who will accept that amount. Those who don’t shop, or can’t because
it’s an emergency, may get “balance-billed” by providers unsatisfied with the
flat amount the plan pays.
“There’s
an incentive to comparison shop, to find a provider who accepts the benefit,”
said Vevurka.
The
cost of balance bills could range widely, but could be thousands of dollars in
the case of hospital care. Consumer exposure to balance bills is not capped by
the ACA for out-of-network care.
“There
are a lot of people for whom a plan like this would present financial risk,”
said Levin-Scherz.
In
theory, though, paying 40 percent above Medicare rates could help drive down
costs over time if enough providers accept those payments. That’s because
hospitals currently get about double Medicare rates through their negotiations
with insurers.
“It’s a
bold move,” said Mark Hall, director of the Health Law and Policy Program at
Wake Forest University in North Carolina. Still, he said, it’s “not an optimal
way” because patients generally don’t want to negotiate with their doctor on
prices.
“But
it’s an innovative way to put matters into the hands of patients as consumers,”
said Hall. “Let them deal directly with providers who insist on charging more
than 140 percent of Medicare.”
Blue
Cross spokesman Vevurka said My Choice has telephone advisers to help patients
find providers and offer tips on how to negotiate a balance bill. He would not
disclose enrollment numbers for My Choice, which launched Jan. 1, nor would he
say how many providers have indicated they will accept the payments.
Still,
the idea — based on what is sometimes called “reference pricing” or “Medicare
plus” — is gaining attention.
North
Carolina’s state treasurer, for example, hopes to put state workers into such a
pricing plan by next year, offering to pay 177 percent of Medicare. The plan has
ignited a firestorm from hospitals.
Montana
recently got its hospitals to agree to such a plan for state workers,
paying 234 percent of Medicare on average.
Partly
because of concerns about balance billing, employers aren’t rushing to buy into
Medicare-plus pricing just yet, said Jeff Long, a health care actuary at
Lockton Companies, a benefit consultancy.
Wider
adoption, however, could spell its end.
Hospitals
might agree to participate in a few such programs, but “if there’s more take-up
on this, I see hospitals possibly starting to fight back,” Long said.
What
About The Bind?
Minnesota
startup Bind Benefits eliminates annual
deductibles in its “on-demand” plans sold to employers who are opting to
self-insure their workers’ health costs. Rather than deductibles, patients pay
flat-dollar copayments for a core set of medical services, from doctor visits
to prescription drugs.
In some
ways, it’s simpler: no need to spend through the deductible before coverage
kicks in or wonder what 20 percent of the cost of a doctor visit or surgery
would be.
But not
everything is included.
Patients
who discover during the year that they need any of about 30 common procedures
outlined in the plan, including several types of back surgery, knee arthroscopy
or coronary artery bypass, must “add in” coverage, spread out over time in
deductions from their paychecks.
“People
are used to that concept, to buy what they need,” said Bind’s CEO, Tony Miller.
“When I need more, I buy more.”
According
to a company spokeswoman, the add-in costs vary by market, procedure and
provider. Less than 7 percent of members should need add-in services in any
given year, Bind estimates.
On the
lower end, the cost for tonsillectomy and adenoidectomy ranges from $900 to
$3,000, while lumbar spine fusion could range from $5,000 to $10,000.
To set
those additional premiums, Bind analyzes how much doctors and facilities are
paid, along with some quality measures from several sources, including
UnitedHealth. The add-in premiums paid by patients then vary depending on
whether they choose lower-cost providers or more expensive ones.
The ACA’s
out-of-pocket maximums — $7,900 for an individual or $15,800 for a family —
don’t include premium costs.
The
Cumberland School District in Wisconsin switched from a traditional plan, which
it purchased from an insurer for about $1.7 million last year, to Bind. Six
months in, Superintendent Barry Rose said, it is working well.
Right
off the bat, he said, the district saved about $200,000. More savings could
come over the year if workers choose lower-cost alternatives for the “add-in”
services.
“They
can become better consumers because they can see exactly what they’re paying
for care,” Rose said.
Levin-Scherz
at Willis Towers said the idea behind Bind is intriguing but raises some issues
for employers.
What
happens, he asked, if a worker has an add-in surgery, owes several thousand
dollars, then changes jobs before paying all the premiums for that add-in
coverage? “Will the employee be sent a bill after leaving?” he said.
Julie Appleby: jappleby@kff.org,
@Julie_Appleby
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