Health insurers respond to Coakley's report

By Jessica M. Karmasek | Jun 23, 2011

Martha Coakley

BOSTON (Legal Newsline) -- Blue Cross Blue Shield of Massachusetts, while it commended Attorney General Martha Coakley for her "sustained attention" to rising health care costs, touted its own approach for reducing costs on Wednesday.

BCBSM is the largest private health plan in the state, providing coverage to nearly 3 million members.

The insurer said in a statement following the release of Coakley's report, based on information received from major Massachusetts health insurers and providers pursuant to a 2008 law, that it agrees with its "fundamental conclusion" -- "to control cost growth, we must shift how we purchase health care to align payments with value, measured by those factors the health care market should reward, such as better quality."

"As Massachusetts leading private health plan, we have already begun implementing strategies that are moving us rapidly in this direction. We're encouraged that the attorney general's report has affirmed as 'showing promise' and a 'step in the right direction' two key strategies that we at Blue Cross have underway including innovative new insurance products, such as our Hospital Choice Cost Share tiered network plan that has seen rapid market adoption, as well as new payment models that emphasize value-based purchasing," BCBSM said.

A shift to "global payments" is unlikely to control rising health care costs without also addressing provider price disparities and encouraging consumers to make better purchasing decisions, according to Coakley's report.

The attorney general's report found that providers who are globally paid in Massachusetts do not have consistently lower medical expenses. In addition, the report found that medical spending is on average higher for the care of health plan members with higher incomes.

To reduce the growth in health care spending in the state, the attorney general recommended taking steps to give consumers more options to make value-based purchasing decisions through tiered and limited network health plans.

Because historic price disparities -- not related to value or the quality of care -- distort how the market functions, Coakley also recommended temporary restrictions on how much prices may vary for comparable services until tiered and limited network health plans, and market transparency, can improve market function.

The report noted that global payments should ultimately result in better care coordination but won't lead to lower total medical spending unless underlying market disparities are addressed.

Wednesday's was the attorney general's second major report on health care costs and cost drivers. Over the past two years, Coakley's Health Care Division has conducted an extensive review of never before obtained data from state health insurers and providers.

BCBSM said it was "enthusiastic" about its new payment model, the Alternative Quality Contract, or AQC, which now includes more than a third of its provider network and slightly less than half of its in-state HMO membership.

"The early results show the AQC is achieving our twin goals to both improve the quality of patient care and reduce the historical rate of increase in health care costs," the insurer said.

BCBSM said in the contract's first year, 2009, the AQC groups produced the greatest one-year improvement in quality performance ever seen in its network.

"At the same time, these groups have moderated the rise in medical spending faster than the rest of the network and are on track to achieve our original 2008 goal to reduce annual medical cost trends by one-half over five years," it said.

The insurer said it is committed to "continued engagement" with Coakley, Gov. Deval Patrick, state lawmakers, physicians, hospitals, employers and consumers to make health care more affordable.

The Massachusetts Association of Health Plans released its own statement Wednesday.

In it, President Lora Pellegrini agreed with the attorney general that limited and tiered networks and "greater transparency" are essential in driving down costs.

However, providing relief to state businesses and residents requires dealing directly with the price of services, she said in a statement.

"As the Legislature considers measures to reform the state's health care payment system, we would urge that House and Senate leaders first address the market power issues highlighted by the attorney general to make health care affordable for employers and consumers and to lay the appropriate foundation for payment reform," Pellegrini said.

The non-profit organization represents 13 health plans that provide coverage to more than 2 million residents.

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