Day: June 18, 2012

In an attempt to reduce healthcare costs, Blue Cross Blue Shield of  Massachusetts introduced a new plan last month that chargesmembers hefty fees for seeking care at more expensive hospitals–and it has become the insurer’s fastest new  product launch ever.

The Blue Cross Hospital Choice plan  charges members, for example, an extra $1,000 for an inpatient stay or  outpatient surgery, and $450 more for an MRI at 15 higher-cost hospitals,  including Massachusetts General and Brigham and Women’s hospitals. Companies and  workers that sign up get a significant break on their health insurance premiums,  increasing by 4.5 percent for the first quarter of the yearinstead of 10 percent, the Boston Globe reports.

Other Massachusetts insurers also report brisk business  in plans that offer lower premiums in exchange for limits on use of high-cost  care. These plans either charge consumers extra for receiving  care from popular but expensive hospitals or doctors, or bar them  altogether from seeking treatment at those institutions and  practices.

Editor’s Note: We applaud Blue Cross for this “take charge” approach to health care costs. The ultimate step is to cut out the more expensive hospitals completely from their network of providers – we wonder why they dont do that. In fact, why have a network at all?  BCBS representative: “Here is our list of participating hospitals. Make sure, though, you dont go to the ones marked in red because their costs are really high.”

Blue Shield of California has been engaging in “death spiral” tactics by pushing older and sicker members into low-benefit, high-deductible plans, according to a lawsuit filed Wednesday against the company.

Consumer Watchdog sued Blue Shield, claiming the insurer closes certain health plans to new members and then sharply increasing rates for the plans’ remaining members until they no longer can afford the prices. This practice effectively forces those members to either to pay the higher rates or switch into policies with less coverage, reported the San Jose Mercury News.

These so-called “death spiral” policies violate a 1993 California law requiring insurers that are closing a health plan to pool the members’ health histories with other members to minimize rates increases for those left in the closed plan. That law also requires that insurers offer members the option to switch to a comparable plan, according to the San Francisco Chronicle.

“Death spirals are the result of insurers behaving at their worst,” Jerry Flanagan, staff attorney for Consumer Watchdog, said at a press conference announcing the lawsuit. “Instead of providing coverage to loyal customers who have paid their premiums, Blue Shield pushes consumers into skimpier coverage or prices them out of care altogether when they are sick and need insurance the most.”

The lawsuit specifically accuses Blue Shield of closing eight policies in 2010 that placed more than 60,000 members in a “death spiral” and of planning to close an additional 23 policies on July 2, affecting more than 250,000 members, the Santa Monica Mirror reported.

Continue reading Blue Shield Sued For “Death Spiral’ Tactics