| Issue: # 86 | October 29, 2012 |
 | | Robby Benson & Donny Most |
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Greetings!
In 2006, the passage of Massachusetts health reform required everyone to buy health insurance. Health Exchanges and Associations would be created and it was promoted that health insurance premiums would drop. This never made sense to us. Health Insurance is not a "widget", whereby the more you buy you automatically get a better price.
The only way to control premiums is:
- 1) control costs by making the underlying costs more transparent
- 2) reward people for good health
Over the past few years, we have made it a point to discuss with our clients how the health insurers pay hospitals, labs and imaging centers different fees for the same procedures. The health plans have responded by now offering plans that 1) have employees paying less out of pocket when they utilize the lower cost providers and 2) pay/reward employees to stay healthy. Now\nO
In this newsletter , read below how the insurance carriers have made similar changes on the reimbursement to doctors and hospitals that also 1) control costs and 2) reward for good health. Perhaps things are moving in the right direction..
Good luck to everyone with Hurricane Sandy. Stay safe! If you have a question, send an email to Bill or Vanessa today.
Bill Randell CLU,CHFC,
Vanessa Costa CLU,CHFC,
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Partners strikes 4 year deal with Harvard-Pilgrim
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Partners HealthCare System has struck a new four-year deal with Harvard retro-active to January running through the end of 2015. This deal will limit future reimbursement increases to 2 - 3 percent, while the old contract was 5 - 6 percent.
This should prove to be a very good thing for future increases from Harvard-Pilgrim. Contracts like these have a direct relation to the premiums Harvard-Pilgrim must charge. Boston Globe story.
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Global payment arrangement
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In the Boston Globe story above, you will note that the deal between Harvard-Pilgrim and Partners is referred to as a new "global payment" method, as opposed to "fee for service". The later is self explanatory. What is the former?
Doctors and hospitals enter "alternative quality contracts", which pay a negotiated total sum to provide all the care patients will need over the course of a year. If the medical groups come under budget, they are rewarded with a share of the savings. if they exceed the target, they must absorb part of the loss.
The danger under this agreement is that doctors may be tempted to deny patients care to keep costs below target. To alleviate that problem, the contract provides substantial bonuses for improving the quality of care.
How has this been working for Blue Cross, who has been doing this the past 3 years covering approximately 640,000 subscribers? The latest independent evaluation of the Blue Cross program, published online by the journal Health Affairs in July, showed that groups covered by alternative quality contracts spent 1.9 percent less on average on medical care than similar Blue Cross groups without such contracts in the first year and 3.3 percent less in the second year.
Savings were achieved primarily by using lower-cost hospitals of high quality and performing laboratory tests and imaging at non-hospital outpatient facilities. Money was also saved by reducing the use of surgical stents for treatment of clogged arteries and high-priced radiology scans. It is noted that "experts believe there is a lot of unnecessary treatment with no benefit to the patient ."
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Dental insurance reminders
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If you have dental insurance, the annual maximum is usually tied to the calendar year, as opposed to the plan year. In other words, you have two months left to maximize your dental benefits before starting your annual maximum all over again January 1st.
A client of ours, who has a high deductible / Health Savings Account (HSA ), had a tooth knocked out playing basketball. His first question was if there was any coverage through his medical insurance. Since replacing his tooth was not medically necessary, and deemed cosmetic, there was no coverage.
We reminded him, however, that he could withdraw monies from his Health Savings Account tax-free to pay for the unreimbursed medical expenses. The Health Savings Account shifted an expense that most likely would not have been deductible to a tax deductible expense lowering the net cost by approximately a third.
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Quest Diagnostics Chooses Marlboro
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Last newsletter, we mentioned Quest Diagnostics was going to open a major facility in Central Massachusetts. Quest will move into the former Hewlett-Packard office complex in Marlborough, moving more than 950 jobs to the city.
The New Jersey-based provider of medical testing services will spend more than $75 million to create a Northeast laboratory facility on the former Hewlett-Packard site, which has been vacant for more than two years.
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