Monday, December 03, 2012

Tiers in my eyes

No, that's not a typo, but the latest strategy by Big Insurance to find creative ways to rein in costs, of both health care and health insurance It's actually a pretty cool idea.

FoIB Jeff M recently attended a Lunch-And-Learn put on by Blue Cross/Shield of North Carolina (pizza, natch). The purpose was to roll-out the next generation of group insurance products, and some of the new strategies being built into them in anticipation of the full implementation of the ObamaTax in a little over a year.

BX introduced two new plans for 2013: "Blue Value" for groups of 1-50 1-48 (what rational employer wants to butt up against the mandate?) and "Blue Select" for groups of 51 and up.

They share a common goal: to reduce rates by anywhere from 2-12 percent over existing plans.

And how, exactly, do they intend to accomplish this?

Common sense. That is, under the ObamaTax, there's a practical limit of how much you can tweak the internal plan design. Ratings structures will be closely monitored by Mmme Secretary Shecantbeserious, and the Medical Loss Ratios will continue to exert downward (or is that upward?) pressure. Carriers have already "adjusted" how prescription drugs are covered, what with separate deductibles, tiered co-pays and cost-sharing, formulary changes, and the like. There's not a lot of wiggle room left on those.

But the concept of "tiers" doesn't have to apply only to meds. What if you could unbundle your provider network, and steer your insureds to cheaper/more efficient docs and hospitals? Might not that improve the bottom line? Of course it would, but how to get that to happen?

Well, you bake it into the cake policy.

Take a look at the different plan designs (generously provided by Jeff M and available here). The change is clearest with the Blue Select plans, where there's a 20% out-of-pocket differential between Tier 1 and Tier 2 providers. That's a heck of an incentive to go online to confirm that your doc (or hospital) is in the "right" Tier.

It has an additional effect, as well: when you reward something, you get more of it. By incenting insureds to patronize Tier 1 providers, BX is rewarding both the consumer (who pays less) and the provider (who, presumably, enjoys a bump in patient count). And Tier 2 providers will get this message, one way or the other.

Very interesting - Thanks, Jeff!
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