Blue Shield of California Introduces Tiered Copayments for Hospital Visits
Blue Shield of California yesterday announced a "two-tiered" hospital system that will charge members higher copayments for being treated at hospitals not included on the plan's "choice" list of facilities, the San Francisco Chronicle reports. Similar to tiered drug programs, in which copayments vary for generic and brand-name drugs, Blue Shield has put "more expensive" hospitals on an "affiliated" list and will charge patients more for using them. The new system is "one of the most immediate ways insurers and employers can pass on to consumers some of the rising costs in health care." Hospital treatment accounts for more than 33% of all health care spending, the Chronicle reports. The preferred list is based solely on reimbursement rates -- which are kept secret -- and not on the hospitals' "quality or reputation" (Colliver, San Francisco Chronicle, 1/31). HMO members admitted to facilities not on the preferred list will pay $100 to $300 more per day. PPO members will be charged about 10% more for hospitals not on the list. Blue Shield Chief Operating Officer Ken Wood said the new system was implemented instead of dropping the "more expensive" hospitals from the network completely or raising premiums for all enrollees (Wolfson, Orange County Register, 1/31). Less than 20% of the hospitals that contract with Blue Shield will be on the more expensive list, according to Blue Shield officials (San Francisco Chronicle, 1/31). However, the system could "drive" hospitals to make "financial concessions" in order to be placed on the preferred list. Blue Shield spokesperson Tom Epstein said, "For hospitals that are concerned about not being in the 'choice' category, this does create an incentive for them to come in and talk to us about how their rate structure can be adjusted."
Blue Shield is not the first health plan in the state to adopt a tiered rate structure for hospitals. Last year, PacifiCare of California implemented a similar policy, and Health Net is expected to announce a tiered hospital plan in the next few weeks. Ian Morrison, a health industry consultant, said the trend is in response to the high rate increases hospitals have been demanding from health plans since the mid-1990s. "This is about reversing the negotiating power that's been amassed by hospitals. ... This is the wave of the future," he said (Orange County Register, 1/31). However, some hospital groups said the system does not curb rising health costs. According to Bill Gleeson, a spokesperson for Sutter Health, a network of hospitals and physicians whose facilities were not included on the preferred list, "This tiered approach simply shifts costs from the employer to the consumer and that doesn't address the long-term problems," such as the increasing number of uninsured patients and the state's seismic upgrade mandates. Jan Emerson, a spokesperson for the California Healthcare Association, a hospital trade association, said the system would negatively impact patients in rural areas. "If you have one hospital in a community and that's the only hospital in a 60-mile radius, you're going to make people pay more out of their pocket? That's really an unfair marketing tactic" (San Francisco Chronicle, 1/31).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.