Managed Care Organizations to Levy Surcharge for Care at More Expensive Hospitals

Hoping to make health care consumers more "financially responsible" for their decisions, several Massachusetts managed care organizations will release health plans next year that "level a surcharge" on patients who receive care at "brand-name" academic medical facilities or other "high-cost" hospitals, the Boston Globe reports. HMOs currently offer little financial incentive to patients to seek care from a primary care physician rather than a more expensive specialist or to have surgery at a less expensive community hospital rather than a teaching hospital. By seeking more expensive care, the Globe reports that patients have increased medical costs for HMOs, which pass the additional expenses to employers through higher premiums. Health plan officials said that with premium rates expected to increase for the fourth straight year, employers have been "begging" for new plans with hospital surcharges. In Massachusetts, for example, premiums will likely increase from 8% to 15% next year. As a result, Tufts Health Plan will release an HMO product that will charge patients "several hundred dollars" for each visit to a more expensive hospital. Employers who purchase the new plan will help set the co-payments, but Tufts officials expect that admissions to a community hospital will cost $250 and care at a teaching hospital will cost $500. The plan will also charge for outpatient procedures -- $25 to $35 for a specialist and $10 to $15 for a primary care physician. Employers who purchase the new health plan will receive discounts ranging from 2% to 9%, the Globe reports. However, Tufts will still offer health plans without the additional hospital co-payments. Kevin Counihan, Tufts senior vice president for sales and marketing, said, "This is what our employers want. They're looking for a greater level of consumer engagement. And they're interested in anything that lowers costs." The Globe reports that Aetna and California-based PacifiCare plan to offer similar plans next year. PacifiCare, however, will divide hospitals into "high" or "low" cost groups. Visiting a higher-cost facility will cost patients $100 to $400.

'Bankrupting' Patients?
The Globe reports that teaching hospitals charge more to treat patients to cover their "large overhead," which includes expenses such as technology, medical student training and research. Some hospital executives and consumer advocates, however, said that the new health plans will prevent some patients from receiving the "expertise" offered at teaching hospitals. Dolores Mitchell, who manages health benefits for Massachusetts, said, "My gut reaction is that there are times when it's appropriate and necessary to go to a teaching hospital, and to say you can only go if you can cough up $500 ... that just sticks in my craw." Ellen Zane, with Partners HealthCare, which includes the teaching facilities Massachusetts General Hospital and Brigham and Women's Hospitals, expressed "concern" that patients will have to pay additional costs for a procedure at a teaching facility that community hospitals do not offer, such as a heart transplant. However, Jon Kingsdale, a vice president with Tufts, said that the health plans would still offer "generous benefits" to consumers. He said, "We're not talking about bankrupting people here. We're not talking about the kind of out-of-pocket spending people used to face with medical fee-for-service plans, $1,000 or $2,000 for one admission" (Kowalczyk, Boston Globe, 8/28).