JULY 1998 - Members Remain Protected From Balance Billing - In an effort to gain control over the fast rising cost of health care, the state’s Group Insurance Commission (GIC) is taking steps to equalize payments made to health care providers. A new system will be implemented by which doctors and hospitals will be reimbursed for their services.

The new Market Based Reimbursement (MBR) plan, which takes effect July 1, is viewed as a full frontal assault on the sky-rocketing costs of the Indemnity Plan. Studies indicate that some health care providers inflate charges to the Indemnity Plan to recover revenues lost under contracts with Health Maintenance Organizations (HMOs).

Historically, HMOs enter into contracts with health care providers that limit the charges that can be made for a given medical procedure. Typically, an identical visit to the doctor costs far less under an HMO than it does for the Indemnity Plan.

Under the MBR plan, health care providers will be paid the going market rate for each procedure they perform. The GIC will pay essentially the same price for a particular procedure regardless of which plan the retiree is covered under.

The change in reimbursement will be implemented over the next six months. MBR changes for inpatient procedures, doctors visits, and lab services will take effect this month. In January, the GIC will make the changes to the outpatient system. At this time, MBR is only planned in Massachusetts.

A comprehensive study conducted over the past two years has shown dramatic cost differences between the Indemnity Plan and the nine other health plans offered by the GIC. Alarming is the apparent trend of shifting costs to the Indemnity Plan.

GIC officials point to evidence gathered through their Medtac tracking system, which clearly shows increased costs for the Indemnity Plan. Several years ago, the GIC became one of the first health care managers in the country to begin a detailed analysis of its health plans through data collection.

The data collected by Medtac, has proven useful, as GIC officials redraft the state’s health care offerings. Medtac collects detailed information on all health care services billed to the GIC plans. GIC and Medtac officials have gone to great lengths to ensure the information remains confidential and is used in the proper manner.

What officials have learned is what many had suspected over the past few years. The cost of an identical medical procedure, with the same provider, varies greatly depending upon who pays the bill.

For instance, the cost to treat a heart attack victim more than doubles when the patient is an indemnity plan subscriber, as opposed to an HMO. Under the Indemnity Plan, operated by Unicare, the cost of treating a typical heart attack is $18,268. Under one of the eight HMO plans, the cost is roughly $8,168.

Hip or knee replacement surgery costs $26,751 under Unicare, while $17,740 under HMOs. From childbirth to a fifteen minute office visit, the study showed significant price increases for the Indemnity Plan.

“It is obvious to anyone who has seen the data, comparing the HMO costs with the traditional Indemnity Plan, that something has to be done. For the Indemnity Plan to pay double what a procedure actually costs is highway robbery,” said Association Legislative Liaison Shawn Duhamel. “The result is that our members are being unfairly driven out of the plan of their choice.”