Blue Cross Blue Shield of Massachusetts held growth in the cost of medical services for its 2.8 million members to under 1 percent from 2011 to 2012.
That’s according to written testimony the insurer has prepared for next week’s much-anticipated state health cost trends hearings which will be held by the new Health Policy Commission. Top executives will be describing, under oath, their efforts to rein in health care costs and meet a 3.6 percent cost growth benchmark that was established by last year’s health cost containment legislation, known as Chapter 224.
The fact that the largest, and historically most expensive, insurer was able to do rein in total medical expenditure growth to under 1 percent is due to several factors. One is the success of its Alternative Quality Contract, a global payments model that incentivizes providers to keep members healthy, rather than order a bunch of extra tests.
But another factor, it must be said, is the success of Blue Cross in deploying the new cost containment law to negotiate with hospitals and doctors to accept lower increases in the unit cost for medical services.
Here’s what the data show:
In 2010, Blue Cross’ unit cost for care – the prices hospitals and doctors charge for specific procedures – rose an average of 2.33 percent. In 2011, it grew by 2.21 percent. But in 2012, unit prices rose only .45 percent. This is a dramatic drop in hospital and doctor price increases.
Blue Cross was also helped by declining utilization, due in part to more members having plans with higher deductibles and co-pays. Increases in costs due to utilization were 0.9 percent in 2010, 0.65 percent in 2011 and 0.25 percent in 2012.
Date: Sep 25, 2013