Blue Cross Revises Direct Pay Overhaul
By Felice J. Freyer, The Providence Journal, R.I.
Jan. 25–PROVIDENCE — Faced with opposition from the attorney general’s office and criticism from subscribers, Blue Cross & Blue Shield of Rhode Island has changed its proposal to overhaul its Direct Pay program.
The revised version of the program, which is for people who buy health insurance on their own rather than through an employer, includes a 1-percent reduction in all the proposed rates, changes the deductible and premiums for one of the four plans, and has new provisions to ease the transition for the 14,500 Direct Pay enrollees. If approved by the state health insurance commissioner, the revised program would take effect April 1.
Blue Cross lawyer Normand G. Benoit presented the changes yesterday as the Office of the Health Insurance Commissioner continued its hearing into Blue Cross’ proposal to redesign its money-losing Direct Pay program. The insurer proposes to replace its previous three Direct Pay plans with four new ones that have higher premiums, deductibles and copayments. The proposal also includes a program to subsidize the premiums of lower-income Direct Pay enrollees.
In two moves that Benoit called “extraordinary,” Blue Cross proposes to give some leeway to people who end up choosing a Direct Pay plan that doesn’t work for them. They can switch plans, and their second choice will be effective retroactively for 60 days. And when they switch during the open enrollment period, they will be allowed to carry over any expenses charged against the deductible. This means, Benoit said, that subscribers are “going to have a few months to test-drive the product.”
Blue Cross also made a change in the premium-assistance program. People who are eligible for the subsidies will get them immediately deducted from their bills, rather than having to wait for a reimbursement check.
The insurer is also substituting one of the four plans in its original proposal. A plan that had a $1,500 deductible is being replaced with one that has a $2,000 deductible and lower premiums. The other three plans will remain the same, except for the 1-percent reduction in premiums.
During yesterday’s hearing, Brenda Gaynor, special assistant attorney general, questioned Thomas Boyd, Blue Cross executive vice president.
Gaynor confronted Boyd on an issue that subscribers had complained about in the hearing’s first session last week: Less than a month after signing up for Direct Pay, new subscribers were notified that the plan they had bought, in some cases abandoning previous coverage, would be changed within six months.
“We were not sure what the benefits would actually look like,” Boyd said. But Gaynor cited earlier testimony that the Blue Cross Board of Directors had approved the proposal on Sept. 14. The open enrollment period ran from Aug. 15 to Sept. 15.
In response to another question, Boyd explained the ways in which Blue Cross believes the new plans will help keep health-care costs down.
Blue Cross spends only 10 cents of every premium dollar on administration, and is always looking for ways to cut administrative costs, he asserted. It changed the rating structure so that premium increases related to age occur once every five years instead of every 10 years, so that people age 30 to 34 will pay one rate and people age 35 to 39 will pay a slightly higher rate; now, people age 30 to 39 pay the same rate and face a big increase at age 40.
The company is also giving a break to the pool of higher-cost people with health problems; their proposed rates are 3.5 percent less than what it will cost to cover them.
Additionally, he said, the high-deductible plans encourage people with non-life-threatening complaints to go to their primary-care doctors rather than urgent-care centers or emergency rooms, because they will be paying out of pocket for those services. When consumers pay on their own, they are more likely to use “the most appropriate setting of care,” he said.
Gaynor asked whether Blue Cross was doing anything to help subscribers connect with primary-care doctors. Boyd said he didn’t know.
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