Blue Cross Blue Shield of Massachusetts
Encyclopedia
Blue Cross Blue Shield of Massachusetts (BCBSMA) is a state licensed private health insurance
company under the Blue Cross Blue Shield Association
with headquarters in Boston
.
in the 1990s.
BCBSMA has non-profit status as a health insurer and has 2.8 million policyholders, the largest number of any insurer in Massachusetts
, with most policyholders insured through employers. The number of policyholders dropped slightly between the first and second quarters of 2011, due to the economy
and layoffs.
The organization's compensation for its departing CEO, Cleve Killingsworth
, totaled $8.6 million in 2010. When this was reported in 2011, public anger and a four-month investigation from the Massachusetts Attorney General
followed. BCBSMA ultimately credited $4.2 million, representing Killingsworth's severance, off policyholders' premiums (~$3 per policyholder).
s. Killingsworth thought existing pay for performance initiatives were insufficient to prevent billions of dollars in wasteful health care spending that either harmed or did not help patients. AQCs were established in January 2009 and they serve as a model for global payments—in contrast to the fee-for-service
model, which encourages excessive treatments—in the state. AQCs were envisioned as a way to increase provider accountability. They are based on the capitation
approach that was tried in the 1990s, but with a bonus for patient quality outcomes to serve as a disincentive against providers neglecting patients. The word "capitation" was discouraged during company meetings, as it proved unpopular with providers under the managed care
of the 1990s. Under the AQC model, groups of doctors and hospitals are paid set fees "to work as a team in caring for patients." In the first year of implementation, AQCs resulted in medical cost savings in all participating provider groups, but the incentives that BCMSMA paid to providers are estimated to have made up for the savings. As of October 2011, approximately 613,000 people were covered by BCMSMA under the AQC model (roughly two-thirds of BCMSMA members in health maintenance organization
s), but the model had not been applied to policyholders in preferred provider organization
s.
When the company was introducing AQCs to providers, "state lawmakers started talking about payment reform", leading to unexpected interest. Deb Devaux, an executive, said providers also wanted to demonstrate willingness towards reform
. In 2011, the large provider group Partners HealthCare
joined the AQC, accepting lower than expected payment levels, possibly preempting regulatory moves to control costs.
Health insurance
Health insurance is insurance against the risk of incurring medical expenses among individuals. By estimating the overall risk of health care expenses among a targeted group, an insurer can develop a routine finance structure, such as a monthly premium or payroll tax, to ensure that money is...
company under the Blue Cross Blue Shield Association
Blue Cross Blue Shield Association
The Blue Cross Blue Shield Association is a federation of 39 separate health insurance organizations and companies in the United States. Combined, they directly or indirectly provide health insurance to over 100 million Americans. The history of Blue Cross dates back to 1929, while the history of...
with headquarters in Boston
Boston
Boston is the capital of and largest city in Massachusetts, and is one of the oldest cities in the United States. The largest city in New England, Boston is regarded as the unofficial "Capital of New England" for its economic and cultural impact on the entire New England region. The city proper had...
.
Workings
BCMSMA formed in 1988 after the merger of Blue Cross and Blue Shield of Massachusetts. In 1992 it offered an HMO plan along with the rise of managed careManaged care
...intended to reduce unnecessary health care costs through a variety of mechanisms, including: economic incentives for physicians and patients to select less costly forms of care; programs for reviewing the medical necessity of specific services; increased beneficiary cost sharing; controls on...
in the 1990s.
BCBSMA has non-profit status as a health insurer and has 2.8 million policyholders, the largest number of any insurer in Massachusetts
Massachusetts
The Commonwealth of Massachusetts is a state in the New England region of the northeastern United States of America. It is bordered by Rhode Island and Connecticut to the south, New York to the west, and Vermont and New Hampshire to the north; at its east lies the Atlantic Ocean. As of the 2010...
, with most policyholders insured through employers. The number of policyholders dropped slightly between the first and second quarters of 2011, due to the economy
Economy of the United States
The economy of the United States is the world's largest national economy. Its nominal GDP was estimated to be nearly $14.5 trillion in 2010, approximately a quarter of nominal global GDP. The European Union has a larger collective economy, but is not a single nation...
and layoffs.
The organization's compensation for its departing CEO, Cleve Killingsworth
Cleve Killingsworth
Cleve L. Killingsworth is a former CEO of Blue Cross Blue Shield of Massachusetts. There, he was dissatisfied with the results of pay for performance initiatives, in that he thought billions more of wasteful medical spending could be reduced with a new payment model...
, totaled $8.6 million in 2010. When this was reported in 2011, public anger and a four-month investigation from the Massachusetts Attorney General
Massachusetts Attorney General
The Massachusetts Attorney General is an elected executive officer of the Massachusetts Government. The office of Attorney-General was abolished in 1843 and re-established in 1849. The current Attorney General is Martha Coakley....
followed. BCBSMA ultimately credited $4.2 million, representing Killingsworth's severance, off policyholders' premiums (~$3 per policyholder).
Alternative quality contracts and reform
The company has received praise for its innovative alternative quality contract (AQC) payment model. In 2007, then-CEO Cleve Killingsworth set a six-month deadline for the company to come up with a new payment plan to offer health care providerHealth care provider
A health care provider is an individual or an institution that provides preventive, curative, promotional or rehabilitative health care services in a systematic way to individuals, families or communities....
s. Killingsworth thought existing pay for performance initiatives were insufficient to prevent billions of dollars in wasteful health care spending that either harmed or did not help patients. AQCs were established in January 2009 and they serve as a model for global payments—in contrast to the fee-for-service
Fee-for-service
Fee-for-service is a payment model where services are unbundled and paid for separately. In health care, it gives an incentive for physicians to provide more treatments because payment is dependent on the quantity of care, rather than quality of care...
model, which encourages excessive treatments—in the state. AQCs were envisioned as a way to increase provider accountability. They are based on the capitation
Capitation
Capitation can refer to:*Poll tax, or head tax, a tax of a fixed amount per individual*Capitation , a system of payment to medical service providers...
approach that was tried in the 1990s, but with a bonus for patient quality outcomes to serve as a disincentive against providers neglecting patients. The word "capitation" was discouraged during company meetings, as it proved unpopular with providers under the managed care
Managed care
...intended to reduce unnecessary health care costs through a variety of mechanisms, including: economic incentives for physicians and patients to select less costly forms of care; programs for reviewing the medical necessity of specific services; increased beneficiary cost sharing; controls on...
of the 1990s. Under the AQC model, groups of doctors and hospitals are paid set fees "to work as a team in caring for patients." In the first year of implementation, AQCs resulted in medical cost savings in all participating provider groups, but the incentives that BCMSMA paid to providers are estimated to have made up for the savings. As of October 2011, approximately 613,000 people were covered by BCMSMA under the AQC model (roughly two-thirds of BCMSMA members in health maintenance organization
Health maintenance organization
A health maintenance organization is an organization that provides managed care for health insurance contracts in the United States as a liaison with health care providers...
s), but the model had not been applied to policyholders in preferred provider organization
Preferred provider organization
In health insurance in the United States, a preferred provider organization is a managed care organization of medical doctors, hospitals, and other health care providers who have covenanted with an insurer or a third-party administrator to provide health care at reduced...
s.
When the company was introducing AQCs to providers, "state lawmakers started talking about payment reform", leading to unexpected interest. Deb Devaux, an executive, said providers also wanted to demonstrate willingness towards reform
Health care reform in the United States
Health care reform in the United States has a long history, of which the most recent results were two federal statutes enacted in 2010: the Patient Protection and Affordable Care Act , signed March 23, 2010, and the Health Care and Education Reconciliation Act of 2010 , which amended the PPACA and...
. In 2011, the large provider group Partners HealthCare
Partners HealthCare
Partners HealthCare is a non-profit organization that owns several hospitals in Massachusetts, primarily in the Boston area. Massachusetts General Hospital and Brigham and Women's Hospital founded the organization in 1994...
joined the AQC, accepting lower than expected payment levels, possibly preempting regulatory moves to control costs.