Insurer provides incentives for choosing hospitals from preferred list - HR Update - Brief Article

HR Magazine, Sept, 2002 by Adrienne Fox

San Francisco-based Blue Shield of California has become that state's first health care provider to set a tiered system for hospitals based on cost, quality and patient experience measures and to give consumers incentives to select hospitals on its preferred list.

Blue Shield consumers who choose hospitals that make the grade pay their plan's usual co-payment amount. But patients who select hospitals not on the preferred list will have to pay up to an additional $200 or 10 percent of the hospital bill--depending on how the plan is set up--except for emergency visits. The new system, which starts next month, will affect about I million health care consumers covered by Blue Shield in small and medium-sized companies. Large employers can opt out of the system.

The provider will use data on quality and patient safety information compiled by The Leapfrog Group, an independent organization based in Washington, D.C., that advocates health care improvements. The Patients' Evaluation of Performance in California will supply data on patient experience. Currently 15 percent of the 369 hospitals in the Blue Shield network have not made the preferred list.

The move is part of an industry-wide and grassroots push to improve hospital standards while lowering health care costs. (See the January HR Magazine cover story, "Finding the Best Medicine," for more information.) Each year, as many as 98,000 people die from preventable medical mistakes made in U.S. hospitals, according to the Institute of Medicine, a congressionally chartered research organization in Washington, D.C. At the same time, health care costs are growing at 12 percent a year, according to the global consulting firm Towers Perrin.