MINNEAPOLIS, Updated 8:00 a.m. CST May 13, 2005 -- Blue Cross and Blue Shield of Minnesota leaders Thursday agreed not to proceed with their plan to tier physician practices beginning in January 2006. In private conversations during the last few weeks, the Minnesota Medical Association has strongly urged Blue Cross to withdraw its proposed plan, citing design and operational defects that could have had a negative impact on physicians and their patients.

"We applaud Blue Cross's willingness to listen to our concerns and to reconsider their decision to move forward with implementation of a plan that we considered flawed," said Michael Gonzalez-Campoy, M.D., president of the MMA.

Blue Cross had planned to place physician clinics in five competitive markets in Tier I only if they signed a contract agreeing to refer Blue Cross patients for both inpatient and outpatient services to Tier I hospitals. All other clinics would have been placed in Tier II. Patients would have had to pay higher out-of-pocket costs to be treated by physicians in Tier II, -- not because of any measures of cost or quality at the clinic -- but because of a potential hospital referral. The MMA argued that it did not make sense to rank physicians on the basis of hospital costs.

The MMA had expressed concern about financial burdens on patients in communities with no or limited access to Tier I hospitals and physicians. The MMA also identified practical issues including level of benefits for emergency care, access to mental health beds, enforcement, and patient preference.

“We appreciate Blue Cross's decision to delay plans to introduce a physician tiering plan and to consider our concerns," said MMA CEO Robert K. Meiches, M.D., who was told about the decision to delay plans to move forward with physician tiering today by Michael J. Morrow, senior vice president of business development and network management of Blue Cross Blue Shield, and William Gold, M.D., chief medical officer and vice president, health management.

"We continue to believe that tiering is an effective way to provide information about cost to our Blue Cross enrollees, but it's important to do it the right way," said Morrow. “Our hospital tiering system is a good start, but we recognize there is more work to do on the physician proposal."

Acknowledging the need to provide more information about cost and quality to consumers so they can make good decisions about their medical care, Meiches offered MMA assistance to Blue Cross as it continues its efforts to develop a better plan.

During the past few weeks the MMA has declined to comment publicly on the hospital tiering system while conversations were underway on the physician plan. The MMA has also raised some concerns about the fact that the hospital tiering methodology is based on cost, not quality. Blue Cross has acknowledged that all the hospitals that were tiered met the quality threshold for Tier I (some level of activity on at least four of seven factors) so tiering decisions were based solely on historic cost differences. In the meeting today, Morrow said that Blue Cross’s intention was to make sure that differences in cost were not linked to lower quality of care – rather than to suggest hospitals were being ranked according to quality level.

The MMA has also told Blue Cross that there is a need for more transparency, more information about the criteria used to make hospital tiering decisions.

Blue Cross is not alone in efforts to place hospitals and providers in tiers. HealthPartners has been tiering health care providers for several years. And this week, Medica introduced a new product that uses dollar signs to rank providers on quality of care and cost.

Meiches commented on the Medica plan in an article in the Star Tribune on May 11, "We like the fact that we're giving more information to consumers, but is the cost and quality information helpful and reliable? The devil is in the details." Medica has not yet given the MMA the level of information about its new product that Blue Cross shared about its proposal. The MMA will be closely examining the details of the Medica plan. Stay tuned to MMAOnline.net for continuing coverage of this issue.