Plan focuses on hospital choice.

Byline: TIM CHRISTIE The Register-Guard

Health insurers are trying to make consumers more aware of the true cost of health care.

They're designing insurance plans that offer cheaper premiums but may cost consumers significantly more when they choose a doctor or hospital.

"It's probably a good thing for consumers who are accessing health care to have a better sense of what that care actually costs," said Mark Ganz, president of Regence BlueCross BlueShield of Oregon.

The latest option comes from Regence, which on Wednesday began offering a plan called DirectBlue, a pilot project available only to employers in Lane County.

Customers who subscribe to Direct- Blue will pay a cheaper premium but will be faced with a pricey decision if they have to go to the hospital.

If they check in to Sacred Heart Medical Center in Eugene, they'll pay a $900 co-pay. But if they go to McKenzie-Willamette Hospital in Springfield - or one of the Samaritan hospitals in Corvallis, Albany or Lebanon, or Oregon Health & Science University or Legacy hospitals in Portland - that co-pay is waived.

The tiered approach is part of an industrywide trend toward plugging consumers into the equation of health care costs.

"We believe the next phase after managed care - where the health plan and providers kind of negotiate but the patient is out of the loop - is a much more consumer-focused way of financing and delivering health care," Ganz said.

If Hospital X charges more than Hospital Y, that's something consumers should know about, he said, just as they do with most other products and services.

In the case of McKenzie-Willamette and Sacred Heart, "both are high-quality providers of health care," but Sacred Heart has higher prices than McKenzie-Willamette, Ganz said. The DirectBlue plan tells consumers, "Here's a choice: You can go where you want, but recognize there is a difference in cost, and it's appropriate you pay more for your choice," he said.

But for a patient facing heart surgery, or who gives birth to a premature baby - two high-cost services provided by Sacred Heart but not McKenzie-Willamette - the choice will be between paying the $900 co-pay or driving up Interstate 5 to one of the other hospitals on the list.

Ganz said those issues need to be considered by consumers before they buy the product.

People make choices every day based on their economic means and their perceived value of a particular good or service, he said.

"For some people and some groups, this product may not be what they want," he said. "What this product offers is, you can choose to pay less in your month-to-month premium, but then know you'll have to make a choice at the time you access service."

Ganz said the new plan is unrelated to a federal antitrust lawsuit McKenzie-Willamette filed in February against PeaceHealth, parent of Sacred Heart. McKenzie-Willamette alleges PeaceHealth unfairly used its dominant market power to coerce Regence into excluding McKenzie-Willamette from its preferred-provider plan.

McKenzie-Willamette is "thrilled" with the new Regence plan, hospital spokeswoman Rosie Pryor said.

"We're grateful Regence is bringing out a new consumer-driven plan," she said. "We're telling anyone who will listen there is something new in the market. ... We sure hope it represents a legitimate alternative to employers who want to restore choice to employees who felt disenfranchised" by the exclusion of McKenzie-Willamette.

PeaceHealth spokesman Brian Terrett said it's too early to tell how the new plan - and it's $900 co-pay for people who choose Sacred Heart - will affect the Bellevue-based hospital group.

"If this kind of health insurance plan works for the consumer and is successful, what we need to do is work with insurance companies to see if there is a plan that would serve the needs of customers and allow them to come to Sacred Heart without a co-pay," Terrett said.

Regence, which covers 77,000 people in Lane County and 1.2 million statewide, isn't the first insurer to offer a tiered health insurance plan.

Eugene-based PacificSource has one product on the market and one on the drawing board intended to make consumers more aware of cost, said Ken Provencher, PacificSource president and chief executive officer.

The product now available is called Personal Options, which allows employers to offer a range of health plans, with different benefits and premiums, to employees.

Starting July 1, a product called Patient Choice will be offered in Portland and Corvallis, giving consumers a chance to pick a plan with a lower contribution that provides access to a lower cost health system. It won't be available in Lane County until later.

Such plans hold the potential to introduce market forces on the provider side, he said, "and probably has the potential to hold down cost by making consumers more informed in making choices about what kind of health care they want to buy."

In California, two of the six major health insurers have introduced tiered products in the past six to eight months, and others may follow suit, said Jan Emerson, spokeswoman for the California Healthcare Association, which lobbies on behalf of the state's hospitals.

Emerson said the tiered offerings don't take into consideration that some hospitals face higher costs than others. A hospital with a burn center, for example, is likely to have higher costs than a community hospital because it offers an expensive, specialized service, she said.

There is some truth to the notion that managed care has shielded consumers from the true cost of health care, she said, but she's not persuaded the tiered plans are the answer.

"It's not really about that," she said. "It's about health plans trying to get costs under control."

Most consumers are not very savvy about health insurance and may be surprised when they get to the hospital, she said.

"I don't think consumers are really aware of what these tiering programs really do until they're at the hospital and they're faced with it," she said. "Most people are going to be caught off guard with these things."