Mass. Blues has an offer doctors might refuse

Blue Cross and Blue Shield of Massachusetts wants to expand its use of global budgets outside of managed care. But the plan's success will depend on how many doctors are willing to accept the risk. 

Doctors across the country have criticized Medicare's accountable care contracts that make physicians responsible for curbing health spending without allowing them to influence where and when patients get care. But the Massachusetts Blues in recent weeks began to approach the state's medical groups with a similar proposal. 

The company plans to introduce global budgets in its preferred provider organization health plans. The new model comes seven years after the insurer first offered global budgets in its managed care plans under what it calls Alternative Quality Contracts. 

Deborah Devaux, the Massachusetts Blues interim chief strategy officer, said it's not yet clear how many providers will be interested. The PPO plans have roughly 615,000 enrollees, and roughly one-third of the network contracts must be renewed before January 2016. 

Medical groups that adopt the model will be rewarded if they keep patients' medical costs below budget. Most doctors in the Massachusetts Blues HMO networks already have global budgets, and the Massachusetts Blues carrier believes expanding them to its PPOs could strengthen incentives for physicians to tightly manage costs. It might also mitigate the confusion that providers experience by operating under different contracts with conflicting incentives. 

But doctors' ability to manage costs is weaker under PPO plans, and they would lose money if they fail to keep spending under the budget. Providers who are turned off by that risk can choose to continue participating in the company's PPO networks under fee-for-service contracts that pay them for each test, office visit and procedure. 

Managed care plans—or health maintenance organizations—require that patients seek care within a network and select a primary-care doctor who must provide referrals to specialists. Doctors saved 6.8% in the first four years of Massachusetts' global budget HMOs, researchers reported last year in the New England Journal of Medicine. Among medical groups that joined after the first year, savings averaged 8.8% through 2012.

But PPOs—an increasingly popular option in Massachusetts—give patients far more freedom. Patients are not required to select a primary-care doctor. The networks are typically broader, and patients can get care outside the network for higher deductibles or copays.