Blue Cross Blue Shield of Mass. wants you to decide whether to pay $50 or $500 for an MRI

BOSTON — Let’s play a game. We’ll call it Health Care Choose Your Own Adventure: MRI Edition! Exciting, right? Right.

(Melissa Cannarozzi - The Washington Post) You’re in your doctor’s office, and he’s got some bad news: You need an MRI. You now have a choice to make about where to go get it. There’s a large academic medical center, one of Boston’s best-known hospitals, where you will pay a $500 co-pay for the scan.

About a mile down the street, there’s a community hospital. It’s not nearly as well known but when it comes to routine care, like MRIs, outcomes tend to be equally good. At that hospital, the MRI will cost you a $50 co-pay. So, what do you choose?

Blue Cross Blue Shield of Massachusetts is betting that you’ll choose the latter — and end up bending the health care cost curve in the process. The health plan, whose CEO Andrew Dreyfus I talked with Wednesday, is experimenting with a novel attempt to reduce the cost of health care without sacrificing quality.

Massachusetts has had, for years now (and well before its health insurance expansion), some of the highest health insurance premiums in the country. It also has huge variation in how much health care costs: A 2010 Attorney General’s Office report found some hospitals were charging Blue Cross twice as much as other hospitals, without delivering any higher quality.

In those two challenges, Blue Cross saw an opportunity. It could offer “tiered” co-pays, where patients who went to the more expensive facilities would pay more.

That would give patients a reason to go to the lower-cost provider: Namely, they’d dodge that $500 MRI co-pay. It would also allow Blue Cross to offer lower premiums, as its actuaries predicted many subscribers would take the $50 co-pay instead.

Medical tiers are not a novel concept in health care. Insurers have regularly used different prices to differentiate between brand name and generic drugs, and successfully nudged patients toward the latter.

It’s rarely, however, been tried for other health care services, things like hospital visits and trips to the doctor. For decades, Blue Cross had charged every patient $50 for an MRI, no matter who delivered it or how much they charged.

Dreyfus, the health plan’s CEO, was worried when he rolled out the product in February 2011. What if patients revolted when they found out it would cost 10 times as much to go to Boston’s top hospitals?

“We set up a dedicated call center for some of these new products,” says Dreyfus, “We thought they would get a lot of complaints.”

Dreyfus says the call volume, however, never materialized. They haven’t heard much in the way of complaints from the employers they serve. He has, however, heard from one of Boston’s more expensive hospitals.

“They were starting to lose referrals because of the new payment model,” he recalls. “He asked, ‘can I lower my prices?’ I said, ‘absolutely.’”

That’s, of course, anecdotal evidence. Blue Cross is currently at work on a more rigorous evaluation of the insurance product to see whether subscribers are actually choosing the lower-cost product.

While the tiers are supposed to incorporate quality measures, some worry that they lean too heavily on cost. That could, theoretically, make the cheapest providers the ones who provide lower quality care. “It’s hard to effectively regulate quality among doctors,” says M.I.T health care economist Jonathan Gruber.

Dreyfus contends that the plan does have measures to guard against this: There is a cap, for example, on how much each subscriber will pay out of pocket. If an individual is already in the middle of treatment at a more expensive facility, her co-pays will not go up. Then there’s also that attorney general’s report, that couldn’t find a link between quality and cost of health care in Massachusetts.

The experiment with tiered health plans, Dreyfus says, responds to an undeniable truth about health care: It’s too expensive, eating up a growing chunk of worker salaries and government budgets. Something has to be done — and that might mean putting downward pressure on players who charge a lot for health care.

“If a company offers a rich benefit plan, and wants to keep it, they’ll see their premiums go up 10 percent,” says Dreyfus. “If they want to avoid that, they can keep the lower co-pays for the majority of their employees, knowing a minority will end up paying more It’s a different process. We’re still early in the process of figuring out what results we’ll achieve.”