Harvard Pilgrim has created a new limited network of moderately priced providers that reduces insurance costs by 10 percent. The insurer's decision is the latest move by the Massachusetts healthcare industry to reduce constantly rising costs in the state. But Harvard Pilgrim's so-called "focused network" is a "significant gamble," according to the Washington Post Wonkblog, because of what it excludes--the state's most expensive providers, such as Massachusetts General Hospital, Brigham and Women's Hospital and Partners Healthcare-owned hospitals.
By omitting these higher-priced hospitals, Harvard Pilgrim hopes to pressure them into lowering their rates to remain competitive in the market. "It's a blunt instrument,'' Harvard Pilgrim's CEO Eric Schultz told The Boston Globe. "But it's getting to the point where cost is a barrier to some services and for some patients."
The 50 or so Massachusetts hospitals and 16,000 doctors that are included in the limited network must keep their costs below a certain level. If the excluded hospitals do negotiate lower reimbursement rates, Harvard Pilgrim will include them in the limited network.
Harvard Pilgrim's new provider network will be available April 1, pending regulatory approval, noted Business Insurance.