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Newspaper Clipping - Newspaper Clipping Scan - Blue Cross Blue Shield begins 51st year - 8/29/19837M The Blue Cross and Blue Shield of Minnesota building, as seen from Highway 13, has won awards for its modern architecture. Photos by Jean Van Pelt Blue Cross Blue Shield Health insurance enters a new era, as company begins 51st year by Jean Van Pelt The cost of Minn esota physi- cians' services increased 14.9 percent in 1982 ar d 12.2 per - cent in 1981. Hospitalizatic n charges statewide rose 1" .1 percent during 1982 and 15 5 percent in 1981. In the pas 10 years, hospital charges it Minnesota have quadrupled, going from about $100 a day tc $400 a day. These charges have increased about twice as fast as the com- sumer price index. Blue Cross and Blue Shield of Minnesota (BCI S), based in Eagan, is attempti; ig to curtail these rapidly escalating costs through a varie y of cost - containment progi ams. These programs represent a major change in the way health care coverage has been ad- ministered for tie past 25 years, said Jean Haskell, BCBS public relations director. After BCBS's fiscal reports showed losses of $:'.6 million in 1980, $7.7 million in 1981 and $4.6 million in 1912, the com- pany began an in iovation in health care philosophy, characterized by BCBS's AWARE program Traditionally, BCBS cooperated will all doctors and hospitals, Haske l said, ex- plaining that health insurance basically paid for whatever doctors or hospitals wanted to charge. Facing cor tinually in- creasing losses because of ris- ing health care cos s, the com- pany was forced tc make deci- sions regarding % /hat BCBS would pay for, Ha ;kell said. During studies o1 claims sub- mitted to BCBS by doctors and hospitals, it was found the range of charges v'as wide, in some cases double, while treatments provided were similar, Haskell sa d. BCBS's answer eras been to make more econor tical use of the benefits throul h AWARE and other programs, rather than cut certain benefits, she explained. "We had to decide what was a reasonable limit ," Haskell said. The AWARE program for hospitals, intr rduced this spring, and a similar program for doctors which will be in- troduced soon, are attempting to stifle health care costs. After computing average daily payments to area hosptials, the company chose a maximum daily payment equal to the 55th percentile of charges for all area hosptials. This means BCBS will pay slightly above the community average for hospital care, but no more. Here's how AWARE works: • BCBS contacted 27 hospitals in the metro area; 20 chose to participate in the pro- gram this year. • currently, only groups can join AWARE. President An- drew Czajowski estimates a company savings of $10 million annually. The program may be introduced to in- dividual subscribers later. • hospitals participating in AWARE have agreed to accept BCBS's daily payment as pay- ment in full. Hospitals who chose not to particiapte are free to charge the patient for amounts above what insurance pays. • people covered under the AWARE program are free to go to any hospital in the metro area, but may risk paying a portion of the bill if the hospital has not agreed to ac- cepts BCBS's payment as pay- ment in full. • if a person in AWARE re- quires emergency care or hospitalization outside the Twin Cities, the person is covered as usual. The message is that people are going to have to become more cost conscious medically. "We're saying there are some good buys out there and we'll cover you for the good buys," Haskell said, comparing in- flated rates charged by some hospitals with the rates charged by other hospitals for the same services. People have the choice of which hospital to go to,; Haskell said, but they should' be willing to pay if they choose a hospital that isn't par- ticipating in AWARE. People's attitudes have started to change as health care costs continue to rise. But the change is just beginning, Haskell said. "People would have found programs like AWARE un- palatable a few years ago," she said. But as costs increase, and the difference in charges be- tween hospitals increases, peo- ple want to become more aware of where their dollars are spent, she said. AWARE's success has been phenomenal— approximately 90 percent of BCBS's group health insurance subscribers have joined AWARE. BCBS is the state's largest health insurance carrier and covers about 20 percent of all Minnesotans. For about 25 years, the company was so dominant that there wasn't much reason to be competitive, Haskell said. This business is very much affected by the economy, she explained. As inflation, unemployment and health care costs skyrocketed, it became evident that both people's at- titudes and the industry had to undergo major changes, she said. Employees in mail room sending 15,000 letters each day. The claims department of Blue Cross and Blue Shield of Minnesota employs 75 to 80 people who answer questions over the phone and in writing all day. THe Ee�eri lJ%+b'