Blue Cross seeks parity in imaging costs

Blue Cross Blue Shield of Massachusetts announced that it is contracting with National Imaging Associates (NIA) to help control medical imaging expenses. Imaging is expensive and growing fast, so it makes sense for health plans to focus there. NIA, a Radiology Benefits Management service requires referring physicians to order imaging based on a set of clinical and cost effectiveness guidelines.

Imaging expenses have been growing fast for a long time. So why haven’t NIA and its competitors been more successful? One reason is that health plans aren’t really seeking to control costs. Rather, their main objective is to maintain parity with other plans. As long as no one else in the market is taking a hard line on a particular cost item, there’s no great incentive to be the first.

What happened in Massachusetts reveals an interesting aspect of NIA’s strategy. The smaller, weaker plans (Harvard and Tufts) were signed up first. Once those plans started to develop a real cost advantage, Blue Cross Blue Shield –the dominant player– decided to make its move.
Pursuing the smaller, weaker plans is a good strategy to consider for companies that are introducing cost saving approaches to the market. However, the savings have to be significant enough for the big guys to notice. Usually BCBS MA can beat its competitors without fancy tools, due to its scale and negotiating power.

September 6, 2005

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