May 13, 2008 - Blue Cross Blue Shield of Massachusetts (BCBSMA) announced today that it has updated its Blue Options tiered provider network plan designs that provide meaningful savings to employers and lower out-of-pocket costs for members who visit a doctor or hospital in a preferred tier.

The methodology used to create the updated tiering applied both cost metrics and a broad set of nationally-accepted measures of quality. The tiering includes three tiers of primary care physicians and hospitals and different member cost sharing associated with providers in each tier. This allows BCBSMA to deliver a premium savings of approximately 8 percent to 10 percent when compared to similar benefits in a single tier plan design* for Massachusetts primary care physicians (PCPs) and acute care hospitals.

This tiering structure is more robust than BCBSMA's first tiered network, and provides meaningful financial incentives for members to choose lower cost/high-quality providers when they get care. This provides savings for both employers and members. It also gives members tools to consider the cost and quality indicators of the providers they select. PCPs were tiered based on the performance of their practice groups, not as individual physicians, so that physicians who cover for a PCP typically will be in the same tier.

The updated tiering methodology and approach are consistent with emerging national standards and recommendations of the Massachusetts Medical Society, and addresses many of the concerns raised in other states. Relative to the initial BCBSMA tiering, introduced in 2007, the updated methodology includes a broader, more comprehensive set of nationally accepted quality measures and updated cost measures for both primary care physicians and hospitals. All provider groups and hospitals were afforded a data review and correction period prior to BCBSMA completing its analyses for tiering.

The new tiers are:

• Enhanced Benefits Tier - Includes Massachusetts PCPs and hospitals that met BCBSMA's quality benchmark and our benchmark for lowest cost.
• Standard Benefits Tier - Includes Massachusetts PCPs and hospitals that met BCBSMA's quality benchmark and our benchmark for moderate cost. Also includes providers without sufficient data for measurement on one or both benchmarks. In limited circumstances, the Standard Benefits Tier includes certain providers whose scores would put them in the Basic Benefits Tier to provide geographic access for members.
• Basic Benefits Tier - Includes Massachusetts PCPs and hospitals that scored below BCBSMA's quality benchmark and/or our benchmark for moderate cost.

How tiers work
Each time members seek care from a PCP or hospital, their cost sharing is based on the tiering of the provider they see. Members can control their costs by choosing providers from the Enhanced or Standard benefits tiers.

This helps encourage members to consider the cost and quality of their PCP or hospital each time they get care and rewards them for choosing providers in top tiers.

Plan Choice
Within the Blue Options family of plans, employers have access to three types of plans:

• HMO Blue and HMO Blue New England Options - Provides tiered network access within our HMO Blue network
• Blue Precision / PPO Blue Options - Provides access to care with no referrals throughout our nationwide network. Available as a self insured plan only.

Blue Cross Blue Shield of Massachusetts (http://www.bluecrossma.com/) was founded 71 years ago by a group of community-minded business leaders. Today, headquartered in Boston, BCBSMA provides coverage to approximately 3 million members. BCBSMA believes in rewarding doctors and hospitals for delivering safe and effective care, and in empowering patients to take more responsibility, become educated health care consumers and become stronger partners with their doctors. Blue Cross Blue Shield of Massachusetts is an independent licensee of the Blue Cross Blue Shield Association.

*Note: For the cost benchmark, hospitals were measured on their individual facility's performance and PCPs were measured according to the costs their group's HMO patients incurred. Physician groups can be composed of an individual provider, or a number of providers who practice together. Tier placement is based on benchmarks where measurable data is available; those without sufficient data were defaulted to the Standard Benefits Tier. Specialty hospitals were measured on cost alone for their overall tier rating.