Insurers are Starting to Pay for Cross-Border Treatment

In the New Republic, Adam Teicholz and Glenn Cohen discuss insurers whose provider networks run across the border:

conceptBefore dawn on a Wednesday in January, Cesar Flores, a 40-year-old employed by a large retail chain, woke up at his home in Chula Vista, California. He got in his car and crossed the border into Tijuana. From there, he headed for a local hospital, where he got lab tests — part of routine follow-up to a kidney stone procedure. He had his blood drawn and left the hospital at 7:30. He arrived home before 10.

But Flores’s situation isn’t medical tourism as we know it. Flores has insurance through his wife’s employer. But his insurer, a small, three-year-old startup H.M.O. called MediExcel, requires Flores to obtain certain medical treatment at a hospital across the border. In part due to cost-pressures generated by the Affordable Care Act, other sorts of plans that require travel have the potential to expand.

Teicholz and Cohen note that this is different than “medical tourism”, where patients pay directly, and that insurers paying for cross-border care like this appears to be in a regulatory gray area. It also re-introduces us to a couple of issues we have addressed in this blog. First: Why doesn’t Medicare pay for cross-border care? Second: What will happen when insurers require cross-border “reference pricing” on U.S. providers, forcing them to meet or beat Mexican hospitals’ charges?

These changes would have a far greater effect than all the proposals for Accountable Care Organizations and High-Performing Systems and Value-Based Care that fill the health-policy journals and conferences.

Comments (16)

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  1. Devon Herrick says:

    “…insurers paying for cross-border care like this appears to be in a regulatory gray area.”

    I’m not sure why it’s a gray area? BlueShield of California has a health plan called Access Baja that utilizes a Mexican network. To enroll, you must live in Mexicali, or Tijuana or within 50 miles of the border crossing points at San Ysidro and Calexico, California.

    I wonder if reference pricing isn’t a way around some of the regulatory hurdles that prevent insurers from requiring Americans to seek care across the border.” Enrollees could be allowed to seek care anywhere in California. But enrollees who seek care at a specific group of Mexican clinics might face no cost sharing — and maybe have some of their premiums accrue to a health reimbursement account for use on other medical items.

    • John R. Graham says:

      What will be really interesting if U.S. hospitals open subsidiaries on the Mexican side of the border, and grant admitting privileges to the same U.S. doctors who admit on the American side. What are the implications for medical liability? What are the implications for cost if you use the same highly priced U.S. doctors but have lower costs of everything else?

  2. Thomas says:

    Insurers are implementing this because of the cheap cost it is to receive care over the border. Since costs are rising and variable with ACA, if individuals live near the border, why not incentivize them to receive their care there.

  3. Matthew says:

    “What will happen when insurers require cross-border “reference pricing” on U.S. providers, forcing them to meet or beat Mexican hospitals’ charges?”

    They will have to meet these prices or risk losing out on patients. I can see the US border clinics hating this.

    • Buddy says:

      It is about time that there is some legitimate competition forcing medical costs to lower, at least a little. Its a shame that it took taking our medical needs outside the country, but the US health care industry needs to wake up!

      • SPM says:

        Yes Buddy, competition is always good! The shame is that it can mainly be utilized only by people living close to the border. What about the family in middle America who can’t afford to travel abroad for healthcare?

        Obamacare, if it had actually been a good law, ought to have created more competition locally!

        • John R. Graham says:

          For the self-paying patient, there are lots of examples (some written at this blog or of offshore hospitals bundling travel and hotel costs in with the hospital cost, and still offering a better deal than U.S. hospitals.

          We have idiosyncratic reports of U.S. large employers who will send employees abroad for surgery, and pay for the family to travel and stay in a hotel as well. It still saves money.

    • Erik says:

      Insurance companies are outsourcing care. That is a term physicians need to get used to. Also H1B visas will do the same.

      I wonder if they are doing this to get around the MLR requirements of 80/20 in reimbursements?

      Profit generated outside the country just may stay outside the country.

      • John R. Graham says:

        I had not considered that, and it is beyond my expertise. Nevertheless, I think it is the lower cost of care.

        Remember that the insurer is paying out money to the provider. The premiums are earned in the U.S., as are the profits. So, I am quite sure it is not a situation like we seen in the pharmaceutical, bio, and medical-device industries.

  4. Jimbino says:

    In all this discussion regarding medical tourism, what needs to be emphasized is that Medicare and Obamacare were not set up to serve patients, but to serve the interests of the hospital-medical-pharmaceutical-insurance complex. Just like Facebook, where its members are the product and its true clients are the advertisers.

    Medicare Part D, for example, was started because our drug companies were losing seniors’ dollars to Canada. Of course patients could be better served by spending their Medicare dollars overseas, just as they do their SS dollars; that would, however, impoverish our medical monopoly once patients found out they could get better and cheaper care in interesting places like Prague, Budapest, Rio and Buenos Aires.

  5. Frank says:

    What is the difference between this and medical tourism? I assumed that insurers have been doing this for a couple years now

    • James M. says:

      Well now I assume this has become a large enough problem for insurers that its hitting a wider circuit.

      • John R. Graham says:

        I think that “medical tourism” usually refers to self-paying patients, not those using insurance.

  6. Linda Gorman says:

    My insurer was willing to pay for me to go abroad more than 20 years ago.

  7. Bob Hertz says:

    On the one hand, I am sure that lower costs in Mexico is due in some part to cheaper labor.

    That is not, to me, a very welcome kind of competition. It is the same kind of competition that has caused lower wages and unemployment in many industries in the USA, thanks to NAFTA and free trade with little protection for the workers affected.

    On the other hand — the US medical industry and especially hospitals have truly
    “asked for this” by ignoring the affordability, relentlessly adding staff and raising salaries, and their general indifference to the pain that is caused by their high fees.