State health plans likely to be similar

The four Medicaid plans that will be offered to low-income uninsured Massachusetts residents starting Oct. 1 are likely to be nearly identical.

Jon Kingsdale , executive director of the agency responsible for implementing many provisions of the state's new healthcare reform law, wants the four companies designing Medicaid plans to focus on simplicity at the expense of innovation. That means the plans, called Medicaid managed-care organizations, will compete mostly on price, their networks of doctors and hospitals, and customer service.

The plans, to be sold by four state-licensed Medicaid insurers, will be based on an existing MassHealth insurance plan for single adults. They are a major part of the effort to extend healthcare coverage to the roughly 500,000 residents who now lack insurance, and are expected to eventually cover 200,000 of those residents.

``In order not to confuse enrollees and to facilitate them being able to make reasonably informed choices, some standardization of the benefit package is advantageous," said Kingsdale, the head of the Commonwealth Health Insurance Connector Authority.

The approach has been discussed at board meetings of the Connector Authority and in private meetings with Medicaid insurers. But it has not yet been finalized or approved by the Connector's board of directors.

The four plans already offer an alternative to standard Medicaid, the joint state and federal program that funds healthcare for low-income residents. Traditionally, Medicaid recipients have been able to go to almost any doctor, with the government footing most of the bill. The four new Medicaid managed-care organizations, or MMCOs, have the same kind of restricted doctor and hospital networks as health maintenance organizations.

The strategy is driven in large part by the aggressive timetable to implement healthcare reforms. Next July, all Massachusetts residents will be expected to purchase health insurance. Those who do not will face penalties, such as the loss of tax exemptions.

But the uniform approach described by Kingsdale has disappointed some officials of the Medicaid plans.

``We don't understand why it has to be standardized," said Sonja Brehm , senior manager of business and product development with Fallon Community Health Plan of Worcester, which has 10,500 members in its Medicaid plan.

``All of the MMCOs will end up developing a similar plan design, which limits creativity and flexibility. It would be beneficial to consumers if each MMCO is allowed to develop unique plan designs. This will help to drive down costs. Let the consumer make the choice in the end."

Christina Severin , head of Cambridge Health Alliance's Network Health plan, with 80,000 Medicaid members, said, ``I'm disappointed that we are not going to be able to do some of the things we had originally thought we'd be able to do. I also understand that the Connector needs to be ready to offer a product on Oct. 1."

Kingsdale said the insurance companies will have some flexibility. He has instructed them to design two alternatives. One would have lower monthly premiums, but higher co payments, and the other would have higher premiums with lower out-of-pocket expenses for members.

``Already, there's some variation," he said. ``We're going to invite them to submit creative, innovative benefit designs, and we'll see what they come up with versus the advantages of more standardization."

Currently, there are four Medicaid managed-care organizations in Massachusetts, including Network Health and Fallon. Under the healthcare reform law, those organizations will maintain exclusive control of the Medicaid managed-care market for three years if they enroll at least 40,000 members within a year and 80,000 within two years.

The companies are developing product offerings for a part of healthcare reform called the Commonwealth Connector Health Insurance Plan, or C-Chip, which will offer subsidized health plans to residents with incomes between 100 and 300 percent of the federal poverty level. The upper limit is an annual income of about $60,000 for a family of four.

The Connector has told the Medicaid plans to build C-Chip offerings around a state Medicaid plan called MassHealth Essential. That plan covers a wide range of healthcare services, including hospital care, doctors' visits, laboratory services, prenatal care, prescription drugs, mental health, and eyeglasses.

Robert Seifert , executive director of the Massachusetts Medicaid Policy Institute, said it is a good starting point for the managed-care plans.

``It's a robust plan," he said. ``It's got everything that's in a commercial health plan."

Seifert said he favors Kingsdale's limited-choice approach. He pointed to the huge number of plan variations offered under the Medicare federal prescription drug benefit, which led to confusion among the senior citizens it was intended to help.

``Some standardization right out of the box is going to be helpful for the people who are going to enroll in these products," said Seifert. ``Consumers are also on a short timeline, not just the plans and the Connector."

Deborah Enos , chief executive of Neighborhood Health Plan of Boston, which serves 105,000 Medicaid members statewide, said she hopes to introduce more innovative products next year.

``I hope we will get to a place where there's more opportunity for innovation in the benefit," she said. ``I hope that in year two of C-Chip we'll start to see movement in that direction."

Jeffrey Krasner can be reached at krasner@globe.com.