Harvard Pilgrim says it told town of deficit
Harvard Pilgrim Health Care officials say they informed the town of Weymouth monthly of a mounting deficit in its self-insured healthcare account. Town officials, however, didn't sound the alarm about the problem until near the end of the fiscal year.
Sharon Torgerson, spokeswoman for Harvard Pilgrim, which administers the town's program for its employees, said Harvard Pilgrim reported to officials "about two weeks after the end of each month."
Despite those reports, the $3.4 million deficit in the town's healthcare account was not publicly acknowledged until May, when it came as a surprise to town officials, prompting a budget crisis. Officials called for a new round of spending cuts, layoffs were announced, and the School Committee called for a Proposition 2 1/2 override.
The Weymouth Town Council unanimously rejected the override option Monday night, with many calling it "ill-timed." But the budget crisis remains unresolved.
In response to Harvard Pilgrim's assertion that the town was warned of the mounting deficit, James Wilson, Weymouth's chief financial officer, said that his office was not monitoring the reports on a monthly basis. Instead, it did so at the end of each three-month quarter when it came time to reconcile the account with Harvard Pilgrim.
Wilson said the number of claims - including catastrophic claims, which are $85,000 or more - exploded beginning in November and peaked during the January-March quarter, adding unexpected costs.
It appears there were 18 catastrophic claims during the fiscal year that ended June 30, compared with eight for the previous fiscal year, he said, pending a final report. Although the town's "stop loss" insurance policy covered four of them, the other 14 were the town's responsibility.
Because so many of the unexpectedly large number of claims were made during the later months of the fiscal year, and because the Harvard Pilgrim updates were not tracked monthly, he said, the overall cost was not evident sooner.
"I was notified of the balances upon my return from vacation in May, hence all the attention," said Wilson in an e-mail.
He said the balance sheet for the quarter showed a huge swing of negative $4.4 million that required him to "sound the alarm" to the Town Council.
Wilson said that his department has no oversight of the insurance issues and that the town's human resources department monitors all bills. There was also a shortage of staff to conduct reviews, he said. There is only one town employee who is qualified to review claims under the Health Insurance Accountability and Portability Act, according to Wilson.
Since the discovery of the deficit, Wilson said Mayor Susan M. Kay has instructed him to review claims monthly.
Kay could not be reached for comment.
Wilson reported to the Town Council in May a projected $3.4 million deficit in its healthcare account for the fiscal year ending in June, and projected a $3 million deficit for the fiscal year that began July 1.
The deficit is being gradually paid down with money from other accounts, including unexpended line items from the 2008 fiscal year budget, and money from the stabilization and reserve funds.
The town will not know the size of the deficit in the healthcare account for the previous year until final bills are paid later this month or early next month.
The town also increased the budget appropriation for healthcare for this budget year to cover another projected deficit. Weymouth is not expected to have a final budget for this fiscal year until sometime next month.
Torgerson said Harvard Pilgrim typically meets with communities for which it administers self-insured plans and works out a cost projection analysis based on past experience. She said Harvard Pilgrim administers 150 to 160 plans for municipalities and school districts across the state.
A committee composed of representatives from 17 town unions has been studying, with the aid of a consultant hired by the Weymouth Teachers Association, whether it makes sense for town employees to join the state's Group Insurance Commission next July 1. The committee faces an Oct. 1 deadline on the decision.
Kathy Lavery, president of the teachers' union, said the sudden jump in healthcare costs at the end of the fiscal year resulted in some school employees - especially paraprofessionals, who are paid at a lower rate than teachers - getting bills for retroactive healthcare costs instead of checks at the end of the school year. Employees pay 30 percent of the cost for health insurance, and the town covers the remainder.
Kay took office in January, about the time the number of claims including catastrophic claims, took off, Wilson said.
Other cities and towns have self-insured plans similar to Weymouth's, but use different methods to protect them financially. For example, Milton's self-insured account features "stop loss" insurance that kicks in after the first $100,000 of a claim; Weymouth's kicks in at $175,000.
While Weymouth might ultimately decide to join the state health insurance pool, the town is, for the moment, left trying to make ends meet this year.
The Town Council's rejection Monday of a Proposition 2 1/2 override raises the possibility of other revenue-raising measures, such as a stiff increase in the fees students pay for sports or other extracurricular activities.
An override, if approved by the council and passed by voters, would have raised between $1.8 million and $4.6 million, depending on the option approved. The money would have restored previous budget cuts.
"I can't speak for all of the councilors, but in my case it was the wrong override for the wrong purpose at the wrong time," said Councilor at Large Robert M. Conlon.
Several councilors have been openly critical of the School Committee's decision to fund a five-year contract with Weymouth teachers after budget cuts had forced the committee to eliminate 90 positions. The school officials had urged the override vote.
Several councilors also cited the struggling economy as a reason for voting down the request.
Rich Fahey can be reached at faheywrite@yahoo.com.
