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Health insurers pushed to cut rates

Reductions sought for residents with lower incomes

By Kay Lazar
Globe Staff / February 11, 2011

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Faced with soaring costs, vanishing resources, and an expected jump in enrollment, regulators in charge of the Massachusetts health insurance law pushed insurers yesterday to cut rates for 160,000 low- and moderate-income residents who receive state-subsidized care.

Regulators and health care advocates warned that cuts would probably mean that insurance plans will offer patients a much narrower choice of hospitals and physicians, and more restrictions on use of specialists.

But as other cash-strapped states sharply cut care for poor residents, Massachusetts regulators said their new strategy to pare costs will keep copayment increases modest and ensure good-quality coverage under the state’s landmark health insurance law and serve as a blueprint for the nation.

“We have to be bold; we have to do things differently,’’ said Jay Gonzalez, chief budget officer for the Patrick administration and chairman of the Connector Authority, the board that oversees the state’s health law.

With a projected $82 million gap, the authority’s board approved a major change in how it will do business with insurers in the Commonwealth Care program. The approach encourages competition and will reward the lowest-cost insurers by giving them the most customers.

Regulators said the new approach is largely modeled on the business strategy and significant cost-savings achieved by CeltiCare Health Plan, which entered the Massachusetts insurance market and the Commonwealth Care program two years ago.

CeltiCare was able to drive down costs by limiting patient choice to 40 percent of the state’s hospitals, including just three of Greater Boston’s teaching hospitals, and by relying on much lower-cost care in community health centers, regulators said.

Despite the more limited choices, a survey of CeltiCare patients showed they were getting the care they needed and not having to postpone or forgo visits to doctors or medicine, compared to patients who had more selections, regulators said.

The survey also suggested that the CeltiCare patients were keenly aware of their limited choices. It showed that just 60 percent of the CeltiCare patients had a favorable view of their choices, compared to more than 80 percent of patients in the program’s four other health plans.

“We are seeing that the members understand they are in limited networks, but it does not suggest there are deficiencies in their care,’’ said Stephanie Chrobak, the Commonwealth Care director.

The survey also indicated that CeltiCare patients were far less likely to use the health care system, compared to their counterparts in the program’s other health plans. Just 30 percent of CeltiCare patients said they had seen a specialist, compared to as much as 60 percent in some of the other health plans. And just half of CeltiCare’s patients said they took prescription medications, compared to roughly 70 percent in the others.

Health care advocates said they were pleased the state was able to keep the Commonwealth Care program, the crown jewel in its health law, intact despite the steep financial pressures.

“We will be monitoring to make sure people get the care they need and are not denied,’’ said Suzanne Curry, a program coordinator at the advocacy group Health Care for All.

The Connector Authority’s new strategy will use some of the program’s projected savings to eliminate patient copayments for preventive care, including visits for family planning and contraceptives. But it projects some increases in copayments for certain prescriptions and higher-cost imaging tests.

Glen Shor, the authority’s executive director, said regulators were determined to ease the impact on patients, even as the trend in many other states is to slash benefits and discontinue care.

“This is a parade of horribles that we believe does not have to happen in the Commonwealth,’’ Shor said.

Insurance company representatives expressed skepticism about the new strategy, saying it may be unrealistic to achieve such savings based largely on the experience of CeltiCare, which only insures about 10 percent of patients in Commonwealth Care. They said that the authority’s analysis primarily studied the experience and savings of a subsection of CeltiCare patients who are legal immigrants, a group that has historically not sought much health care, even when insured.

Insurers also said they were still studying the authority’s proposal and analysis.

“We are carefully examining the data to determine if it is even possible for a local health plan committed to serving Massachusetts’ most vulnerable residents to achieve the performance results on which our future payments will be based,’’ Deborah Gordon, vice president and chief marketing officer for Network Health, said in a statement. Network Health insures about 28 percent of patients in Commonwealth Care.

“We are committed to partnering with the state and with providers to find innovative ways to manage health care costs,’’ Gordon said. But “rates must be based on applicable and verifiable data of real experience of the Commonwealth Care populations in all the communities represented,’’ she said.

A statement from the largest insurer in the program, BMC HealthNet, said the company is looking forward to continuing in the program, and its bid “will reflect our best possible efforts’’ to meet the needs of patients while controlling health costs.

Insurers’ bids are due by March 18, and the Connector Authority board is slated to vote on new contracts in April.

Kay Lazar can be reached at klazar@globe.com.