And Then There Were Five?

The Connector Board met on Thursday morning. The Board was updated on the Commonwealth Care FY10 MCO procurement process and presented with data on enrollment, plan design, premiums and the draft Seal of Approval goals for the Commonwealth Choice plans. The big news is the possible addition of a 5th CommCare plan, a joint venture between Caritas Christi network and an out-of-state for-profit insurer that specializes in Medicaid coverage. DOI Commissioner and Board member Nonnie Burnes presided over the meeting, as Board Chair and Administration and Finance Secretary Leslie Kirwan could not be present. Materials for the meeting can be found here, and our full report is after the jump.
Executive Director’s Report
Jon Kingsdale opened the meeting with his Executive Director’s Report. Kingsdale reported that he is pleased with the results of FY10 CommCare MCO procurement process. According to Kingsdale, the objective of the RFP was achieved, with the plans bidding an average 2.3% reduction from the projected FY10 expenses. Kingsdale was proud to announce that two low cost options will be available for more than two-thirds of CommCare enrollees and the maximum premium will be reduced substantially for some members. Kingsdale acknowledged concerns that a few of the Board members raised about a new entrant to the CommCare arena. Kingsdale stated that the CommChoice Contributory Plan for small employers is proceeding; the Board will be updated on its progress at the April Board meeting.

CommCare FY10 MMCO Procurement
Connector CFO Patrick Holland presented the Board with results of the FY2010 CommCare Managed Care Organization (MCO) procurement process. The process was hailed by Board members and staff as a calm, smooth process with better-than-expected results. The RFP came back with responses from four incumbent MCO’s: Boston Medical Center HealthNet Plan, Fallon Community Health Plan, Neighborhood Health Plan and Network Health. The fifth bidder – Commonwealth Family Health Plan – is new to the Commonwealth Care market. Commonwealth Family Health Plan (CFHP) is a joint venture of Caritas Christi Health Care and Centene Corporation, a national Medicaid risk bearing entity; the plan bid in every market except Western Mass.

Holland said that the process was a team effort. RFP responses met all five procurement goals set by the staff and board: fair and reasonable rates, avoid programmatic budget uncertainty, mitigate risk selection, protect members from large premium swings, and attract additional health plan and expand network coverage/access.

Rates & Plan Discounts
According to Holland, competition in combination with plan discounts drove down price. The competitive bidding process should result in a 2.3% reduction in budgeted FY2010 CommCare program expenses, which is a flat trend from FY09 to FY10. The maximum discount was bid in all five regions. In three regions, two health plans – CFHP and Network Health – bid the maximum discount (5.39%) allowed under actuarial soundness rules.

In addition, every plan will get a little bit of the auto-assigned population, although it looks like CFHP (if accepted) may get the bulk since they bid the lowest in the most areas. Holland says that “no one’s losing money on CommCare;” the plans would also be getting a pretty good deal.

Network Coverage and Access
According to Holland, the bids maintain continuity of health plan participation, attract another MCO, and expand access, providing enrollees with 4-5 health plan options in 30 of 38 service areas. Board member Celia Wcislo inquired as to whether plans are also expanding into the western part of the state, where access is more sparse than some other parts of the state. Holland said that they really need to work on increasing access in Western Mass. As they have done in the past, CommCare staff will continue working with MCOs – both new and old – to make sure they have adequate provider networks.

Board member Nancy Turnbull suggested that the Board also consider the intersection of plan and provider. Can folks join new cheaper option and keep their provider? Do they have to switch providers to get the cheaper plan? Holland responded that staff is able to do a primary care physician overlap, but it will be evolving over time. He said that most hospitals and physicians in participate in most plans, so there is likely overlap.

Enrollee Contributions & Member Cost Protections
The bid responses also ensured member cost protections, especially for those who select the highest cost plan in their income category. There will be two low-cost options available to most members in most service areas. Assuming a 2% enrollee premium increase for FY10, the difference between the least and most expensive health plan for any given income bracket is expected to decrease substantially (by 40%-64%).

Nancy Turnbull asked how much contributions would increase for enrollees who choose to stay in their current plan. Holland said that members in the 200-250% fpl and 250-300% fpl income brackets, for example, would see a significant reduction in their premiums, and CommCare staff will look into what the increase could be for other income brackets.

Board member Rick Lord brought up the incredible premium increases many small businesses are seeing, and is concerned with cost shifting. Connector ED Jon Kingsdale responded that he is very pleased with the Commonwealth Care rate trend, but this trend cannot be maintained, nor cost shifting averted, without a shift to an all payer system. Board member Nonnie Burnes agreed, and said we need to be careful identifying causes on this level; the payment reform commission will be looking at the broader issue of how we pay for care.

Plan Type I Enhanced Benefits
Plans that came in as the lowest bidder in a region could propose “enhanced benefits” for Plan Type I enrollees. By offering these benefits, plans can recoup up to 25% of their rate discount.

• BMC HealthNet Plan (qualified in Northern region) proposed a behavioral health co-pay waiver.
• Network Health (qualified in Boston, Southern, and Western regions) proposed a chiropractic benefit and a fitness/wellness initiative.
• Commonwealth Family Health Plan (qualified in all regions but Western) proposed a Health Reward Account for targeted health behaviors – members receive pre-paid card that can be used for health purchases. Centene previously offered this benefit to members in South Carolina’s Medicaid program.

Holland clarified that these benefits are marketing incentives; non-premium paying members in Plan Type I might switch from one plan to another because of one of these extra benefits. Holland also cited the need to sit down with each plan to get details on how to operationalize each of these enhanced benefits. Staff will come back with a firm recommendation on March 12th.

Plans can also earn a $2 per member per month bonus in the Quality Incentive Program/Member Annual Physical Incentive. MCO’s had a lot of questions about this program. CommCare staff will determine how to best measure and define this program, so that it can be included in a the formal contract.

New Bidder: Centene + Caritas Christi = Commonwealth Family Health Plan?
Patrick Holland recognized that many Board members are concerned with a new bidder coming in. Nancy Turnbull reminded the Board that they had wanted new plans to bid. With that, the Board has a particular obligation to look at any new entrants very carefully.

Holland raised outstanding issues that need to be addressed with the new plan:
• DOI Licensure – CFHP is not yet licensed.
• Provider Network Adequacy – The Caritas system is the foundation of the new plan’s network; they need to expand outside of Caritas.
• Operational Readiness
• Care & cost management

Board member Ian Duncan asked how the new plan compares in financial strength with existing MCO’s. Since Centene is a publicly traded company, accessing this data will likely be easy. Patrick Holland said that they can also look at two of the four existing MCO’s licensed through DOI, but the comparison won’t be “apples to apples.” Nancy Turnbull added that the Board should not only look at the strength of Centene as a corporation, but also at its strength as health plan.

Duncan also had some questions about provider network adequacy. Holland responded that network adequacy will evolve and change over time. CommCare staff will work closely with the new plan to make sure they have the right network configuration in any given service area before they allow them to market in that area. He stressed that no MCO’s are allowed to market (i.e. be an option during open enrollment) in any area until they build an adequate network.

Rick Lord asked DOI Commissioner and Board member Nonnie Burnes what she looks for when considering granting a license to a new plan. Burnes said DOI looks at capital structure (to make sure the plan can pay claims), administrative fees, company structure, IT capability, and quality of management. Holland added that DOI and CommCare staff are meeting to discuss the new plan, then DOI will run with the licensing piece.

Nancy Turnbull pointed out that Community Family Health Plan – whose name might be confusing and misleading (it sounds too close to Commonwealth Care, and there are no family plans offered in CommCare)– will be the lowest cost plan in many areas, and thus particularly attractive. It is also the only plan bidding for CommCare that does not contract with MassHealth. Given that the CommCare population churns a lot, the staff and Board need to make sure this back and forth is least disruptive for the member. Turnbull also raised concerns with the scope of services offered in the Caritas system – reproductive services are not provided by Caritas. The staff and Board need to make sure female members have adequate and uncomplicated access to these important services.

Commonwealth Choice Seal of Approval Goals and Market Baseline Data
Finally, Kingsdale and Connector CFO Patrick Holland provided the Board with a presentation on Structuring Choice in the Commonwealth Connector.

Kingsdale listed the myriad of programs and plans offered by the Connector. There are 15 different CommCare plans, 12 unique YAP plans and 25 flavors of CommChoice plans. Kingsdale stated that the 25 CommChoice plans represent almost 14% of available options in the market. Kingsdale explained the variation among the CommChoice plans; there are three benefit tiers, plans with select and broad networks, plans with and without deductibles and plans offered through 6 different HMOs. Kingsdale defended the variation as important for choice and risk selection.

Next, Kingsdale provided insight into the evolution of the Mass. non-group market and trends in premiums. Kingsdale compared the average number of carriers and benefit packages and monthly premiums for the three largest plans in the state in 1998, 2006 and 2008. Kingsdale pointed out that there was a significant increase in premiums for the standard benefit package from 1998 to 2006, then a sharp decrease in premiums from 2006 to 2008. Also, there was an astronomical increase in the number of benefit packages offered from 2006 (30) to 2008 (180). Burnes questioned whether the decrease in premiums from 2006 to 2008 was attributable to the merger of the non-group and small-group market in 2007. Kingsdale responded that there are three reasons that explain the premium decrease: the small-group/non-group merger, the implementation of the individual mandate, which recruited younger, healthier individuals into the insurance pool, and the movement of consumers to lower-priced plans. Gruber wondered if people are buying less generous coverage. Kingsdale replied that yes, there is considerable buy-down. Wcislo inquired about the impact of the small-group/non-group merger on the small-group market, specifically if the merger made small-group coverage more expensive. Kingsdale answered that although no evaluation has been done, he theorizes that due to the individual mandate small-group coverage is no more expensive.
Kingsdale presented the Board with current premium prices for 37 year olds in Boston and Worcester for five carriers and three plan tiers. The Board remarked on the significant variation in costs across plans. For example, a 37 year old can buy a Bronze level Fallon plan for $190 or a Gold level Harvard Pilgrim plan for $530. The premium analysis reveals a 40-60% premium range on each tier. According to Kingsdale, while over 50% of members are in the highest cost plans, 60% of buyers are price-sensitive and opt for the Bronze level plans. Kingsdale reported that there is significant membership for plans at both ends of the price and network spectrum. Turnbull expressed that the extraordinary price spread across CommChoice plans was “very curious”, and questioned if some plans were more profitable than others. Turnbull requested that the Connector look at medical expense ratios for plans. Burnes also stated that she was struck by the price differential between CommChoice plans and would like to investigate what is motivating the price variation. Kingsdale responded that analysis of the CommChoice plans would be complicated, but the Connector would attempt to get claims data from the plans.

Holland provided the Board with an overview of the Seal of Approval process. Granting the Seal of Approval signifies that the CommChoice plan meets certain quality and value standards approved by the Board. The goals of the Seal of Approval process are to select and offer high value plans, align choice of plan designs and carriers with consumer demand, enhance simplicity of the consumer shopping experience and lower transaction cost, minimize risk selection and maintain continuity of coverage for the roughly 21,000 CommChoice enrollees. Holland then explained the role of CommChoice in the success of health reform. The Individual market has more than doubled since Chapter 58’s passage and 30% of this growth has come through CommChoice. For some carriers, CommChoice represents more than 50% of their new growth. Kingsdale admitted that there is some debate about the exact percent of growth in the Individual market. Turnbull wondered why some carriers received varying shares of business through the Connector. Ian responded that one reason might be that some carriers have cheaper plans than the plans offered through the Connector. Gruber added that it would be good to know about the less expensive options in the market. Gruber also asked if the Connector has explored why people have not signed up through the Connector. Kingsdale responded that the Connector is launching research on people who have and have not taken up CommChoice.

Next, Holland presented data on the distribution of CommChoice members across carriers. According to Holland, 60% of Gold members are in two plans (out of 11 plans), 60% of Silver members are in 5 plans (out of 15), 60% of Bronze members are in two plans, 80% are in 4 plans (out of 14) and 60% of YAP members are in 3 plans (out of 14). Over 90% of CommChoice members are in four of the six carriers. Holland assessed that since members are in all of the plans, choice is valued among members. Turnbull challenged this assumption and requested that the Connector explore through market research if this is the case. Turnbull stated that the Connector’s website is a great tool, but it can be overwhelming and she would like a more standardized benefit design. Turnbull also raised concerns with benefit caps in the YAP plans and requested insight into how long people are staying in CommChoice. Duncan responded that the Connector can not really limit choice, as the carriers can offer as many plans as they would like and people can shop outside of the Connector to find their desired plan. Lord stated that price, not choice, was the biggest concern for his constituents, especially for small employers. Dehner questioned how the Connector fits into the long term goals of health reform and the role of CommChoice. Kingsdale replied that the role of the Connector is described in Chapter 58, but the Board can discuss this issue further. Holland explained the next steps for the Seal of Approval process, which include performing market research (surveys and focus groups), analyzing the benefit take-up outside of CommChoice to inform the development of the Seal of Approval specifications. Kingsdale promised the Board a full CommChoice update in April.
Catherine Hammons & Suzanne Curry