At Glen Shor’s first meeting as Connector Board Executive Director, the Board tackled issues related to the budget and Business Express. Click here for meeting materials.

Jay Gonzalez opened the meeting by thanking out-going Executive Director Jon Kingsdale, and welcoming Glen Shor as the new Connector head. Gonzalez said, “I couldn’t be happier to have Glen Shor as Jon’s successor. He knows the Connector, Massachusetts health reform, and stakeholders inside and out, and has a talent for taking complicated issues and identifying paths to consensus. He’s the right person for the job.”

Gonzalez also reflected on the Connector’s success and important work ahead – particularly on national health reform implementation and cost containment. More urgently, Gonzalez is focused on the state budget; the Legislature is expected to release their final FY11 proposal by the end of next week. Unless Congress includes an FMAP extension in the federal tax extenders bill, the state will face an additional $680 million hole. In response, the Governor submitted a revised budget which includes 3.6% less spending than his original proposal. Gonzalez commented that “we need to ensure we have a fiscally responsible budget going into next year; I don’t know the potential impact on CommCare or Bridge yet.”

Lastly, Gonzalez reminded the Board about his commitment to taking a fresh look at the Affordability Schedule and possibly changing their approach. He announced that Board members Jon Gruber, Rick Lord, Nancy Turnbull, and Celia Wcislo will be on a special committee to begin looking at this.

Before passing it on to Glen Shor, Gonzalez announced Jean Yang as the Connector’s new CFO.

Executive Director’s Report

Glen Shor began his first meeting as the Connector’s ED with a reflection on his role at ANF and what’s ahead. “I am very excited to be sitting in this chair and feel a great sense of responsibility. I look forward to working together and finding consensus solutions moving forward.” He also expressed gratitude for his colleagues at ANF.

Setting context for business of the day, Glen provided several updates about the Connector’s activities, the most recent MA Health Reform Survey, and the Senate President’s short-term cost bill:

Premium billing: The Connector introduced a new premium billing system for CommCare on May 31st. The system will allow the Connector to accurately bill members and manage membership information. According to Shor, contracting with Xcelys has made major functionality upgrades possible. CommCare Director Stephanie Chrobak will share a more detailed update on this at the next Board meeting.
CommChoice: As of May 1st, CommChoice broke the threshold of 30,000 subscribers.
CommCare Bridge: The Connector completed FY11 procurement, awarding the bid to CeltiCare. The number of people Bridge can cover will depend on the final budget appropriation. According to Shor, $60 million (in both the House & Senate budgets) can cover about 24,000 members and $75 million (in the Governor’s budget) can cover about 31,000 members. Stephanie Chrobak, Kerry Connolly, MassHealth, and ANF are planning for FY11 implementation. The Connector hopes to have more robust, reliable data soon; this will help inform the program moving forward. In response to a question from Gruber, Shor said that the Connector will develop a logic to prioritize new enrollees, taking into account those who naturally fall off program and program integrity. Shor thanked staff who have worked on this program – James Woolman, Deb Hayes, Jamie Katz, Ed D’Angelo, Ben Walker, Robin Callahan, and Candace Reddy.
Massachusetts Health Reform Survey: On Tuesday, the Urban Institute and Blue Cross Foundation released results from their MA Health Reform Survey. Good news: Massachusetts continues to be successful in maintaining gains in health reform despite intense economic challenges. Perhaps the best finding: there has been a decrease in disparities. Turnbull also mentioned recent report releases on the positive impact of health reform on women.
Senate President’s small business bill: A few provisions directly impact the Connector, which has a strong role to play in offering affordable options to small businesses. There are also provisions requiring screening of new non-group enrollees to make sure people aren’t gaming the system, and offers of state tax credits to small business that purchase through the Connector (in advance of federal tax credits).

Rick Lord asked whether the financial picture for the Medical Security Program has improved after doubling the employer assessment. Gonzalez responded that MSP’s financial picture has improved due to the increased assessment and other measures; however, there continues to be an extraordinary strain on the unemployment system and concerns about future solvency of MSP. A lot depends what the federal government does with unemployment extensions.

Wcislo asked whether most people currently in MSP will come into CommCare if the federal unemployment extension doesn’t pass. Gonzalez responded that some people will shift to MassHealth and some to CommCare; they are trying to develop plans to make it easier to shift from one program to another.

Website Hosting

Bob Nevins and Scott Devonshire gave an update on the procurement for the Connector’s website vendor. The Connector will continue their contract with Computer Science Corporation (CSC), which, according to Nevins and Devonshire, provides the best value and will enable the Connector to increase the site’s functionality. The contract runs from 7/1/10 to 6/30/11.

Gonzalez suggested looking into the possibility of the state hosting the site. Nevins responded that this is a possibility and the reason for the short contract with CSC. Turnbull also suggested using the Connector’s website experience as a business opportunity, to advise other states as they set up web portals in compliance with national health reform.

The Board voted unanimously approve the web hosting contract with CSC.

FY10 & FY11 Administrative Operating Budget

Fiscal Year 2010

According to Kari Miller, the current estimate reflects a reduction in FY10 expenses by $3.7 million, resulting in net gain of $3.3 million. $2.6 million of the reductions came from premium billing project savings; $500,000 from an over-estimate of employee benefits; and $500,000-600,000 from a delay in infrastructure improvements.

Improvements to the CommChoice provider search tool were delayed. The hope is to eventually have an integrated provider search for all carriers in one place. Gruber suggested prioritizing this project and exploring the possibility of adding expected cost calculators to the tools available to potential CommChoice subscribers.

Fiscal Year 2011

There are quite a few challenges ahead in FY11: flat revenue, combined membership increase, and uncertainty in CommChoice enrollment.

That said, the FY11 budget recommendation is $3.2 million higher than the FY10 year-end estimate (not including $2.5 million for the outreach grants, which is covered by the FY10 surplus). According to Miller, over 92% of the projected expense increases will be in CommCare and CommChoice customer service and premium billing, as a result of expected increased volume. In addition, 75% of the growth in CommChoice is due to the SBSB conversion into Business Express.

Among the most flexible and discretionary budget items are infrastructure improvements.

In this category, Lou Malzone suggested the Connector investigate simplification of product offerings. Shor responded that the project budget leaves room for flexibility based on the Board’s priorities. Dolores Mitchell asked if any components of national health reform roll out and are budgeted for in FY11. Shor responded that Secretary Bigby is heading up the efforts to analyze national health reform and identify funding opportunities; nothing is assumed in this budget. Wcislo requested that the Board spend the bulk of the agenda during their October retreat on how national health reform will impact the Connector’s work.

Gruber asked why the Connector is cutting their CommChoice administrative fee if they will end up with a loss from it. Lord responded that the Connector is asking plans to decrease their administrative fees and the Connector should follow suit. In the end, the operating budget breaks even.

The Board voted unanimously to approve the FY11 administrative operating budget.

Business Express Update

Kevin Counihan, Roni Mansur, Jamie Katz gave an update on Business Express, the Connector’s small business offering.

Counihan reminded the Board that Chapter 58 directs the Connector to provide products for individuals and small businesses with 1-50 employees. Currently, the Connector is focusing on the “mini-group” market – employers with 1-9 employees. To make this offering more affordable, the Connector reduced administrative fees to mini-employers from $35 per subscriber per month (the amount charged by SBSB) to $10 per subscriber per month. According to Counihan, the reduced admin fee results in an average of $300 annual savings for employees.

In addition, Business Express has reduced the number of intermediaries for carriers from three to two and reduced carriers’ admin fee from 4.5% to 3.5%. Only one health plan (Blue Cross Blue Shield) allows small businesses to buy directly through them; other carriers go through intermediaries.

Business Express is a sole source product with one carrier and one benefit plan design; employees can take it or leave it. To simplify its choices, the Connector has reduced plan options from 25 to 7.

Gruber asked if the Connector is putting the employee choice (Contributory Plan) option aside. Counihan responded that the Connector wants to put its resources into one effort for small businesses. Thus, they are focusing on Business Express and deferring work on the Contributory Plan.

Next, Mansur gave a run through of the Business Express shopping experience, showing slides from the Connector’s website. According to Mansur, Business Express simplifies the shopping experience for employers, allowing them to compare plans side-by-side.

Challenges

Counihan explained that CeltiCare, Health New England, and Neighborhood Health Plan are currently the only participating carriers in Business Express. Blue Cross Blue Shield had never been part of the program, and beginning this month, Fallon Community Health Plan, Harvard Pilgrim, and Tufts Health Plan also pulled out of Business Express. Combined, these four plans represent 90% of the private market. Shor sent letters to the carriers urging them to reconsider participation in Business Express.

Shor commented that major plans choosing not to participate in Business Express is a significant situation facing Connector and small businesses. Shor stated, “Massachusetts health reform envisioned small businesses buying through the Connector. This is also a vision of national health reform; new federal tax credits available in 2014 will only be available to businesses that buy through exchanges. Business Express is also a value proposition; apples to apples comparisons empower small businesses to make decisions and save money. The ability to offer robust options to small businesses has been compromised. The success of this program is tied up in relationship with health plans. We need to maintain these relationships, and we need to deliver for small business and fulfill the vision of Massachusetts and national health reform.”

Nancy Turnbull agreed: “I fully support what Glen said. By not participating in Business Express, carriers are not complying with the letter or the spirit of the law. The spirit of the law is shared responsibility. Individuals contribute through the individual mandate. Government contributes through Medicaid expansions, CommCare, and the Connector. Employers contribute through the Fair Share assessment and the increased ESI uptake. Shared responsibility is for everyone. Plans are obligated to contribute fully in the Connector. Plans have upwards of 400,000 new members through health reform. They can’t pick and choose which pieces of the law they want to comply with. Consumers don’t have that choice. The Connector is intentionally designed as an alternative market mechanism that is easier to navigate. It doesn’t work without full participation.”

Mitchell added that providers are also part of shared responsibility and have contributed to health reform. Wcislo concurred with Glen and Nancy’s statements, expressing hope that the Connector and plans can get to an agreement soon.

Lord also expressed the need for robust, affordable options for small business, and also understands the carriers’ position. At this time, according to Lord, the carriers have lost money because of rate issues. Shor responded that rate issues are out there, but there are other avenues health plans can pursue to deal with them. Health plans are still selling through other intermediaries, and he hopes they will participate in Business Express soon. Gruber expressed support for Shor’s letters, and suggested exploring a structure in Business Express that would help plans feel like partners in the design of the program.

With that, Jay Gonzalez motioned that the Board go into Executive Session to discuss the pending CommCare Bridge lawsuit.