Health reform is about to face a critical test: Can it achieve financial stability? Success will hinge on three elements – renewal of the MassHealth waiver by the federal government, continued funding of the state share of the program, and a concerted effort to control costs. Each of these will be challenging and will require a renewed commitment from all the stakeholders who made health reform a reality two years ago.

Health reform is only possible because Massachusetts receives significant federal funds through a Medicaid waiver. The waiver is up for renewal in July. Renewal is contingent on a determination that the federal government will spend no more on the state’s Medicaid program than it would have in the absence of the waiver, the so-called budget neutrality test. This calculation is complex and subject to significant back and forth between state and federal administrators. Stakeholders should stay focused on the big picture and assist the Administration as it navigates through this process.

Failure to renew the waiver on acceptable terms would jeopardize the second element in achieving stability – adequate state funding. Read more…

Both Massachusetts and Maine have embarked on significant health reform journeys. Harvard Pilgrim is proud to be helping in both states and believes that each state could learn important lessons from the other.

Here in Massachusetts we have enrolled hundreds of thousands of uninsured individuals in a very short period of time. Many factors have contributed to this achievement, but chief among them are the long-term funding commitments of state government, businesses, stakeholders, and the federal government in the form of a Medicaid waiver that provides substantial funding. As a result, subsidies available to low-income individuals are very generous, and the premiums of the majority of new health reform enrollees are entirely subsidized. While we have made progress enrolling the uninsured, recent reports warn that the cost of the program will be exceeding budgeted expectations at about the time the federal waiver comes up for renewal next year.

Maine on the other hand has fallen short of its enrollment targets. Unlike Massachusetts, Maine has not had a ready source of state funding, nor has it been successful in obtaining federal support. Read more…

If no further action is taken, the Commonwealth Connector board will soon require that residents of Massachusetts buy policies with drug coverage in order to comply with the individual mandate imposed by the new health reform law. Health plans have traditionally offered policies with or without drug coverage. If drug coverage becomes mandatory, the Connector will stop selling no-drug policies through Commonwealth Choice early next year and individuals who have already purchased a no-drug policy, either through the Connector or in the broader marketplace, will face the choice of either buying-up by the start of 2009 or paying the penalty for noncompliance.

Unfortunately, about a third of those who have enrolled through Commonwealth Choice have purchased no-drug policies, and approximately 160,000 people have no-drug policies in the broader marketplace. Is it consistent with the goals of health reform to raise the premiums of thousands of currently insured people? Wouldn’t more people be insured, if they were able to choose policies with or without drug coverage, especially with the availability of very low-cost generic drugs?

The mandatory drug benefit controversy is really about the goals of reform. Read more…

While medical costs, at nearly 90% of the health care dollar, drive most of the annual increase in health care premiums, there are very real opportunities to lower administrative costs through collaborations. The New England Healthcare EDI Network (NEHEN) and Healthcare Administrative Solutions Inc.a (HCAS) are two successful examples of such collaborative efforts.

NEHEN is a payer and provider owned electronic connectivity solution that processes 60 million transactions per year (80% of the state’s transactions) with a savings to members of $20 million annually in transaction fees alone. A subscription service with a low cost of ownership, NEHEN removes barriers to automation for members while simplifying and improving the accuracy of operational transactions. Benefits for health providers include reduced claim denials, reduction in bad debt and write-offs, and lower administrative costs. Benefits for health plans and members include increased accuracy and timeliness as well as lower processing costs. Currently over 50 hospitals, 5,000 physicians, and 8 health plans are NEHEN members.

HCAS, founded in January of 2005, is a nonprofit collaborative of major regional health plans dedicated to simplifying administrative processes. Its first initiative, a redesign of the provider credentialing process, has recently been completed. The new process enables providers renewing their health plan credentials or submitting credentials for the first time to use a single, standardized process established by HCAS. Previously, health plans administered different processes, requiring providers to submit similar information over and over again. Duplicative processes have been eliminated and replaced by a single process that delivers administrative cost savings, improved cycle times, and greater accuracy.

NEHEN and HCAS are just two examples of the kind of efficiencies that collaborations can produce. Such cooperative efforts hold great promise for lowering administrative costs. Who knows – perhaps the model can be employed to help reduce medical costs as well!

Bruce Bullen
Chief Operating Officer
Harvard Pilgrim Health Care

The state Division of Health Care Finance and Policy has issued draft regulations to strengthen this important piece of the health reform law. Read more…

In her posting on June 5th,Dolores Mitchell argues convincingly that rising healthcare costs pose a danger to the ultimate success of Chapter 58. In fact, despite the many innovative provisions of Chapter 58 and the efforts of the Connector Board to reduce health plan premiums there is little in the law that addresses healthcare provider costs.

About the question of whether or not the new Health Care Quality and Cost Council, chaired by the state Secretary of Health and Human Services, can help control provider cost increases, Dolores is not sure. She asks instead that purchasers “stiffen their resolve and insist on better rates, even to the point of dropping some providers or charging higher co-pays for selecting them.”

Unfortunately, these approaches have been and are being used with lukewarm market response. Read more…

Harvard Pilgrim Health Care regularly convenes an Ethics Advisory Group (EAG), made up of health care consumers, employer customers, health care providers, academics, and others, who volunteer their time to help us evaluate business problems that test our values framework. The Group’s advice on how to approach business challenges ranging from high-deductible products to joint ventures to protection of member privacy and confidentiality has been invaluable to Harvard Pilgrim staff and leadership.

On April 5th the EAG tackled the question of what values framework would be most appropriate to help Harvard Pilgrim meet the challenge of Massachusetts Health Reform. A key focus of the discussion was on the values most relevant to striking a balance between affordability and coverage.

In its deliberations the EAG strongly endorsed the goals of Health Reform but had several concerns. Read more…

This week the Connector Board will address an issue that is the linchpin of the Massachusetts health reform effort, namely how to determine who should be exempt from the individual mandate that requires everyone to purchase health insurance.
Deliberations will focus on the criteria for deciding whether or not Connector products are affordable given individual economic circumstances. The challenge for the Connector will be balancing the need to recognize individual economic hardship against the need to ensure that the health reform risk pool remains sound. This is a delicate balance, because the viability of the health reform program itself is at stake. Read more…

Last Thursday, the Connector Board took a major step forward in implementing the health reform law. The Board unanimously endorsed a broad range of product choices from seven carriers, including Harvard Pilgrim. These products will be available on May 1st, with coverage effective July 1st. Read more…