Massachusetts Health Plan for 500,000 Uninsured to Define Provider Networks

State plan may curb hospital choice

Insurance authority looks at ways to keep premium costs down

By Jeffrey Krasner, Globe Staff | June 8, 2006

At yesterday's first meeting of the state authority charged with crafting affordable health insurance, a state Medicaid official said restricting patient access to a limited network of hospitals could help keep premiums down.

Brian Wheelan , assistant director of Medicaid, spoke before the board of the Commonwealth Health Insurance Connector Authority, which was created under the healthcare reform bill intended to extend coverage to the roughly 500,000 Massachusetts residents without health insurance.

As an example of the differences in hospital costs, he said that Cambridge's Mount Auburn Hospital, a Harvard-affiliated teaching hospital, charges $1,800 to deliver an underweight infant, while Massachusetts General Hospital, also a Harvard-affiliated teaching hospital, charges about $5,300. Brigham and Women's Hospital, another teaching hospital that has a reputation for quality maternity services, charges $3,200, he said.

"Don't let anyone tell you there aren't huge savings in cost while maintaining quality," he said at the meeting held at One Ashburton Place.

Wheelan said defining provider networks, which mandate which hospitals patients can use, could generate enormous savings as the Connector seeks to craft an affordable insurance plan for individuals that features a target premium of $300 a month. Some board members seemed open to that approach.

"If you have to restrict something, I'd rather restrict the breadth of the network rather than cut benefits," said Dolores L. Mitchell , who also serves as executive director of the Group Insurance Commission, which provides insurance for state employees and retirees.

David Torchiana , chief executive of the Massachusetts General Physicians Organization, acknowledged that costs are higher at his hospital, but he warned against restricting access. Residents of Everett, Chelsea, and other areas rely on Mass. General as a community hospital, he said.

Jon M. Kingsdale , the former Tufts Health Plan executive who is executive director of the Connector, said he will rely on insurers to craft low-cost offerings, which might include a restricted network. ``We want to be open to what health plans bring us," he said. ``I suspect if there is substantial value in limited networks, we'd be open to them."

Kingsdale is being offered a three-year contract with a $225,000 annual salary, although final details have not been worked out.

The issue of restricting networks was one of many addressed yesterday . The new authority is chaired by Thomas Trimarco, secretary of health and human services, but will operate largely independently. It will develop a low-cost insurance plan that is intended to be a key part of the state's reform effort. The state will also expand Medicaid, the federal and state program that provides healthcare to low-income residents, and will provide subsidies for residents who earn less than three times the federal poverty rate, about $60,000 a year for a family of four.

The authority's decisions will determine what is covered by the affordable health insurance plan, called Commonwealth Care. But it is also operating under a tight deadline.

"We'd like to be enrolling people in Commonwealth Care by Oct. 1, less than four months away," said Kingsdale.

Along with limited provider networks, the state highlighted other approaches to low-cost insurance, such as eliminating some healthcare mandates. For instance, Massachusetts insurers now must cover assisted reproductive techniques like in vitro fertilization. Wheelan said the Connector should look at suspending some of those benefits for its low-cost product.

He also discussed using tax-advantaged health savings accounts, which enable employees to set aside pretax dollars for out-of-pocket expenses. Such accounts are typically linked to health plans with high deductibles. Wheelan said preventive services like routine checkups could be exempted from the deductibles.

Another approach would be to charge higher premiums for residents who smoke, similar to the way life insurance companies charge higher rates for smokers, he said.

Charles Joffe-Halpern , executive director of Ecu-Healthcare Inc. of North Adams, which provides access to healthcare for Berkshire County residents, said he was wary of so-called consumer-directed healthcare plans, which feature high deductibles and copayments.

"It's a slippery slope when you start to talk about consumer-directed healthcare," he said.

Jeffrey Krasner can be reached at krasner@globe.com.