Network Health, one of five health insurance companies that provides coverage under the state’s subsidized Commonwealth Care health insurance plan, is moving to drastically cut costs next year by cutting hospitals from its network—including many in the Longwood Medical Area (LMA).
It is likely that the only local hospital people with Network Health Forward Commonwealth Care plans will be able to visit is the Beth Israel Deaconess Medical Center, Commonwealth Health Care Connector Authority spokesperson Paul Wingle told the Gazette. Brigham & Women’s Hospital, Dana-Farber Cancer Institute and Children’s Hospital are among those that would be excluded, he said.
Network spokesperson Debbie Gordon told the Gazette that limiting the insurer’s hospital network was a key factor in bringing Network’s premiums down this year. Network’s Commonwealth Care premiums will be reduced between $10 and $18 per month, while all other Commonwealth Care providers’ premiums are scheduled to rise.
“We are working with [health care] providers to lower costs without affecting the quality of care,” Gordon said. “Unfortunately, we could not come to terms with Partners.”
Network’s MassHealth insurance plan for Medicaid patients still includes Partner’s hospitals, Gordon said. “Partners is still a critical partner,” she said.
Commonwealth Care is a state-run subsidized health insurance program that, in partnership with private insurance providers, offers insurance for low- and middle-income adults who do not receive insurance through their employer. MassHealth administers the state’s federally funded Medicaid program—which provides subsidized insurance coverage for individuals and families that fall below the federal poverty line—and other public health care programs. Most Massachusetts residents are required by law to have health insurance.
The Commonwealth Care changes, not yet finalized, would take effect in July and make Network one of the lowest-cost Commonwealth Care options. Existing Commonwealth Care members will have the option to switch insurers during Commonwealth Care’s open enrollment period in June.
Currently, Network’s is the second most popular Commonwealth Care insurance plan, with 44,465 members. The Boston Medical Center’s HealthNet Plan, which will likely be the most expensive next year, has 54,186 members
Brigham and Women’s Hospital—an LMA hospital that is part of the Partners HealthCare System—was among those excluded from the Network plan. Partners was singled out in a report by Attorney General Martha Coakley last year and another report released this month by the state Division of Health Care Finance and Policy as having some of the most expensive hospitals in the state.
Partners disputes those findings on the grounds that they did not take quality-of-care and money-losing services the hospitals provide—like extensive psychiatric and substance abuse treatment programs—into account, Partners spokesperson Rick Copp told the Gazette. It is true, though, that Partners hospitals are more expensive than others in the area, he said.
The Harvard University-affiliated teaching hospital has an about $2 billion operating budget, but had a 2.4 percent profit margin last year. “That is thin as compared to other like-hospitals across the country,” Copp said.
“That thin margin allows us to provide high-quality care and a wide range of services,” he said, including continued investment in mental health services, substance abuse services and community health centers.
Another Commonwealth Care insurance provider, CeltiCare Health Plan previously had the lowest costs among Commonwealth Care insurers, and, Wingle said. Next year, Network Health’s rate reductions will mean CeltiCare and Network Health have the same rates. CeltiCare plans to include Partners hospitals in its network next year.
CeltiCare operates with a limited network of health care providers, but, “We have purposely kept [LMA hospitals] in our network because of the quality of care they provide for our sickest members,” said Dr. Robert LoNigro CeltiCare’s chief medical officer.
CeltiCare’s cost-containment strategy involves working closely with the health care providers in its network to ensure its members are receiving appropriate, cost-effective care, he said.
Many CeltiCare patients receive care from less expensive community hospitals, he said. But patients who need “sophisticated, complex procedures” to deal with “complex cardiac cases, complex trauma cases or complex medical disorders involving the lungs or kidneys,” will end up at hospitals like Brigham and Women’s.
Gordon said Network is also using similar cost-containment strategies, and that there are mechanisms in place for patients in need of specialized care to visit doctors outside of its network, including at LMA hospitals.
About 158,000 state residents are insured by the Commonwealth Care program. That number is expected to jump to 175,000 in the coming year, according to a press release from Gov. Deval Patrick’s office.
The move by Network comes as Patrick is proposing to level-fund the Commonwealth Care program in the coming year at $822 million. “That is $80 million less than what would be needed to maintain [the plans]. The bids had to get creative,” Wingle said.
Network—a health insurance company affiliated with the Cambridge Health Alliance—put in the lowest bid for the coming fiscal year, starting July 1. The bids are based on an average cost per-member per-month, Wingle said.
Network came in at $360. The highest bidder was the Boston Medical Center’s HealthNet Plan, which estimated a cost of $457 per-month. Members of Commonwealth Care plans get subsidies to help cover those monthly premium costs based on their incomes. Because those subsidies are mostly constant, insurers with lower bids have lower premiums.
Correction: The print and previous on-line versions of this article incorrectly stated that Network Health would this year have the lowest premium rates for Commonwealth Care patients. Network Health and CeltiCare have the same rates this year.