Commonwealth Care

Boston - The state’s subsidized health insurance program for low-income residents, Commonwealth Care, an exclusive network of four insurers since its inception, is preparing to throw open its doors to new bidders in an effort to cut costs, stabilize premiums and pay fair rates to carriers.

“It’s really about achieving those three things,” said Jon Kingsdale, executive director of the state’s Connector Authority, which oversees Commonwealth Care. “We don’t want the premiums going all over the place and people having to switch plans.”

With a three-year deal of exclusivity for BMC HealthNet Plan, Fallon Community Health Plan, Neighborhood Health Plan and Network Health expiring in July 2009, the Connector board on Thursday explored ways to bring new insurers into the fold and to provide incentives to bring costs down for taxpayers and program enrollees.

Under the upcoming round of bidding, carriers would be limited to offering plans with maximum $404 monthly premiums, a 2 percent increase from this fiscal year and a figure that includes $35 per month in administrative costs, according to a plan proposed by Connector staff at a board meeting at One Ashburton Place. Rates would vary based on the health of the covered population, and plans would be rewarded financially if their enrollees more regularly receive primary care.

The premiums envisioned contrast sharply with actual increases in health care premiums over the years. Last year, Commonwealth Care premiums rose more than 9 percent, a lesser increase than in previous years but far above the 2 percent cap proposed by Connector staff.

A spokesman for the Connector said the trend of double-digit increases in the rate of health care costs “appears to have certainly slowed down in Massachusetts.” The spokesman, Dick Powers, added that under the proposal, the state would share half the burden with carriers whose costs exceed the cap set by the Connector.

Powers said that if trends continue, the $869 million budgeted for Commonwealth Care this fiscal year would be sufficient, despite warnings from lawmakers during budget debate that the account was underfunded.

Dr. Marylou Buyse, president of the Massachusetts Association of Health Plans, said health care costs continue to outstrip inflation, even though the explosion in costs has somewhat slowed. She said she hadn’t reviewed the Connector board’s proposal but that “we don’t want this to adversely affect any of the health plans.”

Kingsdale said increasing the pool of insurers, or managed care organizations (MCOs), would loosen a rigid system that failed to fully account for the sickness of the populations covered and could not protect against drastic shifts in premiums.

Under the proposal, insurers bidding 2 percent below the maximum premium would be eligible to win a share of enrollees who are auto-assigned to carriers in their region. Enrollees are auto-assigned when they sign up for Commonwealth Care but fail to select a specific carrier.

Patrick Holland, chief financial officer of the Connector Authority, estimated that 7,500 new enrollees sign up each month, including 1,800 who are auto-assigned. Despite the stream of new enrollees, program enrollment remained flat this month at 162,726 members as departing members offset the gains.

Board members weighed incentives for enrollees to choose the lowest-cost plans but worried that longtime patient-doctor relationships could be disrupted, which would undercut the fiscal benefits.

“They’re not just commodities that we can, kind of, move around,” said board member Nancy Turnbull.

Health Care for All officials agreed.

“We absolutely oppose disrupting people’s relationships with their providers,” said Lindsey Tucker, reform policy manager for the consumer advocacy organization.

“There’s a lot of questions that still have to be answered,” she said. “Until there’s a sort of next draft, I don’t feel like I have any idea of what the plan will be.”

Tucker said the Connector should avoid plans that result in an increase in redeterminations because confusing paperwork required to enroll in Commonwealth Care could lead to unnecessary loss of coverage or plan changes.

Among options staff recommended included inducing patients with $10 or $15 cards for certain health care services or to designate a two-month period in 2009 to require enrollees to actively choose a carrier. Those who don’t would be auto-assigned to the cheapest available plan.

Dolores Mitchell, a board member and executive director of the state Group Insurance Commission, described herself as “lukewarm” to using cards to sway people to switch plans.

“Something about it doesn’t feel comfortable to me,” she said, calling it “an inappropriate use of financial incentive for people making an important personal decision.”

The proposal also included increasing from $1 to $2 the co-pay for most generic medicine for non-premium paying enrollees, a change mandated to comport with Medicaid rules.

The board will meet next week to finalize a procurement plan for new carriers. If an existing insurer fails to win the state’s blessing, its members would have the opportunity to pick a new plan or be auto-assigned.