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Limits to save $80m on health plan

State expected to OK narrower options

By Kay Lazar
Globe Staff / April 14, 2011

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Regulators in charge of the Massachusetts health insurance law are expected to approve new contracts today that will save the state $80 million, in part by offering a narrower choice of hospitals, physicians, and specialists to thousands of patients insured through the state-subsidized Commonwealth Care program.

The new contracts will allow state funding to remain level, even as enrollment in the program is expected to grow from 158,000 low- and moderate-income residents to 175,000 over the next year.

Regulators said the savings anticipated in the new contracts will allow them to maintain the current level of benefits for patients with only modest increases in some charges.

The Connector Authority scheduled the vote today as the Patrick Administration celebrates the fifth anniversary of the state’s closely watched health law this week, with renewed vows to rein in soaring medical costs.

“We are glad to be a laboratory for innovation and hope the results of this contract procurement offer some encouraging models for containing costs while maintaining high-quality coverage and care,’’ said Glen Shor, the authority’s executive director.

Shor said some of the five insurers in the program submitted bids that were significantly lower than their current rates by using a variety of approaches, including renegotiating contracts with health care providers and limiting consumers’ choice of hospitals.

Shor said that a proposed limited-network contract from Network Health excludes all hospitals in the Partners HealthCare system except two, on Martha’s Vineyard and Nantucket.

Partners, which includes the Harvard-affiliated Massachusetts General and Brigham and Women’s hospitals, has faced criticism from regulators and consumer advocates because it has used its market clout to obtain higher overall reimbursements from insurers and government programs than other hospital networks for similar services.

Shor said the proposed Network Health plan would offer patients care at Beth Israel Deaconess Medical Center, UMass Memorial Health Care, and community hospitals.

“Their network must and does meet our network adequacy standards,’’ he said.

A second insurer, CeltiCare Health Plan, also proposed a limited network, Shor said. CeltiCare entered the state’s insurance market and the Commonwealth Care program two years ago with an aggressive cost-savings strategy. The company has been able to drive down costs by limiting patient choice to 40 percent of the state’s hospitals, largely by shunning big-name hospitals and relying on lower-cost care in community health centers.

Shor said that the two lowest bidders, CeltiCare and Network Health, will be rewarded by having certain patients new to the Commonwealth Care program automatically assigned to their companies. Patients who choose the limited network plans will also be rewarded with lower monthly premiums, he said.

Health care advocates said they were pleased that the state was able to keep the program intact and affordable for patients, despite steeply rising health care costs.

Amy Whitcomb Slemmer, executive director of the advocacy group Health Care for All, said she is concerned, however, about narrowing patients’ choices for medical care. She said the group will watch to make sure residents get the care they need.

“Limiting networks is a short-term solution to our long-term problems of redesigning the health care system so it meets the needs of consumers’’ and controls costs, she said.

Limited networks appear to be gaining popularity. The Group Insurance Commission, which oversees health insurance for state and municipal employees, is giving workers a strong incentive to agree to the smaller networks. The commission voted earlier this year to pay the employee’s share of the premium for three months if an employee enrolls in such a plan. Private insurers have also begun offering such plans.

The limited networks are one tool health plans are using, said Eric Linzer, spokesman for the Massachusetts Association of Health Plans. “Ultimately, making health care affordable requires dealing with the underlying prices of medical services.’’

Kay Lazar can be reached at klazar@globe.com.