State prepaid health
council rejects HMSA plan
The state's Prepaid Health Care Advisory Council rejected a bid by Hawaii Medical Service Association yesterday to offer a new, less-benefit rich, less-costly health plan targeted primarily to its small business customers.
The new plan proposed would result in a 5.7 percent monthly premium savings over HMSA's Preferred Provider Plan, the most prevalent plan of its type in the community. But it would also result in a greater cost share of medical services for the member.
While acknowledging there would be greater out-of-pocket costs for members, HMSA Vice President for Marketing John Jacobs argued that the move is part of the company's drive to respond to the demands of its business customers -- particularly small businesses -- for lower monthly premiums.
"I'm trying to respond to employers, especially small employers," he said.
The new plan would also give consumers a better idea of the real costs of medical services, something employers have indicated they want, he said.
But the council expressed concern that the proposed plan benefits were not a close enough equivalent of the most popular preferred provider plan on the market, the standard the council uses to compare and measure benefits of new plans entering the market.
Council members were also not convinced that the added benefits in some areas outweighed the increase in out-of-pocket costs to the member.
HMSA wants to offer the plan to coincide with its upcoming small business open-enrollment period. The plan would go into effect July 1 but would also be available to larger employers who renew their plans at different times during the year.
Jacobs argued that changes to the plan, such as 80 percent instead of 90 percent coverage for in-hospital and physicians services were offset by other added benefits, such as greater coverage for more preventive services.
For example, under its current Preferred Provider Plan, routine pap smears, screening mammograms and well-child visits are covered at 90 percent of HMSA's eligible charge. Under the new plan, those benefits would be increased to 100 percent. The new plan also providers greater coverage for mental health and substance abuse treatment services.
Jacobs argued that the benefits added by HMSA to the new plan were "reasonably medically substitutable" for benefit reductions in other areas.
"I'm saying there are better benefits in some areas," Jacobs said.
Nelson Befitel, director of the state Department of Labor and Industrial Relations, has said he favors more flexibility in allowing for lowering and substitution of benefits to reduce costs. While the council operates in an advisory capacity to the director, it's possible Befitel may choose to override their recommendation regarding HMSA's bid to introduce the new plan.
Council member Beverly Harbin also questioned how shifting additional costs to employees would affect physicians, who would have to collect more money from their patients.
"What will be the impact on providers as far as needing to collect all the money -- would it be like a dentist?" she said.
Jacobs acknowledged doctors may have some concerns about additional collections. "But I don't see it as an overwhelming problem," he said.
HMSA had asked the Council to approve an "A" status for the plan, which would allow for the same percentage of premium contribution as its current plan from the employer. The granting of a so-called "B" status would mean higher employer contributions to the monthly premium, making the plan less attractive to employers.
But the council decided to recommend granting A status only if HMSA agreed to offer the plan as a comprehensive medical plan, rather than a preferred provider plan.
Comprehensive medical plans require an insurer to make the same reimbursement percentage to providers whether the member goes to a participating doctor in its network or not. It's unlikely that HMSA would agree to deviate from its current provider reimbursement policies, which offer lower reimbursements, Jacobs said.