Harvard Pilgrim Health Care settles rate dispute with Massachusetts Division of Insurance

 

FOR IMMEDIATE RELEASE

 Health Care settles rate dispute with Massachusetts Division of Insurance

 (Wellesley, MA) – Harvard Pilgrim Health Care and the Massachusetts Division of Insurance (DOI) have reached agreement on small business and individual premium rates for the remainder of 2010. This settlement comes on the heels of Harvard Pilgrim winning its administrative appeal with the DOI on the amount it can charge small businesses and individuals for the second quarter of 2010. In recognition of its commitment to its customers, Harvard Pilgrim voluntarily agreed not to ‘retro-bill’ for the months of April, May, June and July.

“It was important for Harvard Pilgrim to work with the Commonwealth to settle this dispute so that we can bring savings, stability and predictability to our customers. We agree that businesses and individuals need premium rate relief, but arbitrarily capping rates treats the symptom, not the disease. We can’t achieve long term relief for those we serve when medical inflation is growing at a higher and faster pace than the market can sustain,” said Eric Schultz, President and CEO of Harvard Pilgrim. “It is time to focus on what is truly driving health care expense, and that is the cost of care. We must address the prices charged by hospitals and physicians as they are the primary driver of the growth in health insurance premiums and, together, we must find creative solutions to bring to the marketplace.”

The Harvard Pilgrim/DOI settlement means that:

• Base rate premiums for small businesses and individuals will increase by 7-11% from 2009 levels to fund the benefits given to members but are lower than the 2010 rates originally submitted,
• Thousands of small businesses and individuals will see single digit increases in 2010,
• Harvard Pilgrim has removed the 1.3% operating margin built into its original rate request to fund its reserves,
• Harvard Pilgrim will not ‘retro-bill’ its customers to recover millions lost in the months of April, May, June and July of this year when the DOI mandated that the health plan use 2009 rates, and
• Harvard Pilgrim will continue to tightly manage its medical costs, which represent 90 cents of every health care dollar, and its administrative costs, which represent 10 cents of every health care dollar.

Schultz also noted that Harvard Pilgrim will continue rate negotiations with providers on behalf of its employer customers and members. “Providers need to be part of the solution for individuals and small businesses, and we are in the process of negotiating with many of them now.” Harvard Pilgrim recently contacted its high-cost, high-volume providers informing them that it will reopen contract negotiations, despite the fact that these contracts are currently in-force and would not ordinarily be ready for renegotiation.

Reports recently issued by the Massachusetts Attorney General and Massachusetts Division of Health Care Finance and Policy (DHCFP) clearly show that prices charged by some hospitals and physicians for medical services are the primary drivers of medical costs. The Attorney General’s report shows that increasing prices charged by providers for medical services are the primary drivers of health care costs, accounting for as much as seventy-five percent of the increase in recent years.

Harvard Pilgrim is a not-for-profit health plan that provides a variety of health benefit options and funding arrangements to more than one million members in Massachusetts, New Hampshire and Maine. For the second year in a row, Harvard Pilgrim Health Care is the highest-ranked health insurance plan in the New England region in the J.D. Power and Associates 2010 National Health Insurance Plan Study.SM Harvard Pilgrim received the highest ranking for overall member satisfaction in the New England region. The study looked at key factors in delivering satisfaction to health plan members including customer service, coverage and benefits , provider choice, information and communication and claims processing. In addition, Harvard Pilgrim, for the fifth consecutive year, was named the #1 commercial health plan in America according to a joint ranking by U.S.News & World Report and the National Committee for Quality Assurance (NCQA)*.

 For more information, please visit www.harvardpilgrim.org.

-end-

* *“U.S.News/NCQA America’s Best Health Insurance Plans 2009-10.” “America’s Best Health Plans” is a trademark of U.S.News & World Report.