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Massachusetts health care — wonky, with a healthy dose of reality

4th Annual Connector Board Retreat

4th Annual Connector Board Retreat

October 20, 2009

This past Saturday, October 17th, the Connector Board held its fourth annual retreat, with the following agenda:

  1. Introduction & State Finances
  • State Financial Outlook
  • CommCare FY10 Update
  • Integration of CommCare & CommChoice
  • Long Range Planning
    • National Health Reform
    • Payment Reform (Global Payments)

    New ANF Secretary Jay Gonzalez ably chaired the retreat, thoughtful and soft-spoken, with all other Board members present, except for interim-Medicaid Director Terry Dougherty. Despite the significant and indefinite stresses of the state budget and national health reform, the morning was relaxed, open, and productive. As someone who has followed the Board over the years, Saturday marked a particular progression for me—officially out of implementation and into…continuation. There were no ground-breaking conversations this year, nor difficult decisions. It was a group of experienced leaders learning from and educating each other. As Kingsdale said months ago, Massachusetts health reform is no longer an experiment.

    Click here for the very useful slides from the morning, and read the rest of our report after the jump.

    PART I: Introduction & State Finances

    Secretary Gonzalez opened the meeting by thanking everyone for their work, indicating his interest in continuing the positive and productive collaboration. Kingsdale walked the group through the agenda, and apologized for the sunny weather – it’s rained on retreat day each previous year, if I remember correctly. In addition to Connector Staff and ANF staff, Dr. Ann Hwang from the Brigham joined to help with the later sections on health reform. He said his main objective for the meeting is to grapple with the reality of the coming fiscal year, and how Commonwealth Care will unfold within it.

    1. State Financial Outlook

    Secretary Gonzalez walked the Board through last year’s fiscal picture--reviewing information we’ve seen before--detailing the different state revenue streams hit by the recession, the various spending deficiencies needing attention. He warned that tax revenues would be limited in FY11 and reiterated the recent announcement from the Governor that the state is down another $600m from initial FY10 projections. The Secretary explained that while the economy is turning around, unemployment will continue to rise; employers will likely increase hours of current workforce before rehiring. Currently, the Governor is reviewing proposals for budget cuts, asking for 7% reduction across the board, including from non-Executive branch agencies. When asked if the state has made any structural improvements with cuts, that can help moving forward, the Secretary said: yes, but there are lots of one-time revenue uses (in the FY10 budget). He voiced some of the questions that the Administration is asking itself, including, “What is state providing that state doesn’t need to provide?” He commented, “Consolidation will be important, providing efficiencies.”

    2. CommCare FY10 Update

    Patrick Holland, Connector CFO, offered the group a financial overview, typical for the retreat, including October actual numbers as part of the forecasting. Connector staff are still evaluating the impact of removing AWSS from Commonwealth Care, in terms of what this will mean for the Connector’s budget and for the MMCOs. (Take a look at the slide deck for more information.) The Connector as been over-budget this year until October, when it dropped down under-budget. Patrick believes the actual funding level, $737.7 million, is a low spending projection, with $746 as moderate and $769 as the high end; the result will depend in part on whether October is a new trend or a blip. The spending drivers for the program are enrollment and the capitation rate. His recommendation to the Board for moving forward is to continue to monitor enrollment, complete acuity analysis, and provide another update in January.

    Patrick then reviewed the MCO financial performance under Commonwealth Care. Regarding the MCOs, he said, “For sure FY10 will be a difficult year.” He reviewed the various year-to-date surplus/deficits for the plans since 2007 and commented: the program is doing what we intended it to do. Looking at the slides, one can see that FY09 was a full year, provided good return on program, and immense value for state. Patrick believes the MCOs are managing the cost trend well, to date. He asked, “What can we do collectively to finesse through FY10 and even 11?” Patrick believes the Connector is “data poor” this year, due to the hiccup in data coming in from new MMIS. Kingsdale indicated a different (perhaps differently competitive) bidding process this year, thanks to less certainty in the environment.

    Nancy Turnbull asked about what we learned from this past year’s audit, if there is anything the MCOs could do differently, to save money. Patrick responded that they are all putting in good effort to put in good management systems. A place to find money might be employee contracts, reducing unit costs, etc.

    Celia Wcislo asked what the removal of auto-assignment and AWSS did to the capitation rate, an ongoing concern since conversations began last spring. Kingsdale responded that it’s a moving target: “we’re watching it, and we’ll be back in January with that information. It’s not going to be rosy, but likely only a small impact.”

    3. Integration of CommCare & CommChoice

    Rosemarie Day, Connector COO, presented the Board with an “Integration Agenda”: an interrelated series of projects designed to find operational and program efficiencies within CCA, focused largely on areas where Commonwealth Care and Commonwealth Choice overlap. The conversation, as it moves forward, is meant to be both reflective of the maturation of the programs as well as in anticipation of budget restraints. She believes this will also be an evolving conversation in response to national health reform. The goal is to be unified and efficient, using economies of scale, both internally for the Connector and externally for the health plans who work with both Care and Choice. The Connector hired a consultant group to come in and look at operational capacities.

    PART II: Long Rang Planning

    After a brief break, the group came back to delve into broader issues.

    1. National Health Reform

    Connector Manager of Policy and Research, Kaitlyn Kenney, led a detailed and excellent overview of the various proposed national health reform options and how they may interact with Massachusetts health reform. (See the slide deck for the analysis.) A different Connector Board member lent his or her expertise and commented on each piece. I have pulled out some of discussion points below, in particular the places where national health reform may differ from Chapter 58, all detailed in the slide deck, as well.

    Individual Responsibility

    • Under the national health reform proposals, if employer sponsored insurance is offered, the individual can still get subsidies
    • MA has much more generous subsidies/affordability schedule
    • Individual mandate penalties more aggressive/higher than MA
    • Jon Gruber: How much does penalty matter? Can’t look at MA for example, we’re very different. Health reform passed here with little dissent: high public support, high insurance levels to begin with, consensus. Affordability schedule is well above us, all of them go to 4x poverty. That help will be good, something. An important question is how to integrate national reform here? Would we be able to take advantage of the state opt-out provision?

    Employer Responsibility

    • There is a difference in fair share/employer requirements and exemptions
    • Rick Lord: Tax credits would be helpful. But it wouldn’t help non-profits, who are 25% of our employers in MA. All penalties are higher, but only for 50 employees or more - so we wouldn’t have many employers affected.

    Insurance Market Reform

    • All national bills cover preventive services with minimal or no cost-sharing
    • All bills prohibit lifetime and annual caps
    • Our Young Adult Plans would be in violation of the prohibition of annual limits
    • Nancy Turnbull: Rate bands are a concern. National bills allow rating factors that MA don’t allow. Other concern - we have broad risk pools, so the pooling issues under national reform could be quite dramatic.

    Development of Exchange/Gateway

    • There is some variation across proposals for who can purchase through Exchange, and also for employer participation. The Senate Finance Committee bill would help us with AWSS immigrants, but not others.
    • There are also cash flow differences. Currently, all cash flows through the Connector; in national bills, enrollees would be paying contributions directly to health plans.
    • Jon Kingsdale: There is clearly a tension between the Exchange as an enforcer of eligibility determination and as an enrollment/market place to buy. There are economies of scale at 180,000 (CommCare); we’re down to 3.5%. With 20,000 (CommChoice), we’re closer to 5%. With millions we could be below 3%; there is a marginal benefit over .5 million lives.

    Looking Ahead

    • Celia Wcislo: The national fight is now more about money. Who is paying? Maybe there could be a trigger for public plan. Or state opt-out of public plan. There are a series of individual mandate issues. Advocates need to focus on the final plan being affordable.

    2. Payment Reform (Global Payments)

    Dolores Mitchell closed the meeting with color-commentary and group discussion on the payment reform process and results thus far. My favorite comment: “I’m not a fan of p4p since I already think I am paying for performance -- I’m just not getting enough of it.”

    See you next year!