Rhode Island

2013 ARTICLE PULL-OUT

Content from HealthLeaders-InterStudys 2013 Health Plan Analysis PUBLISHED: MAY 2013

Commercial Carriers
BY RIC GROSS

Table 3-1: Rhode Island Commercial Enrollment Trend (Largest Plans)

Company Blue Cross & Blue Shield of Rhode Island UnitedHealthcare Cigna HealthCare Tufts Health Plan Aetna
Source: HealthLeaders-InterStudy

July 2012 254,015 140,130 24,095 19,794 18,139

July 2011 228,485 144,284 22,789 20,519 18,604

Change 25,530 (4,154) 1,306 (725) (465)

% Change 11.2% (2.9%) 5.7% (3.5%) (2.5%)

With Rhode Islands economy still struggling, commercial insurers have been working to roll out products that appeal to cost-conscious employers. The small market is dominated by two insurers, Blue Cross & Blue Shield of Rhode Island and UnitedHealthcare, with distant regional player Tufts Health Plan still looking to gain market share incrementally. Rhode Island has very few private-sector self-insured employers, bucking a regional and national trend toward increases in self-funded insurance. Enrollment: Rhode Islands commercial insurance market has been slow to recover from the woes of the recession, with overall enrollment numbers dropping 7.6 percent from July 2011 to July 2012. The state has been one of the hardest hit in terms of job losses, with the unemployment rate reaching a high of 11.9 percent in January 2012. Rhode Islands unemployment rate stood at 9.1 percent as of March 2013, versus 7.6 percent nationwide (Rhode Island Department of Labor and Training). Rhode Island remains virtually a two-player landscape, dominated by market leader Blue Cross & Blue Shield of Rhode Island and No. 2 player UnitedHealthcare of New England, as distant competitor Massachusettsbased Tufts Health Plan struggles to find its niche. Tufts Health Plan entered the market in 2010 in an attempt to incrementally gain market share against the two longtime insurers, realizing an uphill battle was ahead. BCBS of Rhode Islands market dominance continues, showing a 11.2 percent increase in membership from July 2011 to July 2012 and holding a comfortable margin with an enrollment of 254,015, virtually all in the fully insured space (HealthLeaders-InterStudy). UnitedHealthcare endured a slight decrease of 3 percent in membership, to 140,130, with its losses coming in the fully insured realm as a handful of accounts shifted to BCBS.

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As a whole, Rhode Island has very few private-sector self-insured employers, bucking a regional and national trend. Fully insured enrollment increased almost 7 percent from July 2011 to July 2012, to 331,499. Conversely, self-insured numbers dipped to 182,144 in July 2012 from 245,601 the year prior. A snapshot of the overall market, however, shows that the fluctuating numbers are more about insurers winning business from competitors rather than through organic growth. There is some churning [between carriers], but for the most part Blue Cross has dominated for years, says Sam Slade, employee benefits practice leader for Rhode Islands USI Insurance Services. And it is not like Blue Cross is simply looking to sustain market share herethey are interested in competing aggressively in every aspect of our marketplace. UnitedHealthcare is there competing, and Tufts Health Plan, I believe, is committed to the market.

Table 3-2: Fully Versus Self-Insured Enrollment Breakdown For Rhode Island (Largest Plans)
Plan Blue Cross & Blue Shield of Rhode Island UnitedHealthcare Cigna HealthCare Tufts Health Plan Aetna
Source: HealthLeaders-InterStudy, as of July 2012

Fully Insured 254,015 42,619 3,100 4,801 2,435

Self-Insured 0 97,511 20,995 14,993 15,704

% FI Ratio 100.0% 30.4% 12.9% 24.3% 13.4%

% SI Ratio 0.0% 69.6% 87.1% 75.7% 86.6%

Tufts Health Plan officials knew organic growth would be slow in the Rhode Island market, and numbers have proven that. Tufts commercial numbers remained essentially flat from July 2011 to July 2012, dropping by just 725 members for a total of 19,794. It is tough for Tufts Health Plan to really compete. We have had a few groups go to them, but it has been tough for them to step up. They certainly arent at the Blue Cross or UnitedHealthcare level, says David Farrell, employee benefits & retirement plan specialist for Greenville-based Schuster Driscoll. You really have to blow Blue Cross out of the water, and that is hard to do. With organic growth difficult to attain, Rhode Island insurers have rolled out a slate of products in recent cycles in bids to capture or retain membership. All three carriers are rolling out new products and are starting to get more aggressive in some of the things they have in development, such as tiered network arrangements, for example, Slade says. With this being a small market and smaller geography, I think UnitedHealthcare, to an extent, has used this as sort of a test market for them. They can try some things here before rolling them out on a larger stage, for example. Blue Cross is local, so they have the ability to really be aggressive with what they are doing as a domestic plan. BCBS has launched products for small- and large-group business that include value-based benefit options, which waive or reduce copays or coinsurance for prescription drugs treating chronic diseases and place an emphasis on patient-centered medical homes. BCBS has its own medical home program that pays practices an increased fee-for-service component plus $10 per patient, per month to coordinate care. Its latest offering, VantageBlue, was rolled out in October 2012 for large groups. The product features no copays for all patient-centered medical home visits and $2 copays for select drugs for asthma, chronic obstructive pulmonary disease, and diabetes. There are no copays for annual foot and eye exams for employees with diabetes, and low copay options for physical, orthopedic, and speech therapy. VantageBlue covers up to 20 chiropractic visits, and BCBS of Rhode Island also provides employers with riders for vision hardware, acupuncture, and hearing aids (BCBS of Rhode Island).

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UnitedHealthcare counters with its EDGE and Tiered Benefits products, which encourage employees to seek care from specialty providers who meet UnitedHealths quality and cost-efficiency criteria. EDGE plans are designed for small businesses, while Tiered Benefits is for employers with more than 100 employees. In 2012, UnitedHealthcare introduced its Navigate offering in Rhode Island. The product line relies heavily on designating a primary-care physician who acts as a gatekeeper for in-network specialty or hospital services. The design complements the companys recontracting efforts with primary-care physicians to reward them for lowering the overall health costs of their UnitedHealth-enrolled patients. Under Navigate, a member must choose a primary-care physician within the UnitedHealthcare network who will manage the individuals healthcare and make referrals to network specialists as needed. If a member chooses to receive care without a PCP referral, Navigate will provide either no benefits (Navigate) or reduced benefits for in-network providers (Navigate Balanced/Navigate Plus).

Employers are beginning to consider consumer-driven health plans as they look for ways to hold down premium costs. Enrollment in such plans increased from 20,722 to 28,501 from July 2011 to July 2012 (HealthLeaders-InterStudy). Going forward, it is likely that CDHP enrollment will trend upward for carriers that are able to keep enrollee cost-sharing down without the prohibitive premium increases that have been passed on to consumers by many other carriers in recent years. We have seen more movement this direction, toward these high-deductible options, Farrell says. And this is a market where it wasnt uncommon three or four years ago to walk in and see a zero deductible. Now we are seeing lots of $1,000 deductibles and $2,000 as well. That was a big jump for consumers here, and sort of a bitter pill to swallow. Provider contracting: Blue Cross & Blue Shield of Rhode Island is signing providers to a new incentive-based contract that rewards hospitals that reach certain quality metrics and evidence-based performance measures. Dubbed the Hospital Quality Program, about 90 percent of the hospitals in the BCBS network have signed such deals. The latest providers to come on board include Westerly Hospital and Care New England. The Hospital Quality Program works by benchmarking patient care against national hospital quality standards provided by the Centers for Medicare & Medicaid Services and the Hospital Care Quality Information from the Consumer Perspective initiative. Hospital discharge best practice measureswhich were created

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by Quality Partners of Rhode Island, the Rhode Island Quality Institute, local hospitals, and local physicians in collaboration with state health plansare also a key element of the program. Collectively, the metrics are used to measure treatment around three categories: treatment quality around specific conditions such as pneumonia, heart disease, and surgical infections; discharge results after a hospital stay, including drug reconciliation and the scheduling of follow-up outpatient appointments; and assessment of patient perceptions regarding the healthcare experience. Health plans in Rhode Island have a directive from former Health Insurance Commissioner Christopher Koller to change the way they contract with hospital systems for services. Koller, who in April 2013 accepted a job with the New York City-based Milbank Memorial Fund, set forth six conditions that new contracts in Rhode Island must meet. The most contentious of the conditions limits price increases for inpatient and outpatient services to a weighted amount equal to or less than the CMS medical-services inflation index. The commissioners office has indicated that studies show rates for services among healthcare systems vary by as much as 85 percent. The new incentive-based contracts reward hospitals that reach the quality and performance measures. The first contact signed in 2011 was with Lifespan hospitals, including The Miriam Hospital, Newport Hospital, Rhode Island Hospital, and Hasbro Childrens Hospital. During 2010, the system either met or exceeded both local and national quality standards on a number of key measures, including heart failure, pneumonia, and surgical care improvement. In keeping with Kollers directives, under the terms of the BCBS program, base hospital reimbursement increases are aligned with inflation, with additional financial incentives available to hospitals that successfully meet the agreed-upon quality scores. Accountable care organization: UnitedHealthcare of New England is forming a commercial shared savings ACO with Lifespan and its four acute-care hospitals in the state: Rhode Island Hospital and its Hasbro Childrens Hospital, The Miriam Hospital, and Newport Hospital. About 21,000 beneficiaries who are enrolled in UnitedHealthcares employersponsored benefit plans will be served under the three-year arrangement, which begins in July 2013. Under the shared-savings deal, emphasis is placed on increased collaboration and outcome-based payments versus reimbursement based solely on the volume of services delivered. Because of this structure, providers have a financial incentive to hold down costs, a feature that has traditionally been lacking in the fee-forservice environment. Lifespans hospitals and physicians will work to improve care coordination across a patients continuum of care, ensuring they are providing the right care in the most appropriate setting. Throughout the contract, UnitedHealthcare will be sharing claims data with the Lifespan hospital network, such as the total cost of care for a particular patient. Participating primary-care physicians will receive monthly updates on their patients, enabling them to monitor all of the care a patient is receiving (Lifespan). Participating providers will be eligible for payment incentives based on measurements in disease management and prevention, patient safety and satisfaction, quality health outcomes, and reduction of medical costs in the Rhode Island market (Lifespan). As with the medical home concept, more effective drugs will win and comparatively less effective ones will lose under a shared-savings contract. Expectations are that patients will be better informed and, as a result, more compliant with their drug regimens. Pharmaceutical companies whose branded drugs are not on a preferred tier may have some risk because physicians will be focused not only on efficacy of care but also on cost of care. As a result, more affordable drug alternatives will be prescribed, making generics and preferred brands better positioned for this transition.

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2013 Article Pull-Out

STATE: RHODE ISLAND

Copyright 2013 | HealthLeaders-InterStudy, A Decision Resources Group Company