Health Benefits Report
Well, we knew that there would be a post-COVID bump in the rates this year, but no one saw 24 percent coming. The Division released the mid-year rate report in June (it was written in the winter) and dropped the rate increases not long after. This has not been done since the inception of Chapter 78.
I want to assure you that while we are exploring every avenue with our friends in labor, legislators and consultants, the situation is dire but can be fixed.
As of the writing of this article, bills are being drafted and conversations being held to both hold accountable the contractors and figure out how to patch what has been described as a one-time anomaly.
If you read the rate renewal reports from the State’s actuary, AON, you can see that they cite many different causes for the rate increase, and most of that is utilization. There was an approximate 11 percent increase in emergency room visits, a 41 percent increase in urgent care (it’s my belief that most of that is employer mandates for COVID testing) and specifically cited are the failure of the navigation and advocacy pieces of the contract to create any savings. This savings was calculated into last year’s rates, and now we have to absorbed last year’s costs and anticipated savings into this year’s rates.
Thus far, the state has only proposed more cost-shifting measures on to our members, but I have been vocal that we are not going to fix this crisis on the backs of our members. The State is sitting on more than a billion dollars of federal COVID funds and needs to assign some of that to the plans to subsidize the costs from COVID. Their testing policies drove our members to the urgent care centers and thus drove up plan costs.
We also have to hold our vendors accountable — AON missed its projections by almost 10 percent. In some cases, our third-party administrators did not control costs and in some cases allowed payments that exceeded the allowed amount for the services provided.
One of the most concerning revelations was the fact that in-network costs are the biggest cost drivers. For years, we have been told that moving utilization in-network would control costs. That has proven to be extremely bad advice and has made this situation worse than it should be. We have discovered that some hospitals are being paid more than out-of-network allowances for in-network services. This is all because of the opaque nature of the network contracts that the TPAs have with different institutions.
As of right now, I can’t speculate on where these rates will end up. Frankly, the only option to move the rates into single digits is for outside funding to come into the plan, and I will warn you, it might be a Band-Aid on a bullet wound unless something changes.
I am somewhat hopeful that this storm will produce the institutional changes we need to move the plan into a position where it is controlled by the people who are legally empowered to do so, not the contractors who have an interest in profits over sound fiscal principles.
In the event that the rates hold where they are, we are putting together a strategy as options for our members should these increases stand. (Remember that the commission sets rates, and they are controlled by the governor.)
Please keep an eye on our website and social media outlets. This is going to be an interesting two months, but we will continue to talk to anyone who will listen and fight for accountability.