Connector Board Cuts Some Payments for 2008

The MMS is dismayed by the Commonwealth Connector Authority’s reported decision to require insurers who bid on insurance products offered by the connector to cut provider payments next year by 3 to 5 percent. The reductions, voted on Thursday (Dec. 13), will be included in bid documents that will be issued early in 2008.

Authority members implemented the mandated provider cuts in contracts of insurers who bid to provide services to the public through the connector in order to reduce projected increases of 14 percent in payments to insurers.

The intent seems to be to lower the current fee schedules which attracted providers to the managed care contracts by providing significantly higher rates than Medicaid. New participating providers were necessary to allow the plans to have any chance of providing access to care to the thousands of new subscribers anticipated under the new law. The managed care plan rates apply both to Medicaid eligible patients and those who purchase or otherwise receive insurance coverage through the Connector.

The cuts would apply to the four Medicaid managed care health plans who also provide care to insureds. They do not apply to Medicaid fee-for-service plans, which by prior legislative requirements are scheduled to rise another $17-$19 million next year.

Until recently, the four managed care plans had offered a fee schedule above Medicaid indemnity rates for services provided to Medicaid and individuals insured through the Connector. Patrick Holland, the authority's chief financial officer, was quoted in news reports stating, “There's no justification to be paying more than Medicaid rates."

The managed care plans generally receive capitated payments from Medicaid and the Connector. Thus the costs of fees are not directly paid by the state in most cases and a 3 to 5% cut to providers may not result in direct savings to the state.

The MMS noted that the Authority’s decision will adversely impact patient access and physician practice viability, and runs counter to the Legislature’s investment and commitment to support providers who have supported expanding access to care.

These cuts, demanded by the Connector, seem poorly considered at a time when significant questions are being raised about the ability of the four plans in question to develop and maintain an adequate provider network to cover a significant increase in insured patients, their traditional Medicaid clients and expanded Medicaid populations.