Nevadacare, a sister company of Summerlin Life & Health Insurance Co., the firm recently named to provide the “default” health plan to state-county workers in a controversial decision by the Hawaii Employer-Union Health Benefits Trust Fund, agreed late last year to stop doing business in Iowa based on allegations made by the Iowa Insurance Commissioner.
In an agreement dated October 30, 2008, Nevadacare agreed not to do business or solicit any business in Iowa for five years, and to voluntary give up its registration in that state. In addition, it agreed to reimburse the state for the costs incurred in its investigation of the company.
The company agreed to stop doing business in Iowa “without admitting to or denying the allegations”, according to the agreement.
Nevadacare, Summerlin, and HMA Inc., another partner company in Hawaii, are all part of the Arizona-based IMX Companies.
According to the Iowa Insurance Division web site, Nevadacare, an HMO that did business in Iowa as Iowa Health Solutions Inc., faced several allegations:
Failure or refusal to submit to a peer review; Failure to file or properly complete an application for renewal of certificate of authority; Failure to file or complete a premium tax return.
Less than two months later, the company announced plans to withdraw from offering commercial health insurance in Nevada, and said it would transition its clients to a regional Blue Cross-Blue Shield company.
Summerlin entered the Hawaii health insurance market in 2004 with a plan to target small businesses. J.D. Dyer, IMX chairman, predicted in a PBN interview the company would have 100,000 “fully insured members” in Hawaii within three years.
Despite being promoted by the Lingle administration as an example of its efforts to boost competition in the marketplace, Summerlin now has just 16,000 members in Hawaii, State Insurance Commission J.P. Schmidt told PBN in August, far short of its earlier goal.
During 2009, state and county employees could choose between several different health plans, including Kaiser, an HMSA HMO, and two so-called “90/10” preferred provider plans, one administered by the local nonprofit HMSA, and the second by the mainland for-profit, HMA/Summerlin.
Given the choice between two equal plans offered by different administrators, 33,000 EUTF members selected HMSA in 2009 and “less than 300” selected HMA/Summerlin, according to a November 23 letter from HMSA president Michael Gold. The vast majority selected the HMSA-administered plan even though it was slightly more expensive.
Despite this clear expression of member preferences, and the precedent of providing a choice between two equal plans offered by competing administrators, EUTF suddenly changed course this year and, at its August 26 meeting, approved HMA/Summerlin as the sole 90/10 plan for the coming year and designating HMSA to offer only a new “80/20” plan that would provide fewer benefits for a lower monthly premium.
HMSA says it simply responded to an EUTF request to develop a lower cost 80/20 plan, but had not been told that it would be limited to offering this new plan and there had been no discussion that its competitor’s 90/10 plan would be considered the “default” for the 33,000 EUTF members who had previously chosen HMSA.
In addition, HMSA says it was surprised to find it was blocked from continuing to offer its own competing 90/10 plan, as it had done previously.
EUTF minutes provide no indication that trustees were made aware of Summerlin’s problems in Iowa and Nevada before making their controversial decision to limit HMA and HMSA to a single plan each, rather than to continue offering competing plans.
The recommendation emerged suddenly from a series of confidential “dispute resolution” meetings by a subcommittee of the board, facilitated by a federal mediator. These meetings were not subject to the sunshine law and were not open to the public, so there is no record of the discussions leading up to its recommendation.
According to the minutes of the August 26 meeting, the discussion began as trustee John Radcliffe “stated for clarification that the Sub-Committee is recommending status quo and offering a second plan which is a voluntary plan which is a less good plan and is not a 90/10 plan but an 80/20 plan.”
Despite Radcliffe’s reference, the recommendation was anything but “status quo”. Further along in the discussion it was made clear that the status quo–competing 90/10 plans by HMA and HMSA–would not continue after all.
There is no indication in the minutes as to why this was not considered possible or desireable.
And the minutes do not indicate why Radcliffe, who was not on the 4-member mediation subcommittee, was the one to offer up this clarification.
In the same discussion, almost as an afterthought, EUTF administrator Jim Williams acknowledged that HMA would be made the “default” plan.
But despite many questions, the board had little choice but to approve the recommendation of the subcommittee. The board had been deadlocked since November 2008 on the shape of the new plans and rates to be offered, triggering the secret mediation process. Failure to accept the mediated deal would have continued the stalemate and potentially left public employees without any health coverage in 2010.
Despite the confusion and the warnings of more to come when members had to sort out their health plan choices, EUTF trustees had run out of time and now had little choice but to vote and move on.
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I’d like to see a clear explanation of how the EUTF selected Summerlin as its default health plan when there’s a clear preference for a Hawaii-based company, and Summerlin has a sketchy track record outside the state?
Despite the members overwhelming preference for HMSA coverage, the EUTF refuses to serve its members’ best interests?
It appears that somone might have something to gain by encouraging — or even forcing — EUTF members into Summerlin’s health plan.
feline friday is on its way…. right?
Feline Friday now posted!
Yay!!!
Thanks for the great reporting on EUTF and HMA, Ian. Why don’t the “news”-papers pick up on this stuff?
Based on this information, its clear this whole process and the irrational decisions on changing appraoches, changing defaults etc. was based on someone’s agenda that has not been made public. Kinda odd that the sub-committee gets to debate “out of the sunshine” and then the recommendation comes from one not on the committee and then its an “afterthought” that HMA is the default? Maybe why Williams is suddenly retiring? Has anyone investigated his agenda…one of my friends at UHPA says he was tight with some of the original supporters of Summerlin who were Democratic party “names”. So much for transparency in government huh. If these guys were smart they would have simply eliminated the 90/10 plan and gone to 80/20 across the board since it is supposed to be cheaper. Seems like they wanted to appear to be doing one thing then they played “sleight of hand” and did another.
My wife and I don’t go for the cheapest health care, but for the system and doctors we like. You have done a great job Ian analyzing this issue.
I attended an HGEA meeting with Randy speaking and your writeup here is really close to what he said to those attending. He touched upon elements that showed confusion and disorganization within the EUTF.
Sounds like a railroading job to me.
There seems to be a real conspiracy among politicians of both parties with various capitalist business people that goes back for a while. Imagine the guaranteed income from a large group of employees defaulting to a mediocre medical plan. Ka-ching, ka-ching, ka-ching!
time for an an updated “Land And Power” book
HMSA has been ticking off Legislature and the Executive for years now, even before Lingle. With the exception of a couple of heavy hitters in the House who have HMSA tattooed on their okoles, theres been a general discontent with the amount of profit HMSA has been bringing in vs. the amount they were contributing to the community. Additionally, HMSA really needs to consider employing a more effective lobbyist. I think that step alone would help them out a lot around town.
Enter Summerlin, as represented by lobbyist Charlie Toguchi, of Ben C. Chief of Staff fame. Hes been peddling for Summerlin for a while now. To me, it seems as simple as Charlie did his job – and here we have HMA being shoved down our throats. How better to assure HMA makes profit than to take away choices.
It seems the story that hasnt been told is what other measures has Government been employing to try to reign in the HMSA beast, before we got to this point? Why hasnt that been effective? What has HMSA been threatening back? What is Summerlin promising that it, given what you report here, probably wont be able to deliver? Where is JP Schmidt in all this?
Please, keep it up, Ian. Youre asking the questions we all wish HA and SB had the courage to ask and print. I very much hope that you will become a part of the EBay guy’s new website as you are the best reporter we got in this town.
This account raises so many questions. Charlie Toguchi is paid by Summerlin to convince the EUTF to go with them against the clear wishes of an overwhelming majority of the EUTF members? And it is his longtime buddy, lobbyist John Radcliffe who makes the motion, in a closed meeting, which carries the day?
I feel a little ill.
Oh, Kolea, I dont doubt that this trail of relationships (and likely co-relating campaign contributions) keeps going. I’ll leave that mission to Ian – should he chose to accept it, of course.
And today’s Honolulu Advertiser page A5 has a half-page mahalo advertisement from HMA. Sunny, bright, positive! I’m still looking for the news story.
The HMA ad was totally sucking up to the EUTF for giving them the gift of new members thru default. It was the first HMA ad I have seen since they don’t have to do anything and will still gain new members thru default. So the back-door connections, agreements, and whatever else was promised results in probably doubling the HMA membership. It is a gift because HMA has been in Hawaii for over 5 years and hasn’t grown much or earned any growth. But now they have help from the EUTF to the detriment of their members. The EUTF should have first identified which carrier would be the default and then assigned them the 90/10 or 80/20. Sounds like HMSA got blindsided after being led that the 80/20 plan would be the default to save EUTF money. Where is HMA’s extra value like disease management programs? Health & wellness programs?? They only process claims. Besides this blog, where is the investigation?
It may be a little late, but pretty much everything on this story can be found at:
http://www.eutf.hawaii.gov/PressReleases/FY2010/11-23-09_Press_Release_Documents/FINAL_PressRelease_112309.PDF
The EUTF board claims that they gave HMSA “first choice” of which plan they wanted to administer and HMSA chose the 80/20 plan. Apparently EUTF decided to only have one administrator for each plan offering. Presumably this is because EUTF is self-insured and only pays a third party to administer the plans they offer and it makes little sense to offer competing administrators.