Tag Archives: Hawaii Employer-Union Health Benefits Trust Fund

HMA/Summerlin to be EUTF “default” plan despite failure in two key mainland markets

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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.

Mediation by health fund trustees bypasses sunshine law restrictions

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Turns out there’s a lot more going on at the Hawaii Employer-Union Health Benefits Trust Fund (EUTF) than the recent dispute with HMSA.

A review of recent minutes shows the EUTF board has struggled with a string of monthly losses earlier in the year, serious disagreements on revised plans and rates, concerns over the state’s “social contract” with retirees, and fears about the system’s ability to keep up with rising costs and fund health care in the long-term.

For several months over the summer, EUTF trustees met out of public view with the assistance of a federal mediator in order to try to forge an agreement on policies and rates for the next year, a process that had never been used previously.

At its March 18, 2009 meeting, the EUTF board unanimously passed a motion to request the assistance of federal mediator Ken Kawamoto to bridge the gap between trustees representing unions and the public employers, the state and counties.

One benefit seen in entering into mediation was that the sunshine law would not apply, trustees were told. Instead, the mediator would set the rules. Any decisions would have to be reserved for later public meetings of the EUTF board.

The board considered, but rejected, the possibility of having the mediator take part in a board executive session rather than a separate mediation process.

Following what was apparently a long and complex discussion, the board voted unanimously to request the assistance of the federal mediator in order to reach agreement on setting of rates and benefit plans. The first meeting was held on March 30, 2009. In late May, trustees were told that one employer proposal had failed, and no other progress was reported.

Meanwhile, trustees were told that more medical claims were being filed than expected, leading to monthly losses.

EUTF Administrator Jim Williams “stated with all the turmoil and uncertainty, he has heard unions are telling their members to go to the doctor now and believes it is affecting the utilization.”

In July, EUTF trustees were told that the spike in the number of members going to their doctors had caused a $10 million loss during the month of May alone.

The loss, one of several monthly losses, prompted serious concern among trustees.

Trustee Radcliffe wants to clarify that the EUTF had over $72 million a year ago but because of recurring expenses we are using reserves at an increasing rate to a point now the EUTF is down to approximately $9.9 million in reserves instead of $72 million in reserves and by the end of next month the EUTF will be at zero. [minutes of the July 15, 2009 meeting]

The discussion continued, according to the minutes:

There is no doubt in Trustee Radcliffe’s mind having been involved in union and public employment business for years that when times are tough like this, people get upset and use their benefits as much as they can. If there is a spike it is because of all the talk in the community about losing benefits, furloughs, lay-offs, and because of this people gets sick.

The board decided to create a 4-member subcommittee to investigate the issues as part of the ongoing mediation. The cover of mediation allowed bypassing of sunshine requirements, and the smaller 4-member committee would make it easier to schedule meetings and make progress, trustees were told.

In August, EUTF abandoned a move to set up a mandatory “wellness” program designed to help members control their weight, blood pressure, diabetes, and other common ailments due to poor diet and lack of exercise. Despite predicted cost savings from such a move, the board was advised that a mandatory program would face a legal challenge. As a result, the board backed off and cancelled a planned request for proposals.

This prompted one trustee to express his concerns:

Trustee Radcliffe stated that the cost of health insurance for the EUTF member was $6,000.00 and we are going to average $7,300.00 and information that we got about the future indicates that 9 or 10 years from now all things being equal, it would be in the neighborhood of $50,000 per person/year which means our system will be pretty much destroyed by that point. Unless something is seriously done to change that path we are on, we will continue on that path.

I’m still plowing through EUTF minutes. There are lots of stories buried here.

Given the fact that all state and county employees and retirees are impacted by EUTF policies, it’s amazing how under reported its debates and discussions are.