Interview with Christina Severin and Leanne Berg of Network Health

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This month Health Reform Matters interviewed Christina Severin, President, and Leanne Berge, Vice President, Strategic Planning and Business Development, of Network Health. Cambridge Health Alliance, a safety net system, originally formed Network Health as a Medicaid managed care plan in 1996. With the onset of Massachusetts health reform, Network Health also began offering one of the four subsidized plans available through the Commonwealth Connector – Massachusetts’ regulated health insurance exchange. Through these two products, Network Health provides comprehensive, high-quality care to over 160,000 low-income enrollees.

Health Reform Matters (HRM): The Senate Finance Committee recently released a report outlining various policy options for expanding coverage under comprehensive health reform at the federal level. This report appears to adopt many elements of the Massachusetts model, such as the proposed health insurance exchange, non-group and small group market reforms, and the possibility of private market reforms in lieu of a comprehensive public plan. What lessons learned and challenges faced during the implementation of health reform in Massachusetts do you believe should guide the federal effort to establish universal coverage?

CS and LB: Massachusetts has unique characteristics that may make expanding our model nationwide difficult. The distrust of health insurers held by many Americans is not as pervasive in Massachusetts. The major Massachusetts insurers are all non-profit and locally-based and have long-standing relationships with the communities they serve; they are not viewed as impersonal, faceless national corporations. Given Massachusetts’s small size, the key health industry stakeholders also tend to know and trust each other.

Massachusetts could help to inform the debate over a public plan. Although most of our health reform has occurred through the private marketplace, the State continues to directly operate a Medicaid so-called managed care plan, called the Primary Care Clinician Program, or the “PCC." The PCC plan is largely fee-for-service without the benefits of managed care tools. Our experience has been that this relatively unmanaged “public plan” increases, rather than restrains, overall health care costs when it is offered as a side-by-side option for all Massachusetts Medicaid enrollees. We have found that providers are less willing to contract with managed Medicaid organizations, including Network Health, unless they can obtain a higher level of reimbursement. To counter this effect, private plans have been forced to pay higher rates to health care providers as part of the contracting process. So having a competing public plan has inadvertently driven up private plans’ contracting costs. So, although Medicaid managed care plans are proven time and time again to be more cost effective than state-run PCC plans due to their care management programs and their administrative efficiencies, these plans could offer an even greater level of savings if they were not competing against a public plan.

Given private managed care plans’ success at covering the uninsured in Massachusetts, we do not think the federal government should establish a single, national public plan. Instead, it should allow each state to develop its own version of a public plan. States could choose whether to administer this plan directly or to contract with a local not-for-profit managed care organization to serve as the administrator. A safety net health plan (i.e., a plan that is not-for-profit and primarily serves Medicaid and other publicly funded enrollees) would have the infrastructure and experience to successfully balance cost containment with a community focus.

Safety net plans, like Network Health, enabled the quick roll-out of Massachusetts health reform. Health reform was signed in April 2006 and became operational that fall. With many new low-income enrollees suddenly eligible for coverage, the safety net plans were able to leverage their longstanding provider relationships and ensure that these new enrollees continued to have access to their existing provider networks and other providers in their communities.

HRM: How has Network Health’s business model changed post-health reform? Do you think that Network Health and other plans in Massachusetts will have an advantage within Massachusetts and in efforts to expand to other states if comprehensive health reform is passed based on the Massachusetts model?

CS and LB: Our business model has generally remained the same, while our business has virtually doubled. We went from having one contract with State government (for Medicaid) to two (Medicaid and the Commonwealth Health Insurance Connector). Yet despite the increase in volume, we have not had to develop a new business model, because the two contracts are quite similar, as are these two membership populations; and for the most part we were able to build on the infrastructure already established. As we have discussed, Massachusetts is a very local health care market, and that for the most part is not welcoming to national for-profit players. We would expect our experience with Commonwealth Care to be an advantage in other states assuming health reform passes in a model similar to Massachusetts.

HRM: One major point of contention has been whether comprehensive health reform should include a public plan option. One of this plan’s purposes would be to cover low-income individuals who are unable to afford private plan premiums. As a plan specifically designed to serve the low-income population, what are your thoughts on a public plan?

CS: As we discussed earlier, a publicly-run plan will not necessarily be effective at controlling overall health care costs if it is directly managed by the government. I also think it will be tough for any agency to wear two hats, both administering its own plan and regulating all plans. For example, the Commonwealth Connector does a very good job at regulating plans through its contracted relationships with the Managed Care Organizations, in addition to the myriad of other functions it performs, like enrolling Commonwealth Care members, setting standards for Minimal Credible Coverage (MCC), setting the annual affordability scale and managing the Commonwealth Choice program (the unsubsidized insurance program for small groups and individuals). All of these functions are complex and technical; running a plan would be a large expansion of the State’s role, would create another layer of government bureaucracy and would put the State in a position of competing with the health plans that they are charged with regulating without adding perceptible value.

LB: A public plan does not necessarily have to be publicly administered. It seems that the definition of a public plan also should include public contracts with private plans, particularly not-for-profit plans, since some public concern rightfully seems to rest with the larger profit margins in shareholder backed plans. So why not leverage existing resources and networks by purchasing these services?

HRM: Another point of contention has been whether or not to include an individual mandate. Based on your experiences under Massachusetts health reform, which includes an individual mandate, what is your opinion of such a mandate?

CS: This is a tricky question. Individual mandates can ensure near-universal enrollment if there are affordable options along the income scale, and we make sure that nobody slips through the cracks. For example, residents with access to employer-based coverage are not eligible for Massachusetts’s subsidized plans. Yet often times, the employer’s plan offers less comprehensive coverage and is relatively expensive, leaving employees with greater out-of-pocket health care costs. We need affordable price points for “creditable” coverage for all people in order to have an individual mandate that is fair and effective.

HRM: President Obama, Secretary Sebelius, Governor Patrick, and many others have consistently talked about the need for cost containment as a major initiative within health reform. What are your views on cost containment and how can it be most effectively implemented?

CS: Ultimately, I think we will see a greater use of global payments, such as those being proposed for Accountable Care Organizations (ACO), which will align the financial interests of different providers. For example, in the current fee-for-service system, overworked and undercompensated primary care physicians are not incentivized to effectively manage their patients’ access to care outside of the primary care setting. Doctors do not have the time or incentive to change the behavior of patients who use the emergency room for non-emergency care needs. And, under the current fee-for-service system, the hospital is incentivized to provide this non-emergency care in these expensive settings. If properly integrated, all providers within the system would be encouraged to deliver the most efficient care at the right time in the right setting.

This being the case, there is no one-size-fits-all solution, and certain providers will not find it feasible to be part of such a large, integrated system. For example, many community health centers thrive independently, and currently have relationships with multiple hospitals that may be in distinct ACOs in the future. We will need to think of ways to implement the benefits of global payments with providers who do not fit into a fully integrated system.

HRM: Prevention and wellness programs have featured prominently in many health reform proposals, and are often described as cost containment programs. Network Health offers wellness programs to enrollees and uses a comprehensive interdisciplinary approach to managed care. How significant do you believe these programs will be to the success of comprehensive health reform?

CS: To-date, Network Health, and insurers generally, have been unable to prove an unqualified return on investment in prevention and wellness programs. Because our members typically stay with us for less than a year, we are not afforded enough time to see results from longitudinal programs such as BMI (body mass index) reductions, smoking cessation or even diabetes management, for example. We continue to invest in these programs because they are the right thing to do, are part of our mission, and are embedded in our contracts with the State.

LB: The return on prevention and wellness programs is societal, not one that necessarily will benefit individual plans, particularly Medicaid health plans which experience so much churn. Nevertheless, we ensure that these programs are implemented in a robust manner for the good of individual members and for the good of the health care system overall.