Connector Board Looks at Risk and Regulations

The Connector Board met this morning to discuss:

  • Customer service and business operations procurement
  • Risk adjustment update and “3R” consultant contract extension
  • Chapter 224 omnibus regulations transfer

Materials from the meeting are here, and our full report is below the fold.

Before diving into the agenda, Secretary Glen Shor noted that the Health Connector released their 2013-2015 strategic plan, which will guide implementation of “Connector 2.0.”  Jean Yang added that the Health Connector is well positioned for their next stage with the release of their Qualified Health Plan (QHP) and Qualified Dental Plan (QDP) RFP and the FY2014 Commonwealth Care renewal.  At the March Board meeting, Health Connector staff will present plans for their ACA-required Navigator program and an update on their Sub-connector RFR to serve small employers.

Customer Service & Business Operations Procurement

Under the Affordable Care Act (ACA), the Health Connector will administer a single, integrated program for individuals (both subsidized and unsubsidized) and small businesses.  After a thorough procurement process, the Health Connector chose Dell to be the customer services vendor.  Dell will need to perform functions beyond those required today, including:

  • Providing call center support in connection with the real-time, integrated eligibility and enrollment system;
  • Helping individuals and small businesses navigate new products, new programs, and new subsidies;
  • Supporting members with new tools, such as web chat and email message center;
  • Assisting new populations; and
  • Interfacing with new technology systems being built through the Health Insurance Exchange-Integrated Eligibility System (HIX-IES) project.

Dell currently provides Commonwealth Care customer service and operations support; their contract is set to expire on June 30th.  The Health Connector recommended extending the contract with Dell through the end of the Commonwealth Care program to ensure a smooth transition.  The Board voted to authorize the Health Connector to both enter into a new contract with Dell for the term of February 28, 2013-June 30, 2016 and extend their current contract for Commonwealth Care services through January 31, 2014.

Risk Adjustment Update & 3R Contract Extension

The ACA establishes three premium stabilization programs for the small and non-group health insurance market, collectively referred to as the “3Rs”:

  • Transitional Reinsurance (non-group only)
  • Temporary Risk Corridor
  • Permanent Risk Adjustment

Two of the 3Rs – reinsurance and risk adjustment – can be administered at the state level, subject to federal approval.  State legislation passed in July 2012 authorized the health Connector to administer the market-wide risk adjustment program.  Risk adjustment is a premium redistribution mechanism that essentially moves funds from health insurance carriers with healthier members to those with sicker members.   The risk adjustment program is designed to be budget neutral.

In 2012, the Health Connector used federal grant funds to hire Milliman as their 3R consultant to assist with analysis to identify the preferred 3R approach for Massachusetts.   Upon completion of this analysis, the Health Connector determined that it made the most sense to pursue a state-specific risk adjustment program.

A state-specific program will allow the Health Connector to leverage the All-Payer Claims Database (APCD), which is a more simplified approach than the federal option.  Also, by using Massachusetts data, the Health Connector will be able to develop methodology that better predicts members’ cost, and thus enhances premium stabilization.

The Health Connector submitted an application for federal certification of Massachusetts-specific risk adjustment methodology on January 6th.  While conversations with the federal Department of Health and Human Services (HHS) have been very positive, the Health Connector does not yet have final approval for the proposed risk adjustment program.

The Health Connector expressed the importance of working closely with carriers throughout the implementation phase.  In fact, they are currently working with carriers to conduct a simulation that will assist with 2014 pricing and product development.

Should the Massachusetts-specific risk adjustment program receive federal approval, the Health Connector will need technical support to implement it.  As such, the Health Connector recommended – and the Board approved – a contract extension with Milliman.

Chapter 224 Regulations Transfer

Chapter 224, the state’s 2012 health care payment reform law, transferred responsibility of several programs and policies from the Division of Health Care Financing and Policy, or DHCFP (now the Center for Health Information Analysis, CHIA) to the Health Connector, including:

  • Student Health Insurance Program (SHP);
  • Health Insurance Responsibility Disclosure (HIRD);
  • Free Rider Surcharge (employer surcharge for state-funded health costs); and
  • Employer Fair Share Contribution.

In order to implement the intended transfer, the Health Connector must repeal the current DHCFP regulations and promulgate regulations under the Health Connector’s new statutory authority.  No substantive changes will be made at this time, only technical changes in order to transfer regulatory authority.  Essentially, this means that the SHP, HIRD, Free Rider, and Fair Share regulations will be renumbered under Massachusetts regulatory code.

The Board voted in favor of issuing a draft repeal of the DHCFP regulations and draft release of the Health Connector regulations, subject to public comment and hearing.
Suzanne Curry


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