Nov. 27, 2010

To: Pierre Omidyar @ Randy Ching:

Here’s a perfect example of why we need a Honolulu-based local news service like Peer News that will produce original, in-depth reporting and analysis of local issues.

Local blogger Ian Lind posted this great reporting today. It sheds light on the recent health insurance spat about the EUTF’s support of for-profit Summerlin vs. nonprofit HMSA, Hawaii’s largest and oldest health insurer. Left unresolved, more than 30,000 local residents will be left with no insurance coverage in 2010.

All the info in Lind’s story is public information but the daily newspapers failed to put the pieces together to let the public know the truth about the EUTF & Summerlin’s unethical tactics.

HMA/Summerlin to be EUTF “default” plan despite failure in two key mainland markets
By Ian Lind
November 27th, 2009 • 8 Comments • Politics
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 desirable.
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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Tags: Hawaii Employer-Union Health Benefits Trust Fund•HMSA•Summerllin
8 Comments so far ↓
• Dean // Nov 27, 2009 at 9:00 am
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 someone might have something to gain by encouraging — or even forcing — EUTF members into Summerlin’s health plan.

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