How Is Network Health Cutting Its Premiums 15%?

Network Health president Christina Severin

Stop the presses! Somebody’s health insurance premiums are actually going down!!

Network Health, a managed care plan owned by Cambridge Health Alliance, has just announced that as of July 1, its Commonwealth Care plan will cut its premiums by 15%. The cut will bring Network Health to the same price level as Celticare, which, with about 15,000 members, had been the only “lowest cost” Commonwealth Care plan. Now both will share that designation.

The announcement is timed to appeal to potential members during the open-enrollment period for Commonwealth Care, the state-subsidized health insurance for people with low and moderate incomes. The Network Health plan currently serves about 44,000 members, who’ll generally see a drop in monthly premiums of between $10 and $30.

WBUR’s Martha Bebinger reported in April that “plans that cover moderate-income residents through Commonwealth Care are holding rates flat by limiting where patients can go, negotiating tougher contracts with hospitals, and with better oversight of the sickest patients.”

In fact, The Globe reported then that the proposed limited-network contract from Network Health excluded all hospitals in the (expensive) Partners HealthCare system except two.

But that was when the news was about holding rates flat. Network Health is going a step further with its 15% cut, and I asked the plan’s president, Christina Severin, today how they were doing it.

She declined to discuss “exclusions,” like the Partners limits reported by the Globe. In general, she attributed the rate cuts to three main factors:

-Network Health had already been working “extremely hard” to control costs. In the current fiscal year, it had already seen zero growth in its medical expenses.

-Of the 15% cut, 10 percent comes through a “high value network”

-and 5% through “medical expense management.”

In other words, 10% from using lower-cost (though still high quality) facilities and 5% through the kind of proactive “care management” that keeps patients in better shape and thus avoids unnecessary expenses.

Christina provided a few telling examples of Network Health’s efforts at care management: Continue reading