Setting the record straight on HPMR

By TOM CANNON

Hawaii Pacific Medical Referrals has had the responsibility of administering the CNMI Group Health Life Insurance Plan since September 2001. Our mission has been to secure access to quality health care providers at discounted rates for GHLI members. We have been very successful, giving members a choice of providers while saving the Plan millions of dollars.

Although our contract only required us to have discounted provider networks in Hawaii and Guam, we added networks in the U.S. mainland and the Philippines at no additional charge to the Plan (the added cost which was considerable, was paid by HPMR). We also staffed and ran an office on Saipan in order to assist members and providers with their problems. Again this was not required by our contract but something we felt was the right thing to do.

We have never spoken out publicly about our concerns with the Plan because our effort has always been to work with the Retirement Fund board to try to resolve the problems we encountered. However the combination of our contract termination by the Retirement board and inaccurate public statements leads me to break our policy and share some facts and opinions in this public forum. I have shared all of the information, questions and concerns in this letter with the Retirement Fund board on earlier occasions and never received any response.

The GHLI Plan is under-funded in two critical ways: The primary funding issue is that the premium level established by the administration is not high enough to pay for all the claims incurred. If you were to eliminate CHC—the highest volume provider of services to GHLI members—the amount of premium dollars available to the Plan would be just enough to cover the payments to providers based upon our contractual discounts. The second funding issue is that the Plan is either not collecting all the premiums that they should, or they are not depositing all the premiums that they collect into the claims payment account.

Our eligibility records, established using documentation provided by the Plan, indicate that the level of premiums should be approximately $775,000 per month. Yet with over 2,500 new members (a 31-percent increase) since January 2004 the Plan has not increased their deposits to HPMR from the $500,000 per month we’ve been receiving since January 2004. Nearly all the problems raised by providers or members stem from these funding problems. If the Plan collected and paid HPMR adequate amounts for the services being incurred by the members then there would be very little, if anything to complain about.

A local provider did complain that HPMR paid Hawaii providers most of the funds that are made available. The fact is that since January 2002, when we began processing payments for services rendered by both on- and off-island providers, we have paid out a little over $20.7 million. Of that amount $10.4 million—a little over half—was paid for services by on-island providers.

Over 18 months ago, when the administration and the Retirement Fund were looking at the possibility of privatizing the Health Plan, HPMR provided an analysis with the opinion that the premiums would have to be increased so much as to be unacceptable to the Plan and the members. Four months ago, after paying a consultant tens of thousands of dollars, the administration came to the same conclusion and the idea was quietly dropped.

The board has awarded a contract to Aetna to administer their medical Health Plan and Pharmacare to administer the pharmacy benefits (now they will be paying two administrative fees rather than one). Based on our proposed rates to the board in our response to their RFP and those for Aetna published in the Saipan Tribune on April 5, we are between 5.7 percent and 45 percent less expensive than Aetna (and our rates include the cost of administering the pharmacy benefit). Just what the Plan needs—more costs they can’t afford.

My strong belief, based upon the poor funding performance of the Plan over these past several years, is that within no more than six months of signing a contract with the Retirement Board, Aetna will have terminated the arrangement. This is if they even sign the contract to begin with. My understanding as of the writing of this letter is that, although the board has terminated our contract, they do not yet have another TPA under contract.

With no clear plan in place by the board for the immediate future I am very concerned about the turmoil and confusion that will very soon be experienced by GHLI members as HPMR discontinues services as well as the long term survivability of the health plan without adequate revenue to support it.

Mahalo and Si Yu’us Ma’ase to all the friends and supporters we have made over the last several years administering the GHLI Health Plan.

(Tom Cannon, MPH is vice president and chief operating officer for Hawaii Pacific Medical Referrals, Inc. Comments and questions are welcome. Call 1-888-547-4767 or email tcannon@hpmrtpa.com.)