Lowered deductibles rejected

Health care panel feared CareFirst might leave market

Open enrollment policies

The likely option for 8,000 dropped by FreeState HMO

November 16, 2001|By M. William Salganik | M. William Salganik,SUN STAFF

In the latest skirmish in a battle that is sure to continue into the legislative session, the Maryland Health Care Commission rejected emergency regulations yesterday that would have lowered deductibles for "open enrollment" health policies.

The commission's staff and Insurance Commissioner Steven B. Larsen had recommended the emergency action to help about 8,000 FreeState HMO members who will no longer be able to get individual coverage from FreeState after Dec. 31.

They currently have no deductible, but would be forced into open enrollment policies with high out-of-pocket payments. Open enrollment policies provide coverage regardless of medical history, but premiums are higher.

Barbara McLean, the commission's acting executive director, said after the session, "There was concern on the part of the commissioners that there was no guarantee that CareFirst wouldn't pull out of the market in the next month" if the lower deductibles were approved, leaving consumers with no coverage at all.

The HMO open enrollment policies - which CareFirst will no longer offer - have had no deductibles. Deductibles - the amount a patient pays out of pocket before insurance coverage begins - are now $1,250 per person for indemnity policies and $1,000 for preferred provider organizations. The emergency regulations would have cut them to $750 for indemnity and $600 for PPOs.

CareFirst BlueCross BlueShield, while dropping its FreeState HMO policies, still offers open enrollment indemnity and preferred provider policies. According to the insurance administration, CareFirst currently covers about 3,500 people through open enrollment policies. Two other insurers, Mid Atlantic Medical Services Inc. and Aetna U.S. Health- care, together cover another 1,500 but have indicated that they will drop out of the program, Alexandra Thomas, associate insurance commissioner, told the health care commission.

CareFirst Vice President Fran Doherty said she couldn't say how CareFirst would respond to a change in deductibles, but told the commission that CareFirst would be meeting soon with legislative leaders to develop a better open enrollment program. Acting now, she said, "could really throw a monkey wrench into the whole discussion we are having."

She also said CareFirst has already sent out enrollment materials based on deductibles and other rules already in effect. "We have gone to market in good faith, and now you would be changing the rules of the game," she said.

Some commissioners pressed for action in time for next month's enrollments, even if the further reforms will come soon. "We are being asked to protect the consumer for this interim period, while this can be discussed by the legislature, and I think that's our responsibility," said Ernest Crofoot. After a spirited discussion among the 12 commissioners, only Crofoot and three others voted for the proposed regulations.

Doherty said CareFirst was already projecting losses of $8.9 million on open enrollment policies next year, and lowering the deductibles would cost another $3.7 million.

Thomas, however, said CareFirst gets more than $30 million in hospital discounts in exchange for offering open enrollment policies - more than enough to offset the losses and the $13 million that CareFirst contributes out of its discount savings to a program covering prescriptions for seniors.

Crofoot said that overall the program has been "extremely lucrative" for insurers. Given rising costs, Doherty said, the policies were "absolutely no windfall for CareFirst."

Over the past few months, Larsen has battled CareFirst over open enrollment rates and the fate of the dropped members. The insurer sought a 50 percent premium increase. Larsen denied it, and CareFirst has appealed to Baltimore Circuit Court. Larsen also wrote to legislative leaders last month that, in dropping some members, CareFirst was trying to improve its profitability "at the expense of thousands of less healthy, former FreeState members."

Killing the proposed regulations was "very disappointing," Larsen said. "This was the last opportunity we had for people whose coverage ends by the end of the year," he said.

McLean, however, said the debate would help focus attention on efforts to reform open enrollment.

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