Going Bold and Implementing Health Care Payment Reform through the Centered Care Initiative

All GIC health plan contracts were coming to an end on June 30, 2013, and the GIC was going out to bid for new five-year contracts.  At the same time, health care payment reform legislation, Chapter 224, directs the GIC and the state’s Medicaid program to move to alternative payment systems.  This law and the federal Affordable Care Act emphasize coordinated care, price transparency, and new ways of paying providers – shifting from fee for service to some form of global payments.  The new laws also emphasize primary care as the focal point for achieving better patient care, better population health, and lower per capita costs. 

Seizing the opportunity of the health plan procurements, the GIC decided to go bold – and went out on a limb with new contracts and an initiative called Centered Care.  Our bid process required plans to work with hospitals, doctors, and other health care providers to establish integrated systems of care called Integrated Risk Bearing Organizations (IRBOs), also frequently referred to as Accountable Care Organizations.  These health care entities will manage a broad range of health care services and accept full or partial financial risk for their patients.  As the GIC does not contract directly with providers, we built a system of incentives and penalties with the health plans to encourage them to contract with providers who can function as IRBOs.  The health plans will be given financial incentives for achieving budget targets and adopting the new payment systems, or penalties for not achieving those benchmarks.

Bending the Cost Curve

Using the GIC’s purchasing clout as the largest Massachusetts employer purchaser of health care, the GIC’s approach will shift the market, moving providers from fee for service to payment arrangements that result in higher quality, more efficient care.  The GIC’s health plans will have annual budget targets over a period of five years that allow for 2% rate increases in the early years, followed by flat and then falling rates in the final years of the contract..  Adjustments are permitted for externally imposed mandates and in certain other limited circumstances.  The incentives and penalties for exceeding or not meeting the targets will help encourage new contract arrangements with providers and also give incentives for improved care delivery. 

Health plans will work with members to identify Primary Care Providers to increase care coordination and quality.  Early intervention, use of technology, and improved wellness activities are encouraged.  Specific standards for quality measurement and reporting are required both from a patient outcome and provider performance standpoint.

Health Plan Options Remained the Same, No Major Benefit Changes, and Excellent Rates

After a rigorous procurement, the Commission awarded new contracts to all of the GIC’s incumbent vendors and their current plan offerings:

  • Fallon Direct Care, Select Care, and Senior Plan
  • Harvard Pilgrim Independence, Primary Choice and Medicare Enhance
  • Health New England HMO and MedPlus
  • Neighborhood Health Plan – NHP Care
  • Tufts Health Plan Navigator, Spirit, Medicare Complement, and Medicare Preferred
  • UniCare State Indemnity Plan/Basic, Community Choice, Medicare Extension (OME), and PLUS

The GIC’s aggressive approach to reversing the cost curve benefits both members and Commonwealth taxpayers.  Not only were we able to avoid cutting benefits, we were also able to align with required new state- and federal-mandated benefits (hearing aids for children, cleft lip and cleft palate coverage, oral cancer therapy, and women’s preventive care), and add some modest benefit enhancements (gym membership reimbursement and tobacco and smoking cessation counseling benefits), while also achieving an overall 3.5% premium increase for FY14. The rate increase was much lower than the 5.5% initial increase requested and below the 3.6% target under state health care reform.  The rate also compares very favorably to other employer trends, which according to Mercer’s fall National Survey of Employer-Sponsored Health Plans, were projected to jump 7.4% for 2013 without benefit cuts.


This information provided by the Group Insurance Commission .