For Immediate Release - October 10, 2012

Group Insurance Commission Begins to Implement Key Requirement of Massachusetts Health Care Cost Control Law

RFP shows government leading by example, proposes changes to the way health plans will contract with doctors, hospitals and other health care providers to change the way in which they are paid

BOSTON – October 10, 2012 - Continuing the Patrick-Murray Administration’s efforts to prevent health care costs from rising at an unsustainable level, the Group Insurance Commission (GIC) announced today the release of a Request for Proposal (RFP) that will help implement key parts of the Commonwealth’s cost containment law. The RFP kicks off the annual bidding and contracting process between health plans and the state.

“We lead the nation on access to care and now, thanks to our cost containment law, will show the country how to crack the code on costs,” said Governor Patrick.  “The GIC’s proposal is an important step. It ensures government is leading by example and moving away from a fee-for-service model in favor of better care at lower costs.”

"The Commonwealth of Massachusetts is a leader in providing quality, affordable health care coverage to its residents," said Lieutenant Governor Timothy Murray. "This new procurement will allow the GIC to continue offering excellent coverage while keeping costs at a manageable level."

The Patrick-Murray Administration’s health care cost containment strategy leverages the state’s immense purchasing power to reward models that provide cost-effective, high-quality coverage and care for those who rely on state health insurance and to better coordinate government’s health care purchasing decisions. The new model proposed by the GIC encourages a shift from the old fee-for-service model to new payment models that emphasize coordinated care and a focus on primary care.  This move will help to limit growth in premiums, avoid higher copays and deductibles and improve patient health.  The GIC estimates it will save taxpayers $1.29 billion over the five year term of the contract with improved quality of care and no reduction in benefits.

“Our new fiscal reality demands that we look toward creative solutions to controlling health care costs while continuing to provide quality health care,” said Secretary of Administration and Finance Jay Gonzalez. “The GIC’s new and innovative approach to contracting with its health insurance plans will pay dividends for its members and the Commonwealth’s taxpayers.”

In August, Governor Patrick signed landmark legislation that launches the next phase of health care reform. Implementing the reforms in the legislation, which takes effect November 5th, will result in nearly $200 billion in savings over the next 15 years by moving to alternative payments, increasing transparency, addressing market power, promoting wellness, enacting malpractice reform and supporting health information technology. Implementation will include a number of state agencies, along with cooperation from providers and insurers, non-profit organizations, and input from and information delivered to the public.

The GIC, which covers almost 400,000 state and municipal employees and retirees and their family members, was required to move to alternative payment systems pursuant to the new law.  In the past, doctors, hospitals and other health care providers have typically been paid on a fee-for-service basis.  This fee-for-service model has often resulted in the overuse of tests and procedures, often to the detriment of patients.  The GIC is seeking to improve patient health and lower per capita costs with its Integrated Risk-Bearing Organizations model. The model takes steps towards implementing the payment reform measures in the cost containment bill. Beginning in 2014, if plans exceed established benchmarks per member per year, they will be rewarded with a share of the savings.  Plans will be subject to penalties if they do not meet the established benchmarks.

“We have a responsibility to use our purchasing clout to effect change in the health care marketplace,” said GIC Executive Director Dolores Mitchell.  “Being a leader is not always popular, but our previous achievements have helped reduce cost and have ultimately helped all residents.  This model is no different. The GIC is leading by example in tackling health care costs, and we are confident we will continue to effect change in the marketplace. We look forward to working with our health plans and the provider community in this innovative effort.”

The GIC’s RFP is just the latest example of its leadership role in making major changes in the field of health care.  The GIC led the way on mental health parity and patient safety, and was the first employer in New England to join The Leapfrog Group, which reports hospitals’ adherence to safety measures.  As part of the GIC’s last all-health plan procurement, which took place five years ago, the GIC implemented the Clinical Performance Improvement Initiative, which requires health plans in the GIC to submit their book of business claims for analysis of differences in physician’s quality and cost-efficiency.  Additionally, GIC members are rewarded, through lower copays, for seeing the higher quality, more efficient doctors. 

A Bidders Conference will be held at the GIC on Monday, October 22, 2012 at 10 a.m. to answer questions for prospective health plans.  The bids are due to the GIC by noon on Tuesday November 20th, and the contracts will be awarded at the February 15, 2013 Commission meeting for coverage effective July 1, 2013.  The GIC’s annual enrollment period, where members will learn about their plan options and make health plan changes for July 1, will take place April 10 – May 8, 2013.

About the GIC

The GIC was established by the Legislature in 1955 to provide health, life, and other benefits to state employees, retirees, and their dependents. The GIC also covers housing and redevelopment authorities’ personnel, participating municipalities, and retired municipal employees and teachers in certain governmental units.  There are currently over 210,000 subscribers and almost 400,000 lives covered by the GIC.  A seventeen-member commission representing labor, retirees, municipal management, the public interest, the Administration, and expertise in health economics governs the GIC.