LD 1959 Legislative Testimony of J. Benoit and J. Baker

Testimony of John Benoit
Board member to the Maine Healthcare Purchasing Collaborative
President, Employee Benefits Solutions, Inc
Member, Steering Committee Greater Portland Chambers of Commerce Purchasing Alliance

Before the Joint Committee on Banking and Insurance
January 15, 2002

In support of LD 1959, an Act to Eliminate
Department of Professional and Financial Regulation,
Bureau of Insurance Travel Restriction for Obtaining Health Care

Presented by Representative Mayo
Co-sponsored by Senator Edmunds and Speaker Saxl,
Representatives Cummings, Dudley, Etnier, Fuller, Glynn, O'Neil and Sullivan


Senator LaFountain, Representative O'Neil, members of the Committee, my name is John Benoit and I am a member of the Board of Directors of a non-profit organization called the Maine Healthcare Purchasing Collaborative (MeHPC). MeHPC is a rapidly evolving organization supported by governmental and non-governmental purchasers of healthcare whose organizations are both for profit and not for profit. Our singular focus is healthcare in Maine.

My testimony today will introduce and explain the purpose of our amendment to LD 1959, describe why the MeHPC membership believes legislative action is necessary, and provide you with a brief overview of our organization. With your permission I would like to distribute our amendment. Joining me to provide support for LD 1959 are three other members of the MeHPC Board. Representing the public sector is Frank Johnson, Executive Director, Office of Employee Health and Benefits for the State of Maine, and from the private sector Peter Hayes, benefit strategist for Hannaford Bros, and Jeff Baker, Manager of Human Resources and Regulatory Compliance for Sabre Yachts.

Our mission states: MeHPC is committed to a restructuring of the healthcare delivery system in Maine by empowering employers, providers, health plans and consumers to implement the principles of value based purchasing.

These principles suggest healthcare providers should be rewarded for delivering quality care. Furthermore, consumers of healthcare should be provided benefit design incentives to seek care from high quality providers who also offer competitively priced services. MeHPC truly believes that higher quality reduces cost.

Recent studies suggest hospital costs vary significantly for the same procedure. If health plans are not allowed to provide an incentive to their participants to seek care at high quality, lower cost providers, this lack of competitive information will drives up costs that will ultimately expand the number of uninsured.

LD 1959 as rewritten seeks to eliminate the travel restriction imposed on health plans under Rule 850 and establish a provider of excellence designation for specified providers within a managed care network or plan. Rule 850 currently inhibits health plans from providing incentives through benefit design differentials when variations in cost and quality can be determined. These incentives would reimburse quality providers with higher levels of reimbursement. These incentives would also reduce out of pocket expenses for patients who seek care from designated providers of excellence. Businesses and consumers respond favorably to incentives that help identify value. An unintended consequence of Rule 850 is to require employers and their participants to pay higher healthcare costs because value cannot be rewarded when it is identified.

LD 1959 as amended also establishes the criteria necessary for a carrier to designate a provider of excellence. Criteria such as average length of stay, mortality, complication rates, readmissions and revisions and infection rates are contemplated when assess facilities. Theses factors should be case mix adjusted to account for severity and demographic variations.

As part of our amendment to LD 1959, MeHPC asks the Joint Committee on Banking and Insurance to consider the concept of "pilot programs". These programs would fall under the jurisdiction of the Bureau of Insurance. Development of health insurance products can be unnecessarily delayed if such development comes into conflict with existing regulation. Given the current health insurance crisis in Maine, we do not believe product development can wait for the next legislative cycle.

Therefore, the purpose of the "pilot programs" is to allow for prompt regulatory relief so value based purchasing initiatives can be introduced in the market quickly and efficiently.

MeHPC wants to emphasize it is not our intent to reduce or diminish the current level of coverage by avoiding state-mandated benefits. We intend to introduce consumer-based information that will assist patients when they are assessing healthcare alternatives.

Some have suggested this bill will restrict access to healthcare and force patients into the lowest cost facility. LD 1959 as amended enables patients to identify high quality, low cost providers and to provide an incentive so they will seek care from providers of excellence. We further anticipate that providers who do not now meet the designated criteria will seek to meet the required standards of excellence or potentially discontinue offering some services.

This bill is not intended to disrupt rural access. Rather it is intended to allow health plans to share information on quality and cost with their participants so they will access care based on value. Ultimately, MeHPC wants to make quality and cost information directly available to consumers.

Before closing I would like to provide a brief history of our organization. MeHPC is comprised of numerous private and public purchasers in the Sate of Maine. We estimate our membership represents over 140,000 insureds across the State. Attached is a list of members that illustrates our diversity from an industry, size and regional perspectives.

The impetus of MeHPC grew from a group of competing health insurance brokers looking to collaborate over concerns about healthcare costs in Maine. First, we looked to confirm our understanding of what we believed to be the root causes of this impending crisis. Second, we wanted to verify that the purchasing community was prepared to mobilize and enter the healthcare debate. The fact that MeHPC is here today demonstrates that the purchasing community is engaged and ready to endorse and introduce the principals of "value based purchasing" as an initial step to address escalating healthcare costs.

MeHPC has provided numerous bullet points that I will not review here. These bullet points are included in my testimony and are intended to provide additional insights into the need for this legislation:

- Engage the consumer in assessing healthcare options recognizing the significant variations in the quality and cost of care.

- Reward high quality, competitively priced providers by identifying them as providers of excellence.

- Identify and provide notice to providers with adverse quality indicators and encourage improvement in deficient areas.

- Allow health plans to provide benefit design differentials that will reward providers for offering high quality, low cost care. Provide a financial incentive to providers who meet the mark on quality.

- Rely on clinical expertise to interpret variations in care based on approved protocols. Designate high quality providers based on clinically sound data and validated assessment methods. Encourage hospitals to become accountable for clinical performance.

- Challenge facilities to meet necessary access standards and develop referral systems that avoid duplication of service and improve quality outcomes at competitive or lower cost.

- Provide incentives for hospitals to use resources efficiently and effectively through the promotion of quality and patient safety.

- The health care delivery system did not respond well to managed care. Consumerism makes the effects more direct and therefore makes all stakeholders more accountable.

- With changing benefit plans consumers will have more at stake and will want to know more about the cost of care. During this transition in consumer behavior, quality must be at the forefront to assist the consumer is assessing choices within their market.

- Reward hospitals for high standards of patient safety .

- Potential for substantial savings in terms of reduced adverse drug events, reduced complications rates, reduced lengths of stay and readmission and revision reductions.

- Encourage hospitals to identify, measure and demonstrate proactive responses to identified variations in patient care.

- Encourage hospitals to demonstrate the value of their services from all components of the value equations (cost, quality and accessibility).

- Encourage internal assessment and external reporting on quality and cost information.

Finally, I have been asked by the Godfrey Wood, Executive Director of the Portland Chambers of Commerce to extend the Portland Chambers support for this testimony and this legislation.

Thank you for your time and I look forward to answering questions now or during work session.

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Testimony of Jeffrey A. Baker
Sabre Corporation, Raymond and Rockland, Maine
Human Resource & Regulatory Compliance Manager
Board member to the Maine Healthcare Purchasing Collaborative
Chairman, Policy and Advocacy Committee, MHPC

Before the Joint Committee on Banking and Insurance
January 15, 2002

In support of LD 1959, "An act to eliminate Department of Professional and Financial Regulation, Bureau of Insurance Travel Restrictions for obtaining
Healthcare".

Presented by Representative Mayo
Cosponsored by Senator Edmunds and Speaker Saxl,
Representatives Cummings, Dudley, Etnier, Fuller, Glynn, O'Neil and Sullivan.


Senator LaFountain, Representative O'Neil and members of the Committee on Banking and Insurance, I am Jeffrey Baker the Human Resource and Regulatory Compliance Manger of Sabre Yachts Corporation. In addition I am a Board member of the Maine Healthcare Purchasing Collaborative and am Chairman of the Policy and Advocacy Committee which represents this diverse group of Maine employers. I am present today to offer full support of LD 1959 and to assist your Committee in better understanding the impact increasing healthcare premiums have on both employers and employees.

Over the last three years Sabre Yachts Corporation has encountered "double digit" increases in Health Insurance premiums. In November of 2001 we renewed with our current Insurance carrier and sustained a 30% increase in premium (quotes from other carriers exceeded 50% increases). This increase dramatically impacted our company, which employs 220 associates and had an equally substantial impact on our employees. Some of our employees contemplated dropping coverage for either their spouse or dependant children as a means of reducing the negative impact on their take-home wages.

Sabre covers the majority of cost for health insurance premiums for its associates and in addition pays for a significant portion of family coverage. After receiving the increase for 2001 / 2002, we as an employer made an important decision, to increase the portion of premium paid by Sabre, for family members. Sabre made this decision as we truly felt a deep sense of concern about the financial impact this increase would have on our associates and their families. Sabre and North End Composites (our sister company, located in Rockland, Maine) are like many other employers in the state, as we are competing with others throughout the world for a share in our marketplace.

Unlike some Maine companies Sabre is in the process of expansion. We have recently broken ground on a new facility and are preparing to increase our workforce by approximately 15%. Over the past 10 years Sabre has grown from 35 associates to our current employment level. This was achieved through sound business decisions, a dedicated workforce with pride in their profession and our ability to compete in a global market. The continued escalation of healthcare costs will have a drastic effect on our ability to remain competitive in the United States, Europe and Asia. Employers can no longer afford to fund the Maine healthcare system, nor can the State's employees continue to absorb these kind of increases.

As a Human Resource professional I am charged with the responsibility of obtaining the best benefit plan possible for all of Sabre Corporations employees. This means supplying them with options which are driven by both Quality and Cost, so that they can make decisions for themselves and their dependants. We have a responsibility to our employees to give them every opportunity possible to make informed decisions regarding issues that effect them and their families. Without your support of LD 1959 we will be failing to give the people we all represent every tool possible for them to make informed decisions. As an HR professional I can assure you that there is no feeling worse than addressing a dedicated workforce and advising them that their benefit costs are increasing by a significant amount, let alone 30%. This was truly one of the most agonizing moments of my career, as I witnessed the disbelief and felt the frustration of each and every member of our organization.

LD 1959 will allow health maintenance organizations to identify "providers of excellence". This information is a vital element which will be used by consumers so that they can become better informed when making decisions regarding healthcare issues. This means that information regarding outcomes, patient safety and other related factors can be taken into consideration by individuals making healthcare decisions. Empowering the consumer with information which relates to "providers of excellence" will enable them to choose providers with the best outcomes for various procedures.

In closing I would again like to thank you for addressing this important issue and allowing me the opportunity to share some of the effects that the current system has on both employers and employees. You will without doubt hear opposition to LD 1959 as it requires many to become more accountable; however, I would urge you to take into consideration the thousands of Maine employees who have been drastically impacted by the soaring cost of healthcare. Consider how effective it would be to let Maine healthcare consumers have the ability to identify and select "providers of excellence" as a treatment facility or provider for themselves or their loved ones.
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