Insurers: Hospital Savings a No-Show ; An Industry Group Says If Dirigo Health is Saving Care Providers Money, It’s Not Being Passed on to Insurers.

By JOSIE HUANG Staff Writer

The health insurance industry, facing criticism over plans to pass a new state fee onto consumers, is trying to shift some of the negative attention to hospitals.

Under the Dirigo Health reform program, commercial insurers are supposed to see savings in the form of reduced charges from hospitals and other providers. The fee on insurers would offset the savings and help pay for the state-sponsored DirigoChoice insurance program.

But the industry says it is seeing little in the way of savings. Karen Ignagni, president and CEO of America’s Health Insurance Plans, said in a written statement Friday that state regulations give companies “little leverage in making sure providers pass along savings attributable to the program to the consumers.”

“If we are to have a debate about how to deliver health care savings to the consumers in Maine, then that debate needs to include those who provide the care as well as those who provide the insurance coverage,” Ignagni said.

Ignagni was responding to comments made Thursday by Gov. John Baldacci. The governor had said it was “unacceptable” that some insurers planned to pass the fee onto consumers even after the state’s top insurance regulator ruled that Dirigo Health had saved the health care system $43.7 million.

The attempt to bring health care providers into the public debate over the fee angered the Maine Hospital Association.

“We’re on the front lines every day providing care, and now to have the insurance industry attempt to blame us is simply irrational,” said Mary Mayhew of the trade group.

Hospitals have lived up to their end of the bargain, Mayhew said, pointing out that $33.7 million of the $43.7 million in Dirigo Health savings came from hospitals voluntarily capping spending and operating margins.

On top of that, many Maine hospitals have frozen, moderated or lowered their charges, Mayhew said, in spite of cuts in Medicaid reimbursement and attempts to subsidize physician practices.

That a national interest group is weighing in on the fee suggests the high stakes around Dirigo Health, a first-in-the-country reform plan that addresses cost, quality and access to health care.

Ignagni’s comments exposed the industry’s break with hospitals, which had shared its criticism of how the Baldacci administration originally calculated $136.8 million in savings.

While Superintendent of Insurance Alessandro Iuppa found that the savings were less than a third of that, the insurance industry says the calculation warrants further scrutiny. The Maine Association of Health Plans, citing “serious concerns” about Iuppa’s decision, is considering an appeal. It has a 30-day window from when the decision was issued Nov. 1.

Consumer advocate Hilary Schneider said the law puts the onus on both hospitals and insurers to recover savings, but that she is particularly troubled that insurers say they can’t negotiate lower rates.

“I think we as consumers have to question the role of insurance companies if they’re not able to negotiate rates. Isn’t that why we have them?” said Schneider, policy director of Consumers for Affordable Health Care.

Debate about the fee, known as the savings offset payment, continues to grow as the Jan. 1, 2006, effective date approaches. On Thursday, the board of directors for the Dirigo Health agency will meet to discuss how much to charge insurers. The $43.7 million serves as the cap.

The consumer group Maine People’s Alliance, which has lambasted insurers’ plans to pass the fee down, demonstrated Friday in support of the Dirigo Health program outside the Holiday Inn by the Bay in Portland.

The protest was timed to coincide with a conference inside put on by the Maine Heritage Policy Center, a vocal critic of Dirigo Health since its passage in 2003. The event, called “Life After Dirigo,” featured discussion around free-market approaches to health care such as deregulation and high-risk pools.

Staff Writer Josie Huang can be contacted at 791-6364 or at:

jhuang@pressherald.com