Sept. 26, 2008 — Troubled contract negotiations between stateside insurance provider Cigna and local provider network V.I. EquiCare have delayed the new government employee insurance contract's presentation, giving the Legislature a very short window to ratify the contract renewal before the Sept. 30 deadline.
The Government Employees Service Commission-Health Insurance Board of Trustees is charged with negotiating a health insurance contract, which the Legislature and the governor must then approve. John Abramson Jr., the board's chairman, said uncertainty about the state of Cigna's contract with V.I. EquiCare prevented Cigna — and hence the board — from being able to present firm and final numbers.
"As late as Sept. 12, the board still did not have a final renewal proposal from Cigna HealthCare," Abramson said, attributing the delay to problems between Cigna and EquiCare. "Current Virgin Islands law requires Cigna to contract with a Virgin Islands PPO (preferred provider organization), and VI EquiCare is currently the only plausible PPO network in the territory."
There is no reason to expect the plan will not pass, but it puts the Legislature in the awkward position of having only a few days to address a very complex issue, then either vote to ratify regardless, or risk having "approximately 30,000 government employees, retirees and their dependents face immediate cancellation of their insurance," as Abramson put it.
Short of that, without an agreement Cigna might have to eliminate in-network medical benefits, causing government-plan participants to be transitioned to an indemnity medical plan, where they would be subject to higher deductibles, coinsurance and out-of-pocket maximums, Abramson said.
Nancy Bass, director of EquiCare, described her company as like "one-stop shopping with health-care providers," providing them with the benefits of being part of a network, acting as a liaison between doctors and insurance providers, gathering doctors' documentation and checking their credentials, and providing insurers with an existing organized network of providers.
Doctors' fees were one major sticking point. EquiCare initially requested an immediate 50-percent increase in fees and an additional increase after five months.
"While it is our understanding this would be the first fee increase for providers in several years, we were advised that Virgin Islands doctors' fee allowances were already substantially higher than any other U.S. region in which Cigna operates, including such high-cost locations as Hawaii, Manhattan and Washington, D.C.," Abramson said.
The fee increase was eventually negotiated downward, but the negotiations produced delays.
Abramson encouraged the Legislature both to ratify the insurance renewal and to change the law requiring local networks.
Senate President Usie Richards defended the original law requiring a local network, but said it had been changed from its original form and could be reformed.
"The spirit of the PPO requirement was to provide and guarantee access to health providers who would accept their health-insurance coverage, which was a problem we were having in the territory at the time," he said. "People were still paying out of pocket for services rendered while awaiting health insurance to reimburse them."
When the bill was first passed in January 1998, it only required insurers to provide access to a PPO, but a March 1998 amendment changed it to require negotiating an agreement with a local network, he said.
"That's an easy fix," he said. "We can just knock out what was added that March and put back what was in the original law passed in January of '98."
Cigna's new contract reflects a 7.7 percent, or $7.4 million, increase over last year, said Steve Burrows, a consultant hired by the insurance board.
Cigna originally requested a 15.4-percent premium increase, amounting to $14.8 million if no changes are made to benefits, Burrows said. Some of this is increased fees for doctors and other charges. However, a new law requiring Cigna's claims reserves be held in a V.I. bank is costing the territory $460,000 to pay for the smaller return the money receives in the local bank as opposed to being invested along with the rest of Cigna's assets.
The board recommended five changes to the plan to cut down the increase, and the governor's office pared it down to three, eliminating coverage for obesity and bariatric surgery; reducing the number of days allowed for outpatient short-term therapies; and having Virgin Islanders who live or seek medical care on the mainland and Puerto Rico become part of Open Access Plus and PPO networks in those places, which contain costs more and pay doctors less than inside the territory, according to Burrows' testimony.
The total cost of the medical plan for 2009 under the proposed plan will be $96.5 million. Dental is to cost another $3.7 million and life insurance another $4.3 million, for a grand total of nearly $104.5 million for all government employees, retirees and family medical and life insurance.
The Senate reconvenes at 10 a.m. Monday on St. Thomas to continue hearing testimony on the insurance contract. A vote is scheduled for Tuesday.
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