Faced with a time crunch to prepare for health care reform and other corporate strategy moves, Massachusetts’s Harvard Pilgrim Health Care is delaying its entrance into the Connecticut market, officials confirmed.
The not-for-profit health insurer originally hoped to begin selling health plans through the state’s insurance exchange when it becomes operational Jan. 1, 2014, but the company won’t be able to make the deadline.
Instead, Harvard Pilgrim, which has been working on obtaining a Connecticut license since September, is hoping to launch sometime in the first half of 2014, possibly in April or as late as July, officials said.
“We did make a conscious decision to delay entry into the market until sometime later next year,” said Mickey Herbert, the former CEO of Farmington insurer Connecticare who was recently hired by Harvard Pilgrim as a consultant to lead its Connecticut expansion.
Herbert said Harvard Pilgrim is dealing with three major initiatives and that is slowing its entrance into Connecticut.
The company, like all health plans, is rushing to make sure its products and procedures are compliant with the many new guidelines established under the Affordable Care Act, which largely goes into effect Jan. 1. Insurers have spent years prepping for the law, but many new regulations have been trickling out in the last few months forcing health plans to shift gears and adapt on the fly.
Harvard Pilgrim is also undergoing a major companywide IT conversion and is working on getting back into the Medicare Advantage market as well. Those projects are requiring significant resources and attention, Herbert said, and the company determined it could not realistically enter the Connecticut market by Jan. 1.
Missing that deadline does represent a setback for Harvard Pilgrim.
Jan. 1 is a major insurance enrollment date, with as many as 60 percent of all commercial groups recommitting to some type of health plan at that time.
This January is particularly important because it will be the first time Connecticut businesses and individuals will be accessing insurance under new federal health care reform guidelines and interacting with the state’s new health insurance exchange.
“It is unfortunate we would miss that date,” Herbert said.”But we are not going to do anything unless we can do it right.”
Although plans are delayed a bit, Herbert said Harvard Pilgrim still expects to be a full-service health plan in Connecticut, but it will slowly ramp up the business. Initially it will only compete in the commercial and Medicare supplemental coverage markets.
Eventually, Harvard Pilgrim also hopes to offer health plans in the individual and Medicare Advantage businesses as well, Herbert said.
Kevin Counihan, CEO of the Access Health CT, which is running the state’s health insurance exchange, said missing the Jan. 1 deadline puts Harvard Pilgrim at a disadvantage, but he doesn’t see it having a long-term adverse affect.
It could, however, give other insurers the opportunity to build-up market share.
“It’s always better to be there upfront,” Counihan said. “But it doesn’t make it impossible for Harvard Pilgrim to enter the market.”
For now, Harvard Pilgrim is focused on finding Connecticut office space and building a robust provider network.
Herbert said the company expects to have a Connecticut office by this summer and is looking for real estate to fit its needs. It’s not clear yet how many employees the company will bring to the state since the insurer has not determined what functions will reside in Connecticut and which will remain in the larger corporate offices in Wellesley and Quincy, Mass., Herbert said.
In the business plan it filed with state regulators in September, the company said it will have a senior leadership team based in the state, as well as positions for network services, provider contracting, sales and account support, product development and marketing functions.
Meanwhile, the insurer sent out its first mailings last month to physicians, specialists, and hospitals in Connecticut to begin recruiting providers into its network. Getting a robust network is critical to a health plans success, and serves as a key selling point in attracting customers. The larger the network, the more options consumers have to seek out affordable and quality medical care.
Herbert said Harvard Pilgrim also has people in the field building relationships with providers, who have been responding positively so far.
“Provider recruitment is going better than originally hoped,” Herbert said. “A lot of providers are welcoming Harvard Pilgrim with open arms. They like the idea of new competition.”
Another new Connecticut insurer, HealthyCT, has already filed health plans to compete in the state’s health insurance exchange. Counihan said HealthyCT’s rates are aggressive and it indicates HealthyCT has ambitious goals to make a dent in the market.
HealthyCT’s plans factor in a 7.5 percent rate increase over 2012 medical costs. The insurer is proposing plans for the individual market with an average monthly premium of $427.35.
For the small group market, which includes businesses with 50 or fewer workers, HealthyCT is proposing plans with an average monthly premium of $445.
“They want to grab market share,” Counihan said.
