Money-losing Allways is drain on Mass General Brigham

Insurance firm lands approval of 11.5 percent rate hike

ALLWAYS HEALTH Partners, which is owned by the Massachusetts General Brigham hospital system, won approval of an 11.5 percent average increase in premium rates across its plans last week from the state Division of Insurance.

The rate hike, scaled back from the original 15 percent request, represents the latest attempt by Mass General Brigham to make its financially draining health insurance company less of a money sink.  In financials released earlier this month, Mass General Brigham reported operating income that tripled between October and December compared to the same quarter a year ago. Income from operations would have increased even more if Allways had not lost $14 million — $4 million more than it did in the same quarter a year ago.

Allways has struggled since Mass General Brigham (then known as Partners Healthcare) purchased the company in 2012, transforming it over time from a nonprofit Medicaid insurer known as Neighborhood Health Plan and closely connected to our state’s community health centers into a commercial insurer, actively shedding much of its coverage of poor people along the way.

In late 2017, Neighborhood Health Plan tried to grow in a big way, by going after the hundreds of thousands of retired and current state employees insured through the state’s Group Insurance Commission.  The company got the hospitals that are part of the Mass General Brigham system to agree to big discounts for the first year of the contract and beat out many of its competitors for a chance to serve the state’s employees. But the employees and retirees, fearing they might lose access to their current doctors, balked at the Group Insurance Commission’s decision to winnow back the overall number of insurance carriers serving members from 17 to six. As a result, the commission reversed itself and Neighborhood Health Plan didn’t get its big shot of new members.

Since then, beyond changing its name and picking up the more than 100,000 self-insured employees and dependents tied to the parent Mass General Brigham system, Allways has stalled at growing its business. I’ve been told by insurance insiders that a health insurer needs closer to a million customers to gain sufficient scale to cover overhead.  But with only about 250,000 customers, Allways seems to be stuck in the red.

Even last year, during the height of the first COVID surge, when every other health insurer in Massachusetts saw profits rise at a time when their customers stopped seeking care except if they were seriously ill from COVID-19, Allways failed to get to breakeven.

Perhaps the company has been poorly managed; the company did replace its CEO last year.

So what’s the strategy now?

Beyond some small new, effort at creating a limited network product through component contracting with Newton Wellesley Hospital and its doctors for businesses that are in that hospital’s geographic area, not a lot. So that brings us to this recent rate submission. It appears that the company has decided that the best way forward is to simply raise premiums as much as the Division of Insurance will tolerate, with a hope to retain customers who are not that price sensitive.

The Division of Insurance rejected the initial request by Allways for an average 15 percent rate hike. In its decision, the Division of Insurance said the company had not demonstrated that it has “taken adequate steps to analyze and renegotiate rates of reimbursement to providers to limit the growth in claims costs, especially rates of reimbursement to higher cost provider groups and inpatient hospitals.”

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Paul A. Hattis

Retired associate professor, Tufts University Medical School
The latter reference to highest cost provider groups is a reference to Mass General Brigham’s hospital network, which has been criticized for using its market clout to negotiate some of the state’s highest reimbursement rates. And an additional worry: possibly those higher Mass General Brigham rates paid by Allways could also have some spillover impact, helping the hospital system set higher price targets in negotiations with other insurers—translating into higher premiums and prices for the rest of the commercial market.

While not clear if this final rate compromise of an 11.5 percent increase will get Allways to breakeven, the trials and tribulations of trying to get there since 2012 suggests to me that both Mass General Brigham and premium payers would both be better off if they sold the company. Mass General Brigham would be spared the hassle of getting Allways out of the red, and we would be spared from having to underwrite the financial costs of this wasteful investment.