FOR IMMEDIATE NEWS RELEASE (February 26, 2019 – Hagåtña)
Please see the transcript of Senator Therese Terlaje’s session remarks regarding Bill No. 30-35 (COR).
“Good Morning and welcome back, Madam Speaker and good morning to my colleagues.
The government of Guam health insurance plan is the largest procurement by the government of Guam in a year and annually. It’s estimated to be approximately $91 million dollars. It is also one of the most complex solicitations and negotiating schemes in government procurement. The health insurance industry is a complex industry. Experts make a living consulting state governments and our own local government in this field. And I know that the negotiating team hires consultants every year to advise them and states hire consultants to advise them as to the impacts of different health policies.
We are, I wouldn’t say drowning, but we are being bombarded with arguments all around for and against the bill, even doctors seem to be divided on the issues. The debate, of course, has highlighted many issues that must be solved. Problems that exist in our current negotiation or contracts, problems in billings, problems in collections, all kinds of problems that the government of Guam must do better on. And I believe that we can solve those, but they are not solved in this bill. We cannot solve these issues with less competition in our procurement and we cannot solve our problems with unequal bargaining power in negotiations.
We know for a fact that federal law requires in emergency situations that the Emergency Medical Treatment and Labor Account (EMTALA) explicitly forbids the denial of services to any patients in an emergency situation and thus GRMC must provide care to patients in an emergency situation regardless if whether the patient’s health insurer has an agreement with GRMC or if GRMC is part of its contracted network. Also, we know that the current and previous GovGuam Health Insurance contract includes a provision that states, if “a carrier does not contract with the provider of any sole service in Guam, it must reimburse the sole source provider by such Guam provider as if the sole source provider were a participating provider.” So, there is a lot of debate in the community about coverage at GRMC and access to it in emergencies, access to it under those circumstances. And I think that, wisely, the negotiating team has ensured that there is access.
The bill that we are looking at today is very similar if not identical to the mandate that was proposed in the last legislative term by former Speaker Benjamin Cruz. That bill received considerable opposition from health insurance providers, by the Department of Administration and was withdrawn. This bill is a result of Bill 3-34, which was passed (P.L. 34-83) in the 34th Legislature, which requires that the Health Insurance Negotiating Team forward only the “lowest cost option of either the exclusive or non-exclusive proposal” to the Governor. That was a huge change in our policy for negotiating health insurance. That law was intended to save $18 to 20 million. It was passed in the midst of a fiscal crisis and the Legislature was making some very hard choices at the time to save money. We were cutting; we were foregoing the renovation of a labor and delivery ward at GMHA and many other things in our government.
I attended the public hearing for this bill and also was in attendance of a public hearing on the bill introduced during the 34th Legislature. There were many concerns presented then from several health insurance providers and many of those concerns still remain regarding higher costs for the government and its employees and retirees, a reduction in choice because of the higher costs, and potential legal challenges that may delay the negotiating and selection process. Which is exactly what happened last year when the negotiating team put a very similar requirement in their RFP and it was contested. That was never really resolved because they settled, and the settlement was to carry over with the prior contract. So, that is what we are operating with for Fiscal Year 2019.
By mandating all health insurance providers to include the private hospital in their network, it creates a potential competitive advantage for that private hospital to negotiate whatever fees they may choose, potentially tying the hands of GovGuam and its employees and retirees. The private hospital may be empowered to set their fees at whatever level they choose and as a private entity, they are not bound to the same requirements that GMH has in monitoring its fees through public hearings and transparency.
The fiscal note from BBMR in February (and we have since received two others) said that “there is a potential for cost escalation due to reduced competition” and “a potential for the overall pricing bases proffered by the qualified insurance providers to increase.” It did not give an exact amount of the potential increase due to lack of data. Now, they are saying that they can’t do that due to the confidentiality of the information.
However, there were estimates provided by Take Care which estimate an additional $20 M to the total premium for GovGuam and that some policy premiums for families would increase by $120 per month for employees and $140 per month for retirees. Currently about 16% of GovGuam employees and retirees choose a health insurance plan that does not include the private hospital. We wonder why and are speculating that they feel that they cannot afford the premiums to go any other way.
We know at the very least, this 16% will see increased rates and it’s unclear if the other insurance companies’ negotiated rates will be affected if there is lack of competition or no incentive to negotiate lower rates. Should we speculate as to the impact of whether it would wash away the $18 to 20 million in savings that we were trying to obtain in the last term of the prior legislature? This is really the crux of the issue here. In that bill we were trying to save money by forcing, perhaps, an exclusive contract with only one provider. And now, we are trying to undo that by forcing mandates with insurance providers we are going to contract with.
Perhaps, I think it is better for us to reconsider that choice instead of this bill. If we have this extra money, I would much rather go back and reconsider that choice and allow the government employees to have a choice of health insurance companies again. I think that would be a better use of a potential $18 to 20 million dollars rather than ending up with an exclusive insurance company. At this point, we do not know the impacts of other insurance company being left out and how that will impact the rest of the community in other ways. We don’t know the impacts to the government of Guam as to amounts. There are just too many unknowns.
If we want our employees and retirees to avail themselves of Government of Guam health insurance, we have to do all in our power to hold down the cost. Some suggestions have been made to allow the negotiation of prices before mandating a provider.
There have also been allegations that this bill will negatively impact GMHA. It is my understanding, hope and expectation that the government’s fiscal team is scrambling to find money the $13 million in Medicaid matching funds that we are going to need beginning April 1, 2019 and the critical GMHA CMS improvements that we have been discussing for years and the new maternity ward that we had to forego. They have not given their input as to whether funding this private hospital benefit for government of Guam employees should be prioritized over all of those other projects or if the Guam Memorial Hospital is at this point, foregoing its desire to rise to the challenge and provide services that it currently does not provide to the people of Guam. And of course, they are going to need our assistance to do this.
I believe it is imperative that we as policy makers, with the power of the purse strings, take the time necessary to be fully briefed about the fiscal impacts before we act. There has been much testimony received, even after the public, from different members of the community. A few of these are:
• SelectCare stated that the bill would be better if amended to “ensure that the requirement to include all private hospitals is fully vested and left in the hands of the negotiating committee. They also mentioned they are “concerned with what would potentially become negotiating advantages for the new private hospital and the consequences of potentially higher fees” and recommended implementing safety nets and limits to cost increases. But none of these recommended amendments have been included at this time in this bill.
• Take Care’s testimony and concerns were the same as their testimony on the prior measure. Take Care testified that including the private hospital in their network would cause rates to rise exponentially. They outlined equal protection rights, violation of due process rights of health insurers, improper delegation of power and negative impacts to revenues at GMHA.
• The Guam Federation of Teachers has opposed the bill as written, citing potential cost increases to employees and retirees.
• Dr. Thomas Shieh has registered his opposition to the bill. His testimony suggests that if we are going to do this for a private hospital, why are we not going to do this for private providers such as his clinic, which has services that are not available anywhere else in Guam? I thought that example was very interesting.
• Other government of Guam employees have also expressed their concerns with being unable to afford increases in premiums.
• There have also been community members who have registered their support for the bill but have suggested we put a cap on GRMC fees. Unfortunately, that cap is not part of this bill.
I understand and commend the intent of the bill to ensure that GovGuam employees and retirees can access to the private hospital on Guam, however I am concerned that the costs to the Government of Guam and GovGuam employees and retirees may be too high and would preclude them from seeking all together, or preclude GMH from expanding its services.
I know that time is of the essence if the Legislature is to dictate the terms of the new solicitation for health insurance by the GovGuam negotiating committee. Yet, I can’t help but feel that if all the insurance companies and some physicians are warning us to significant increase in costs and change in negotiating power, we should go back to the public hearing process and work some more to come up with the language that will avoid a spike in premiums or deductibles for both the employees and retirees and the government of Guam.
I believe we can do better if we do not buckle to pressure, act uninformed or to embed the government in another legal battle or forgo other solutions such as allowing negotiating team to negotiate private hospital rates. Those were just some of the suggestions that were made.
For these reasons, Madam Speaker, I would move that the bill go back to committee so that we consider the caps that have been suggested on the GRMC rates, consider who should negotiate rates if we are going to mandate that this private hospital be included in the contract or consider the rest of the testimony. Most of all, consider the financial impact on the government of Guam, which I feel is not available to us today.”