Priority Health, one of Michigan's largest health insurers, has cut premium rates for members and employers for June and July and will return possible overpayments to fully funded employers later this year to provide financial support amid the ongoing COVID-19 pandemic, officials said today.
Grand Rapids-based Priority Health said lower use of services—and lower claim costs—enabled the insurer to offer premium credits and waive cost sharing for its most heavily impacted members and employers.
"We are the first health plan in Michigan to do this to directly help the people of Michigan," said Joan Budden, Priority's president and CEO.
Priority Health plans to return any revenue to members and employers above the amount the company retains for administrative services, which is about 10% of premium revenue, officials said.
"Our team is focused on people, not profits and the welfare of our members is always our top priority," Budden said. "Priority Health is constantly looking for ways to make health care more affordable, and thanks to our dedication to running an efficient operation, we are pleased to be able to make this commitment today to offer financial relief to our members."
Priority set premium rates for 2020 based on expected health care costs. With many health procedures being delayed or canceled and fewer patients seeking in-office care, Budden said projected costs have declined.
"We don't have hard numbers. (Our estimates are) based on preauthorization data from health care providers," said Budden, adding that there usually is a lag of one to two months on claims submissions.
Budden said the 15% credits are based on actuarial estimates from claims already submitted, what providers are saying and the expected increase in utilization later this year.
"Our big concern is that people are delaying care. When they do go, (their) illness will have progressed further and care will be more intensive," Budden said.
Health insurers also submit premium rate requests for 2021 to the state insurance department in May. Budden said Priority plans to submit its rate requests even though the state said it could delay the deadline.
In a statement from Blue Cross Blue Shield of Michigan, Andy Hetzel, corporate vice president of communications said: "This sounds like good news for Priority's customers. At Blue Cross, we are taking a disciplined approach to understanding the uncertainty that the pandemic has caused in health care economics.
"There are many competing models on future health care spending because there are so many unknowns. We are also waiting for some guidance from (the Centers for Medicare and Medicaid Services) that is critical to us making good decisions, and will be communicating our plans to our customers in the near future."
Based on the new projections, Priority Health plans to return excess funds for 2020 in these ways:
- Waive cost sharing for all Medicare Advantage members for in-person and telehealth primary care services May 1, 2020 through December 31, 2020
- A 15% premium credit for June and July 2020 for MyPriority Individual plan members
- A 15% premium credit issued in June and July 2020 for small group employers (2-50 employees)
- Large, fully funded employers will also have an opportunity for premium credits in the fourth quarter, when the total amount of excess revenue available can be determined
"Small businesses and individual consumers have been particularly hard hit during this outbreak, we hope this relief will make it easier for them to stay covered," said Budden. "We also recognize that the lives and health care routine of our senior members has been significantly impacted. We want to make sure these members are able to reengage with the health care system without having to worry about the cost of a copay to see their doctor."
Priority Health spends about 90 cents of every dollar on member care, retaining the other 10 percent for administrative services and revenue reserves.
Other steps Priority Health have taken include:
- Fully covering the cost of physician-ordered COVID-19 testing for all members
- Waiving all copays, deductibles and coinsurance for the treatment of COVID-19 through June 30
- Expanding frere virtual care to most members for routine care through June 30
- Expanding free home medication delivery for all members
- Providing free access for all members to myStrength, an online mental wellness tool
- Accelerating value-based payments and quality bonuses to offer physician and provider partners financial stability
- Offering flexibility to employer groups on premium payments and eligibility criteria
- As part of an integrated health system, Priority Health is also participating in temporary measures announced by Spectrum Health including executive compensation reductions, suspension of retirement matching program for employees and aggressively reducing expenses and prioritizing 2020 spending
Priority Health offers a broad portfolio of health benefits options for employer groups and individuals, including Medicare and Medicaid plans. It offers coverage to more than 1 million members in Michigan.
This article originally appeared in our sister publication, Crain's Detroit Business.