$8M savings for the NMI

The third-party administrator for the CNMI Retirement Fund’s group health insurance program reported a total of over $8 million in discounts earned from Aug. 1, 2001 to July 31, 2004.

“Discount is the amount we saved [for the program] during the three-year period [that we administered it],” said Hawaii Pacific Medical Referral vice president Thomas G. Cannon in an interview Friday.

Records showed that during the three-year period, HPMR recorded total charges of $53.6 million. Of this, $39.3 million had been processed and paid out. The remaining $14.3 million has not been processed and remains unpaid.

Of the $39.3 million, the Fund had only actually paid $14.1 million—representing a 64-percent savings on the total amount.

This happened because the total amount was deducted $12.5 million in ineligible charges, $8.3 million representing HPMR discounts, $2.7 million in COB or coordination of benefits, and $1.7 million co-pay and co-insurer.

Ineligible charges include those that were not program members when they received the service or the service was not part of the plan. They also include duplicate or questionable charges. COB refers to charges shouldered by co-providers such as Medicare, StayWell or Calvo’s Insurance while the co-pay or co-insurer charges are those paid by members in their premiums.

Meantime, Cannon reported that of the total charges, $29.8 million included off-island claims, while $9.5 million represented local claims.

Of the off-island claims, $7.4 million was actually paid by the Fund. For on-island claims, the Fund paid out $6.7 million.

Interestingly, Cannon observed, “there’s not much difference in the amount of paid out. We’re paying almost as much on-island as off-island.”

“There’s only $9 million on-island claims. It’s comparatively less in charges but the pay out percentage wise is much higher because there’s not a big contractual savings,” he said.

HPMR saved $8.1 million for off-island referrals and $225,000 for on-island.

Cannon further noted that nearly 50 percent of local payment went to PHI Pharmacy. “About 45 percent of the money was paid out to PHI,” he said.

The figure, he said, already excludes a 15- to 20-percent discount offered by PHI to HPMR. “We negotiated for a discounted payment arrangement with PHI upon coming here. So these charges don’t reflect the 15-20 percent savings,” he said.

Meantime, Cannon said that of the unpaid claims totaling $14.3 million, $11.8 million is owed to the Commonwealth Health Center, $548,214 for off-island providers, and $1.9 million for island providers.

Minus the ineligible charges, discounts, COB, and co-insurers payments, the Fund would only be paying $6.4 million: $5.5 million for CHC, $332,494 for on-island providers, and $539,599 for off-island providers.

Overall, Cannon expressed pride about HPMR’s savings for the CNMI.

“For three years, we saved the Fund over $8 million in contractual discounts,” he said.

HPMR’s contract with Fund has been extended up to June 2005.