Fallon Community Health Plan recognized for health care cost control by Pioneer Institute

Innovative solution calls for the combined use of limited provider networks and defined contribution strategies to reduce cost trends while maintaining quality of care

Worcester, Mass., September 16, 2009—Fallon Community Health Plan (FCHP), a nationally recognized, not-for-profit health care services organization, announced today that it has been honored by Pioneer Institute with Special Recognition in the Institute’s 2009 Better Government Competition. The competition focused exclusively on healthcare through the solicitation of ideas for local and state-based reform from around the country.

In its nomination, FCHP focused on opportunities to sustain health insurance cost control through the combined use of limited, or selective, provider networks, and a defined contribution strategy. This offers the potential to enable government entities and employer groups to achieve significant and sustainable health insurance savings and reduce medical cost trends, while maintaining coverage levels and quality of care.

“Ever-rising health care costs and the recession have combined to create unpalatable decisions for business and government,” said Eric H. Schultz, President and CEO, FCHP. “Many employers in Massachusetts are looking for ways to reduce their health care expenses by cutting back on benefits or switching to a high-deductible health plan for budget relief. Through this innovative approach, we’ve seen how additional savings can be achieved by combining a limited network with defined ‘equal dollar’ contribution strategies.”

FCHP’s experience shows that a defined “equal dollar” contribution strategy—typically between 80 to 100% of the lowest cost option—has proven to be successful in driving consumers toward efficient and effective providers, while also motivating other providers to improve quality, efficiency and infrastructure that can ultimately drive down health care costs.

“Providers in our limited network are carefully selected using objective clinical and service quality measures,” added Schultz. “FCHP has found this approach to be highly successful, as most all providers in our limited network have a proven track record of providing high-quality care.”

Pioneer Institute is an independent, non-partisan, privately-funded research organization that seeks to change the intellectual climate in the Commonwealth by supporting scholarship that challenges the “conventional wisdom” on Massachusetts public policy issues. The Better Government Competition showcases innovative ideas and programs to improve the efficiency and effectiveness of government.

“Pioneer Institute is pleased to recognize Fallon Community Health Plan for their innovative, sustainable health insurance cost control measures,” said Jim Stergios, Executive Director of Pioneer Institute. “FCHP’s experience proves that leveraging limited network options in combination with an equal dollar contribution strategy can produce immediate and significant savings for all stakeholders in the health care system and pave the way for sustainable change in the marketplace.”

Lauren M. Petit
lauren.petit@fchp.org