What Makes Harvard Pilgrim So Good?

It’s the nation’s leader in member satisfaction and quality of care, according to NCQA. Dynamic leadership and dominance of a region where excellent docs and plans abound are part of the formula.
Frank Diamond
Managing Editor

About 25 years ago, Toyota introduced a quality control system that revolutionized manufacturing. Some 70 years before that, Henry Ford unveiled the first assembly line. There are moments in every industry that are indisputable turning points.

However, most successful companies rise and rise some more by doing the things everybody else does, except much better. That’s the not-so-secret secret of Harvard Pilgrim Health Care. The insurer is ranked the number one commercial plan in America by U.S. News & World Report and the National Committee for Quality Assurance. They say that Harvard Pilgrim leads the country in member satisfaction and quality of care.

Meanwhile, J.D. Power & Associates lists Harvard Pilgrim number one in member satisfaction in the Northeast region. J.D. Power’s National Health Insurance Plan Satisfaction Study gave Harvard Pilgrim a satisfaction index of 785 — the highest score of any plan in the nation — out of a possible 1,000. The study identifies coverage and benefits; choice of doctors, hospitals and pharmacies; and information and communication as the most significant factors driving member satisfaction.

“We focus intensely on a lot of our operational stuff,” says Charlie Baker, HPHC’s CEO, citing one of his reasons for his plan’s success.

As a small example, many health plans and providers use clearinghouses like WebMD to connect electronically with one another to do member eligibility, claims processing, and a host of other administrative transactions. “The typical fee for this service is a click charge — paid by the plan each time a provider sends a query or a claim to the clearinghouse for processing, like a toll on a toll road,” says Baker. “The click charge varies in price, but it’s usually somewhere between 25 and 50 cents. We decided a few years ago to build an online and direct transaction capability for use by our provider partners, thereby connecting directly with them, and for all intents and purposes, cutting out the clearinghouses wherever we could. In the end, we still use them with some providers, but not many, and we don’t pay a click charge.”

Employers, while monitoring costs, appreciate a smooth processing operation. “High-performing health plans are more likely to have organized systems or system-like elements,” says Helen Darling, president of the National Business Group on Health. “They constantly evaluate, measure, monitor, and manage care and administrative systems.”

Doctors are appreciative as well, says Roberta Herman, MD, HPHC’s chief medical officer, who adds that the health plan’s beginnings as the staff-model Harvard Community Health Plan fostered an understanding of the challenges that physicians’ face.

“Our history is such that we used to be both a health plan and a delivery system,” says Baker. “Not just Charlie Baker, but many people in the company have at least some history of functioning on the provider side. That is definitely an asset.”

Trend setter

That history helps HPHC obtain good outcomes, Herman says. “We were doing pay for performance before anyone was calling it pay for performance. Nobody had invented the term, but in effect what we were doing was creating incentives and bonuses for practices that were all-stars to continue doing what they were doing.”

The insurer conducts an “honor roll” ceremony every year for high performing physician practices. “On our Web site, we note those practices that consistently achieved excellent results. Each year we have a big bash and we give them honors. We go to the town that they’re in and make sure that there’s a lovely newspaper article that acknowledges that they’re on our honor roll. They really appreciate that.”

Baker joined HPHC in the middle of 1999, a year in which the plan ultimately lost $225 million. In 2000, his first full year as CEO, the plan lost $9 million. It has been profitable ever since, and will report $46 million in net income for 2007. (See “Increased Membership, Revenue” below.) Baker believes that Harvard Pilgrim’s attempt to reduce the hassle factor for network physicians contributed to the turnaround.

Between serving as the Massachusetts secretary of human and health services and going to Harvard Pilgrim, Baker ran the Harvard Vanguard Medical Associates physician group.

“I spent an extraordinary amount of time, and our organization was spending an extraordinary amount of time, dealing with ‘administrivia,’” he says of his time at Harvard Vanguard. “When I went to Harvard Pilgrim, my reaction was that if my experience as a leader of a physician group is any indication of what life in a physician group is like, we lose a lot of time that could be a lot better spent for value-added activities. I saw all the time being lost to follow-up issues concerning benefit management, claims activities, referral authorizations, and payment denials.”

Time well spent

“We’ve been told by folks in the provider community,” Baker adds, “that the fact that they don’t have administrative and operational issues with us that they need to spend time working through and managing and fixing means that they can spend that time on things like how they’re doing on diabetes, how they’re doing on smoking, and how they’re doing on asthma.”

Not everyone thinks that Harvard Pilgrim is kind to doctors (see “This Doctor Begs to Disagree,” below). Even Baker has to pause when he’s congratulated for running a “provider-friendly” company. “The conclusion you can draw is that we don’t drive a hard bargain and we’re not tough in negotiations,” he says. “I would argue that we drive as hard a bargain and we’re as tough as anybody. But we do start with the fundamental premise that there are dozens if not hundreds of transactions that involve us and most of the providers in our network every day and every week. They’re part of doing business with a trading partner, almost.”

This Doctor Begs to Disagree

Not everyone is enamored of Harvard Pilgrim Health Care. CEO Charlie Baker says that the insurer tries to limit the hassle for physicians. Well, try harder, suggests Purnima Sangal, MD, a gynecologist in Chelmsford, Mass.

She finds working with Blue Cross Blue Shield of Massachusetts to be much less problematic. Even the state’s cumbersome Medicaid program, MassHealth, is easier to deal with, says Sangal.

“Patients come to me and I am not very concerned about what insurance they carry,” says Sangal. “It’s only when my billing manager will come back to me with a lot of issues on different claims. Harvard Pilgrim is the one that is the worst.”

No one suggests that the complaints sounded by Sangal, referred to us by the Massachusetts Medical Society, amount to anything more than anecdotal evidence — one physician’s opinion.

After all, the MMS’s view of Harvard Pilgrim is much less harsh. Still, at the very least, Sangal’s reaction suggests that there’s room for improvement in even the best health plan. Her focus is payment of claims. She gives as an example a woman who comes to her to confirm that she’s pregnant. “Within a week, she miscarries on her own. Harvard Pilgrim will deny the claim, saying, ‘We want the tissue report.’ The lady miscarried on her own. I don’t have any tissue.”

Harvard Pilgrim’s reaction?

The health plan resolved 99.3 percent of all claims within 30 days in 2007; so far this year, it resolved 99.6 percent within 30 says, says CEO Charlie Baker. “We survey physicians and hospitals on our operational performance annually, and if we discover problems, we make adjustments. Ninety percent of the providers we surveyed last year were satisfied with our overall performance. And I always ask how we’re doing when I meet with physician and hospital leaders, and if they raise issues, we try to resolve them.

“Harvard Pilgrim processes over 10 million claims a year and seeks additional clinical information on about 15,000 claims a year — about one tenth of one percent, which doesn’t seem like a particularly significant administrative burden.”

HPHC plays in a competitive league. Tufts Associated Health Maintenance Organization, one of Harvard Pilgrim’s competitors, has been consistently ranked number two by the NCQA. Blue Cross Blue Shield of Massachusetts, and Fallon Community Health Plan also score well. (See “Tough Neighborhood”.)

Tough Neighborhood

Harvard Pilgrim Health Care is in one of the most competitive markets in the nation. Blue Cross Blue Shield of Massachusetts, Tufts Associated Health Maintenance Organization, and Fallon Community Health Plan all score well on health care performance evaluations.

“Massachusetts, Boston in particular, is the site of some incredibly great health care organizations, and over many years, as health plans have grown and developed, they have adopted those characteristics and they have to compete in that sort of a market,” says David Stefan, the executive director of J.D. Power & Associate’s health care practice. “They have to be extremely good.”

Harvard Pilgrim Health Care was the number one commercial plan in America in a joint ranking by U.S. News & World Report and the NCQA.

NCQA’s top 5
Health plan and coverage area Score
Harvard Pilgrim Health Care
Massachusetts, Maine
Tufts Associated Health Maintenance Organization
Massachusetts, New Hampshire, Rhode Island
Harvard Pilgrim Health Care of New England
New Hampshire
Blue Cross Blue Shield of Massachusetts
Source: National Committee for Quality Assurance and U.S. News & World Report, 2007

Harvard Pilgrim also scores consistently high in the J.D. Power & Associates ranking. Harvard was number one in member satisfaction in the northeast region last year.

J.D. Power’s member satisfaction index for the Northeast
Health plan and coverage area Score
Harvard Pilgrim Health Care 785
Tufts Associated Health Plans 771
Highmark 762
Anthem 759
Excellus BlueCross BlueShield 757
Note: Based on a 1.000-point scale.
Source: J.D. Power & Associates, National Health Insurance Plan Member Satisfaction Study, 2007

“In Massachusetts, the market is very blessed by having four plans that are nationally very highly ranked on performance measures like NCQA, and customers don’t usually use the ranking system in selecting a plan,” says Chris Murphy, a spokesman for Blue Cross Blue Shield of Massachusetts. “Part of that is because all four local plans all rank so high.” Harvard Pilgrim’s other competitors declined to comment for this article.

Dale Magee, MD, a gynecologist and president of the Massachusetts Medical Society, says that in general, Harvard Pilgrim is a reasonable negotiator. “HPHC has an imaging preauthorization program that we have been working on with them for a few years to decrease the burden on physicians who have good records for ordering appropriate imaging tests,” says Magee. “They have moved to exempt some physicians from the preauthorization program.”

However, the reason Harvard Pilgrim and other Massachusetts health plans excel has to do with the level of doctor care, he insists. “If you ask most physicians why they take good care of their patients, I don’t think many will say it’s because the plan has made it easier for me to do so.”

Baker responds, however, that it’s not just a case of the doctors making the health plan look good. Harvard Pilgrim’s New Hampshire plan also scores high. That’s not to say that the doctors in Massachusetts are better than the ones in New Hampshire.

“My point is not about comparing physicians,” says Baker. “I’m referring to the fact that some people say it’s not the plan, but the network that matters, and reference the fact that HPHC, Tufts, Blue Cross Blue Shield and Fallon all do well on HEDIS in Massachusetts using more or less the same network. Yet in New Hampshire, where we compete against Anthem and Cigna, we still deliver very high clinical scores — much higher than our competitors — with a different provider network.

Magee does concede that, in general, HPHC’s high rank helps physicians. “The flip side of winning the competition, which is what these rating systems are for them, is that we as physicians will do better,” says Magee. “We’ll be able to move forward and improve the care that we deliver.”

Sometimes, though, Magee wishes that there were less competition. “Our efforts to try to get the plans to deliver information in a uniform way to physicians so that they can pool it and use that electronic data to improve care have not met with success,” says Magee. “Part of it has to do with the fact that they feel a certain pressure to distinguish themselves.”

Barbra Rabson, executive director of Massachusetts Health Quality Partners (MHQP), a broad-based collaborative that measures and reports on physician performance, disputes that assertion, saying that the Massachusetts plans do in fact share some information under her organization’s auspices. “It’s fair to wish for more, but there’s so much more [in Massachusetts] than in other places.”

The fact that the highly rated Massachusetts health plans are all not-for-profit does not mean that what they do cannot be duplicated by a for-profit plan, says Baker. “I don’t think there’s any reason why any plan, for-profit or not-for-profit, can’t be focused on reducing errors in transaction activity with physicians and hospitals.”

Regional power

Besides, Harvard Pilgrim’s success has less to do with it’s being a not-for-profit than it does with being a regional health plan, says Rabson. “There are some challenges with big national health plans playing a really strong collaborative role within different regions,” says Rabson. “If you’re an independent plan in that region, that’s your market area so you’re committed to it. We’ve had this experience a little bit with MHQP’s collaborative guidelines across plans. Although we have been successful in getting some national players to endorse, it’s tricky because sometimes they say, ‘We don’t want to endorse different guidelines for different regions. We want to be centralized.’”

Says Herman, Harvard Pilgrim’s CMO: “It’s a very different experience for me if I know that I’m going to bump into some of these folks in the supermarket. If I get sick, they’re the ones I’m going to be calling. The very long arm of the national player is just a fact. ”

Ultimately, though, it’s about the pursuit of perfection. Baker says that in some industries, a 5-percent error rate may not sound so bad. “If you’re processing millions of claims, it’s a ton of rework,” says Baker. “You’ve got to get that number down to zero, or something close to zero.”

Trying To Keep It Simple

With apologies to the memory of Winston Churchill, it could be argued convincingly that the world would almost certainly be worse off if journalists ran it. However, if those world-running journalists were talented (or availed themselves of talented copy editors), then at least everybody would be able to understand one another as civilization sank into the abyss.

Charlie Baker, CEO of Harvard Pilgrim Health Care, wrote for his local newspaper when he was in high school and college. He’s one CEO who maintains a blog (and found, as do many who undertake a Web log, that it eats up much more of his time than he’d every dreamed it would).

Every Friday afternoon, Baker sends out an e-mail message to employees in what he calls a “casual” style, without the OK of Harvard Pilgrim’s lawyers. He doesn’t like jargon, and he believes that this impulse helps his company.

“Everybody in health care is guilty of using way too much jargon,” says Baker. “We’re probably as guilty as anybody, though we do try to use less of it than most. That’s a pet peeve of mine. We have tried to significantly improve the language in a lot of our communications to providers.”

To everybody, in fact.

Baker’s e-mail is about “what’s going on with the plan, what’s going on with the market, what’s going on operationally, what’s going on financially, what’s going on with policy.“ It’s written in plain English. The message that he sends to everybody in the organization is that you need to be committed to intellectual rigor when you communicate, but you don’t have to write in such a way that no one can understand it.

That philosophy underlies how HPHC communicates with consumers, says Roberta Herman, MD, HPHC’s chief medical officer. “With our diabetes program, a big part of what made us very effective is that we have in general used very simple language and we have boiled down what it is that the member needs to do to take care of him- or herself. Maybe three to five critical steps. We created a little wallet card. Here are the three to five questions when you go to your doctor that you should be asking in order to make sure that you’re taking the best possible care of yourself and getting the care that you need.”

Communication Called Key to Harvard Pilgrim’s Success

The emphasis that Charlie Baker, CEO of Harvard Pilgrim Health Care, places on effective, jargon-free communication seems to pay off. Health plans in general falter in trying to communicate to members about their health care needs, and also about benefits and services offered.

“It’s the lowest performing area in our study across all plans,” says David Stefan, the executive director of J.D. Power & Associates’ health care practice. “It’s clear to us that if that level of performance came up, you would see a higher level of satisfaction among members for their health plans compared to other service industries that we track.”

Harvard Pilgrim, according to J.D. Power’s National Health Insurance Plan Member Satisfaction Study, does the best in this area. “If you’re looking at where are Harvard’s strengths, one of them is clearly how they communicate to their members,” says Stefan. “Members are more clear about how to use Harvard’s benefits then they are in other plans.”

Do members even care about communicating with health plans? The answer is that they care more than they used to. That’s true for sick members and, lately, for the increasing numbers who seek preventive services, says Stefan.

“We ask people if they believe they understand how to use their health plan to best get their health needs met,” says Stefan. “On that question, Harvard is above just about everybody else we look at. Among those members who don’t quite understand how to use the health plan, we ask, ‘What is it that you’re looking for?’ The big thing that comes out is wanting to know how to access preventive services. Harvard does extremely well.”

When J.D. Power asks consumers whom they trust as a source of health care information, 70 percent say their primary care physician. No surprise there. What is a bit disconcerting for employers is that only 3 percent say that they rely on their employer as a source of information. “People . . . trust their health plan more than their employers,” says Stefan. “That’s a piece of good news for the health plan.”

Increased Membership, Revenue

Harvard Pilgrim Health Care lost $225 million in 1999, the year CEO Charlie Baker came to the struggling plan. He eliminated about 2,000 jobs, overhauled senior management, withdrew from the Rhode Island market, reworked contracts with the plan’s hospital and physician networks, and changed pharmacy benefit managers. Things began to turn around for the health plan in 2001.

Healthy trends for Harvard

Income from premiums (billions) [bars]

Source: Harvard Pilgrim Health Care