► Minuteman Health NewsroomMarch 17, 2017

Minuteman Health files 2016 year-end financial report, cites real problem driving higher premiums

CEO: Federal program forces premiums up higher than rising pharmaceutical costs…or any other factor

BOSTON and MANCHESTER—Minuteman Health (www.minutemanhealth.org) today filed its 2016 unaudited annual financial statement, projecting losses of $39.0 million. This non-cash accounting loss was largely driven by charges for reserves of $29.8 million for Minuteman’s projected 2016 Risk Adjustment payout and $23.7 million for additional potential Risk Adjustment liability for 2017.

The company continued its trend of solid membership growth, adding 12,438, or over 45 percent, more members between February 2016 and February 2017. Minuteman also continued its network expansion, adding providers to its networks in Massachusetts and New Hampshire.

“Our market model and our financial fundamentals are strong. Our focus on partnering with a select provider base has given us the ability to offer high-quality, value-priced care to individuals and groups in New Hampshire and Massachusetts,” said Minuteman chief executive officer Tom Policelli.

Policelli said the most significant challenge facing Minuteman is the federal government’s flawed Risk Adjustment formula, which was intended as a balancing measure to benefit insurers who attract sicker members than other insurers. But the system has destabilized the market and has punished smaller, more efficient carriers like Minuteman, he said.

“We are seeing the results of this flawed formula every day. It goes directly against the public policy goals shared by all – making healthcare more affordable and covering more people. It penalizes lower-cost solutions of any kind. Focused networks of providers, risk-bearing physician groups, and innovative medical management models? All penalized. Even when individuals or small companies buy Bronze or Silver plans because that is what they can afford or chose to buy, they are penalized and forced to subsidize those who choose Gold and Platinum plans,” Policelli said.

The reserve Minuteman has established for 2016 Risk Adjustment is, at $29.8 million, one-third of all premiums and $1,188 per member for the year. Total pharmaceutical costs, by contrast, were $13.7 million. Those drug costs amounted to 20 percent of all medical expenditures, which is typical for the industry.

“The media is focused on spikes in pharmaceutical costs. We are concerned about pharmaceutical costs too, just as we are with all costs,” said Policelli. “But Risk Adjustment is both much larger and far more volatile. That uncertainty drives premiums higher than they should be, directly harming the small employers and individuals who are trying to afford coverage.”

The latest Risk Adjustment forecasts were driven by updated simulation data for Massachusetts and New Hampshire.

“While simulation data has proven volatile in the past both period-over-period and with respect to final numbers, it must be taken into account. Minuteman hired outside actuaries for this analysis, and reviewed it with state regulators,” said Greg Pence, Minuteman’s acting chief financial officer.

Minuteman has been a national leader in the effort to revise the Risk Adjustment formula. The company last year filed a lawsuit against the federal government challenging the Risk Adjustment formula. It also founded CHOICES, a national association of health insurers focused solely on advocating for improvements to Risk Adjustment, Risk Corridors and Reinsurance.

About Minuteman

Minuteman Health, Inc. is a health maintenance organization (HMO) committed to providing high-quality care, cutting administrative costs and reducing premiums for individuals and employers in Massachusetts and New Hampshire.

Minuteman Health’s In-Plan Provider Network offers high-quality care at lower costs and currently includes over 11,700 In-Plan Physicians, Hospitals, Community Health Centers, Urgent Care Facilities, Behavioral Health providers, Walk-In Health Care Clinics and other health care providers practicing at over 21,500 locations throughout New Hampshire and Massachusetts. Updates on Minuteman Health’s growing provider network can be found at www.minutemanhealth.org.

Minuteman is marketed in Massachusetts through its website, brokers, Health Services Administrators (www.HSAinsurance.com) and the Massachusetts Health Connector. It is marketing in New Hampshire through its website, brokers, and the Federal Healthcare Exchange.


Media Contact:

Jim Borghesani


Lisa McTighe
Director of Marketing and Communications