New Kid on the Block Fallon Community Health Plan Makes Inroads in Western Mass.

In Western Mass. — a highly competitive market for health insurers — officials of Fallon Community Health Plan say they can bring something different to the table.

But as Fallon makes its first inroads into the Pioneer Valley region, it will have to overcome the pitfalls that have frustrated other HMOs during the past decade.

“We began expanding our services in 2002,” said Christina Sciammacco, spokesperson for the Worcester-based health plan. “At that time, we made a conscious decision to build off of our base in Central Mass. That’s where we formed, we have a significant number of members in the Central Mass. region, and we offer products that are very affordable and unique to our marketplace, so we wanted to bring these products to other markets.”

That plan has encompassed a recent expansion into various Eastern Mass. markets, most recently the South Shore area, southeast of Boston. Last December, the company decided to expand in the opposite direction, into Western Mass., “because we feel we have a product that employers there will find attractive,” Sciammacco said. Already, Fallon has agreements with seven hospitals and 1,500 primary-care physicians and specialists in Hampden, Hampshire, and Franklin counties.

Other health plans are watching the move closely, including Health New England, the only HMO headquartered in Western Mass.

“The health care insurance market is a very competitive market. We know that, and all the players here know that,” said Peter Straley, president of Health New England. “There are a number of plans available here, and this will add another one. From a consumer standpoint, having another choice is not a bad thing.”

Still, Straley characterizes Fallon as yet another non-local plan trying to make an impression on the region — a goal that has met with mixed success with various insurers in the past. This month, The Healthcare News takes a look at how Fallon is marketing itself with employers — and why the company feels it can succeed in the Pioneer Valley.

Slow Growth

Fallon Community Health Plan was formed in 1977 by a group of physicians called the Fallon Clinic. Since that time, the company has cultivated a range of products, including HMO, POS, and PPO plans, as well as its Medicaid and Medicare Advantage plans — although it will initially offer only the HMO in Western Mass.

Long a dominant health plan in Central Mass., the company has nevertheless taken a slow approach to growth. While Blue Cross Blue Shield of Mass. boasts some 2.9 million members statewide, Harvard Pilgrim Healthcare about 900,000, and Tufts Health Plan just over 600,000, Fallon claims about 172,000 members — not much different than the 169,000 it reported in the mid-1990s.

That’s why the recent eastward expansion makes sense, said Fallon President and CEO Eric Schultz, and the same goes for the new Western Mass. push. Fallon is still waiting for approval from state regulatory bodies to make the move official, but the plan has already struck deals with seven regional hospitals that will provide health care services to members of FCHP Select Care, Fallon’s HMO product.

Those hospitals include Baystate Medical Center and Mercy Medical Center in Springfield, Cooley Dickinson Hospital in Northampton, Holyoke Medical Center, Franklin Medical Center in Greenfield, Noble Hospital in Westfield, and Baystate Mary Lane Hospital in Ware.

“This is very exciting news for the region,” Schultz said. “We will now be able to deliver innovative, high-quality, affordable solutions to businesses and individuals from Boston to Springfield.”

Schultz has the confidence of someone who has overseen a financial turnaround of his health plan, which lost $21 million as recently as 1998 —and returned to a surplus just two years later. Fallon did so by making some difficult choices, including a 10-percent staff cut, renegotiated provider contracts, significant premium increases, and some cutbacks in Medicare services.

In facing its latest challenge, the company recognizes the highly competitive nature of the Western Mass. market, Sciammacco said, but is confident it can market itself successfully.

“We have a sales force in house, and we work closely with employers, human resources directors, and benefits administrators to discuss what types of products to offer and what benefits employers would like to see,” she said. “Once we receive approval from the state, we can begin marketing with advertisements in both print and radio, and probably some direct-mail pieces to employer groups in our region.”

Prevention and Cure

Fallon already boasts what Sciammacco says will be attractive features to employers, including reimbursements not only on fitness center memberships, Weight Watchers programs, and pilates and yoga classes, but on fees paid for school sports programs — a unique feature in the market.

“We reimburse for karate, basketball, baseball — any type of sports,” she said. Even jazzercise and dance lessons fall into this category. “We place a high emphasis on preventative care, on keeping fit and healthy, and this type of benefit helps us do that.”

Beth Foley, RN, Fallon’s director of Health Services, noted that obesity affects at least 15{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} of school-age children in the U.S., and the percentage of young people who are overweight has more than tripled since 1980. In recent years, most health plans have emphasized preventative care to keep members healthier and costs down, but Fallon is currently alone in Massachusetts in offering a youth sports reimbursement.

“The current data indicate that this situation is worsening rather than improving,” Foley said. “Rewarding healthy behavior will motivate individuals to want to take control of their health and live longer, healthier lives.”

“This new feature will particularly support and encourage physical activity for our younger members,” Schultz said. “After all, children who participate in physical activity see benefits involving weight, muscular strength, bone mass, and self-esteem. Helping young people to lead healthier lives today will have a direct and positive impact on health care costs and outcomes in the future.”

In the same vein of preventative health, Fallon offers a zero-dollar co-pay for routine annual checkups. “Those co-pays typically run from $10 to $25 when you walk into the doctor’s office, and with a family of four or five, that can add up,” Sciammacco said. “We have waived co-payments for those visits to ensure that our members are receiving the preventative care they need.”

In addition, Fallon offers dental coverage through its HMO, and also boasts a 24/7 nurse hotline for its members; in fact, more than 10{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} of its workforce is made up of RNs and LPNs.

“They work directly with members who have chronic illnesses, like diabetes and congestive heart failure, to help them manage their illnesses and stay on track with medications and doctor appointments,” Sciammacco said.

Tough Market to Crack

According to the Mass. Division of Insurance, here are the membership figures of 10 HMOs doing business in the Western Mass., ranked by total number of members in Hampden, Hampshire, Franklin, and Berkshire counties (latest figures available):

Health Plan Members in Western Mass.
HMO Blue (BC/BS) 90,920
Health New England 63,284
Tufts Associated HMO 31,948
ConnectiCare of Mass. 9,109
Harvard Pilgrim Health Care 5,327
Neighborhood Health Plan 2,735
Fallon Community Health Plan 2,236
CIGNA Health Care of Mass. 2,018
Aetna Health 1,317

Another Competitor

None of that particularly worries Straley, who admitted that there really isn’t a downside to giving consumers more choices in the marketplace.

One of the newer entrants, ConnectiCare of Massachusetts, began doing business in Hampden, Hampshire, and Franklin counties in 2001. Today, the health plan boasts nearly 10,000 members in the Pioneer Valley, has developed relationships with local chambers of commerce to connect with businesses, and was named one of the top 10 health plans in America last year by U.S. News and World Report.

“Our business will continue to grow in this market because we offer exceptional customer service, high-quality care management, and innovative products,” said Mickey Herbert, president and CEO of ConnectiCare.

Still, Straley noted, “Health New England is the only local health plan in this region. We’re celebrating our 20th anniversary, and we’re still the only local health plan. We’ve seen plans come into the market and then leave the market, and we’re still here. So time will tell whether the entrance of another competitor will make a difference or not.”

Straley said his company has thrived due partly to a high retention rate, and has actually grown stronger through the various attempts by others to grab market share.

“In the past, when competitors have come in, we haven’t lost members,” he said, citing Harvard Pilgrim’s entry into the market within the past decade. “They traded some members with Blue Cross primarily, and when they left the market, we and Blue Cross took those members back.

“We didn’t lose members then, and I don’t expect us to love to Fallon,” Straley continued. “We have a growing customer base, which I expect to keep growing, because Fallon is not going to be a local plan.”

Sciammacco dismisses the criticism, maintaining that Fallon offers a strong-enough network and products that are different enough to attract employer attention and spur growth. While the health plan’s initial presence is in Hampden, Hampshire, and Franklin counties, Fallon will soon file an application to sell in Berkshire County, and will then take the appropriate steps to develop contracts and market itself farther west.

“We’re ensuring that people have access not only to our health plan, but also some very high-quality doctors and hospitals in their region,” Sciammacco said.

We’re very excited to enter this market, and we feel it’s a positive step forward not only for our company, but for the residents of Springfield, Northampton, and the whole region.”

That’s the goal, anyway. What the diagnosis will be for Fallon in a few years is anyone’s guess.

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