Massachusetts Investigating Wide Disparities in Hospital, Provider Reimbursements

John J. Curley, senior vice-president of Blue Cross Blue Shield of Massachusetts, also said in a written statement that the company believes the state health reform played a role in increases and that medical expenses drove the costs.

"The increase in unit costs before considering shifts in sites of service and provider mix, contributes approximately 50% to medical cost trend," Curley stated. "Healthcare costs and trends are also impacted by shifts in the sites where members receive medical services."

Curley mentioned the effects of the state's health reform, which merger the individual and small group segments in July 2007.

"The individual segment has claims experience and trends that are significantly higher than the group business, due to higher morbidity and unfavorable selection in this segment. This has resulted in increasing per member per month annual trends across all services for the merged small group an individual segment by 4-5% and for the entire commercial group business by approximately 1-2%."

Schultz's testimony noted a difference in the company's experience compared to the Attorney General's findings.

"One specific area of the reports in which the findings are materially different than our experience is the analysis of retention, the portion of the premium that covers administrative expenses and contributes to surplus," Schultz said. "The report concludes that in 2009, small group business had the highest retention, followed by mid-sized business, with large group having the lowest retention. That was not the experience for Harvard Pilgrim, which saw the highest retention in the midsize segment, followed by large group, with small group having the lowest retention.