State regulators have approved the selection of the national actuarial firm Milliman as the independent consultant to set caps on price increases at Lawrence + Memorial Healthcare for the next five years.

The consultant, selected by Yale-New Haven Health and approved by the state Office of Healthcare Access on Thursday, was required as part of the state’s approval allowing L+M to join the Yale-New Haven network. The selection of the consultant comes less than a week after the announcement that the consulting firm Deloitte & Touche had been approved as the independent monitor to verify compliance with the terms of the agreement between the hospital network and the state.

A coalition of union and health care advocacy groups last week objected to the choice of Deloitte & Touche, saying the company is one of Yale-New Haven’s largest contractors and therefore cannot be independent. It asked state regulators to rescind the decision and consider its input in the selection, as well as to allow it to provide input into the selection of the independent consultant.

Neither request was granted, even though the coalition was granted intervenor status in the hearing process that preceded the agreement.

“Based on the agreed settlement, the intervenors do not have legal standing to raise objections to the selection of the IM (independent monitor) or IC (independent consultant),” Maura Downes, spokeswoman for the state Department of Public Health, the agency OHCA is part of, said in an email message on Thursday.

In response, the coalition issued a statement from Tom Swan, executive director of the Connecticut Citizen Action Group, one of the members of the coalition.

"The arrogance of the health department's statement does not bode well for their interest in working with the community in the future," Swan said in an email message.

Asked about the objections raised by the coalition, Yale-New Haven spokesman Vincent Petrini directed questions to state regulators.

“We are solely focused on ensuring the success of the affiliation,” he said. “We are recruiting new physicians. We’re looking to drive up volume. Our emphasis is simply on ensuring high quality care for the patients and we don’t anticipate being distracted from that goal.”

Matt O’Connor, spokesman for the coalition, said the group has emphasized repeatedly to the hospitals and state regulators that public input in the choices of the monitor and the consultant is crucial for the public to have faith that its interests are being protected.

In email messages between the state and Yale-New Haven about the selection of Milliman, OHCA director of operations Kimberly Martone refers to a presentation and discussion with representatives of the hospital network and Milliman about their expertise and how they would conduct a cost and market impact review to determine baseline prices and set increase caps. Martone describes the meeting as “very informative and comprehensive.”

No further documents about the company are posted with the email messages, which are included with the affiliation agreement, and the amount Milliman will be paid by Yale-New Haven is not given.

According to the agreement, Milliman would conduct the cost and market impact review, which would compare prices at L+M to other health-care providers in eastern Connecticut, factor in trends, statewide prices, availability and accessibility of services and the role of L+M in serving low-income and Medicaid populations. That information would be used to establish the cap on price increases, taking into consideration “the cost reductions resulting from the affiliation and the annual cost of living” in the L+M service area.

Dr. Stephen Smith, a member of the coalition, said he believes Deloitte & Touche would be overpaid for its services. The agreement on the state agency’s website states that Yale-New Haven Health will pay Deloitte $180,000 to $190,000 during the first year of the monitoring project, and $150,000 to $160,000 for years two through five. It was unclear whether the second fee is annual or for the entire four-year span.

“If you look at the actual tasks that the independent monitor must undertake,” he said in an email message, “you’ll see that it’s mostly assuring that required reports have been submitted and that Yale and L+M are abiding by the agreement ... The independent monitor isn’t required to do detailed technical and financial analysis ... Giving the nontechnical nature of the responsibilities and the rather straightforward duties of assuring compliance ... I have a hard time understanding why it will cost $180,000 to $190,000 for the first year with a team of five highly paid consultants.”

Given the existing relationship between Deloitte and Yale-New Haven, he added, “this raises the concern that this is a quid pro quo arrangement to assure that the ‘independent’ monitor sees things the way Yale wants them to be seen.”

He called for a different monitor to be chosen with “no ties” to either hospital network and “whose integrity and independence is unquestionable. And who doesn’t cost nearly $200,000 a year.”

j.benson@theday.com