Mike Shields
KHI News Service
December 5, 2011
"TOPEKA — Kansas isn’t the only state doing it.
When Gov. Sam Brownback announced his
administration would seek bids from private companies to manage the care of
virtually every person enrolled in the state’s Medicaid program, Kansas became
part of what has been a rapidly accelerating trend since Medicaid managed care
companies came on the national scene in the 1990s.
“Virginia, Florida, Texas, Illinois, New York,
California … especially California and Texas and Florida. They certainly have a
lot of people that are eligible for Medicaid,” said Michael McCue, a professor
at Virginia Commonwealth University and co-author of a recent national study of
Medicaid managed care operations.
Looking to cut budgets
“States are looking for ways to manage those
populations and cut their budgets, and typically 20 to 30 percent of state
budgets are going to Medicaid. With the recession, states are looking for ways
to manage that cost,” he said.
In 2000, according to the federal Centers for
Medicare and Medicaid Services, 18.8 million enrollees — or 55 percent of the
nation’s Medicaid population — were covered by various managed care
arrangements. By 2009, CMS reported that the number of enrollees receiving
services covered by managed care plans had nearly doubled to 36 million, or 72
percent of the Medicaid population.
The agency also reported the nation now has 225
full-service Medicaid health plans that each have at least 5,000 members
enrolled.
High stakes
But the business is increasingly dominated by a
handful of major, for-profit insurance companies that are positioning
themselves to manage the care of the 16 million more Americans expected to
become eligible for Medicaid once the federal health reform law fully kicks in
on Jan. 1, 2014.
“With enrollment in employer-sponsored health
insurance steadily declining and more Americans falling into the Medicaid
safety net, health insurance companies are going where the growth is — the
Medicaid managed care market,” wrote Emily Berry in a recent article titled
“Mining for Medicaid Gold” that appeared in American Medical News, a trade
journal for doctors.
Most of the nation’s major managed care companies
have shown interest in securing one of the three contracts that Brownback
officials have said they intend to sign. The contracts are each expected to be
in the range of $300 million to $400 million a year.
“Small state, big contract,” a representative of
one of the major companies told KHI News Service, acknowledging his firm likely
wouldn’t show interest in a contract here worth only $100 million.
The governor’s plan is a high-stakes affair for
Kansans and for some of the insurance companies.
“Health
system reform, in combination with economic factors, is expected to speed
consolidation of health insurers,” wrote Ron Sommer, an independent stock
analyst who writes the blog Measured Approach.
Mergers and acquisitions
“The prospect for mergers and acquisitions
throughout the industry is high due to pending reform initiatives and greater
access to financing. In addition, there are tax incentives for privately held
companies to sell now when capital gains taxes are relatively low. There is an
incentive for health care insurers to be very large to realize economies of
scale and efficiency. Instead of mega-mergers among the big companies, we
expect to see the majors buy up the smaller regional providers,” Sommer wrote.
Evidence of that already is available in Kansas.
In late October, a few days before the governor announced preliminary details
of his Medicaid makeover plan, Coventry Health Care, a publicly traded national
player, announced it had reached agreement to buy the nonprofit Children’s
Mercy Family Health Partners. Children’s Mercy currently is the state’s largest
Medicaid managed care company, providing services to about 155,000 women and
children enrolled in the Kansas HealthWave program.
Coventry is one of the major national companies
interested in securing a Kansas Medicaid contract.
Quick schedule for expansion
The governor’s plan would expand the state’s more
limited use of Medicaid managed care for HealthWave beneficiaries to also
include the elderly, disabled and mentally ill. Though more and more states are
moving to managed care, Kansas, under the Brownback plan, still would be one of
the very few to bring all those groups — generally the most expensive to treat
— under the wing of managed care.
Also unusual is the relatively quick schedule the
Brownback administration has set for itself and its goal of rolling out the
new, expanded program statewide on Jan. 1, 2013. Other states that have
included all those subpopulations in their managed care contracts have done so
incrementally and at a slower pace. And even with that, there have been
problems.
For example, New Mexico began its move to Medicaid
managed care in 1997 but only recently phased it in for nursing home residents.
Now, two managed care companies oversee nursing home care statewide, creating a
host of problems for nursing homes, according to Linda Sechovec, executive
director of the New Mexico Health Care Association, a long-term care trade
group.
Sechovec said the state Medicaid program wasn’t
paying the facilities enough to cover their costs before moving to managed care
and that problem was made worse by the introduction of “third parties” that are
slow to pay and impossible to negotiate with when it comes to setting payment
rates.
Buying a "broke" system
“It’s just not a model that is well-served by
pinching every penny to the point that service is inadequate,” she said. “In my
state, providers haven’t had a rate increase since 2007. They have staff
members who have gone without raises for three years or more, and we are
pleading with our legislature and administration to address the chronic
underfunding that existed not only before managed care but is now exacerbated.
“It was a broke system,” Sechovec said. “But the
managed care companies came in and they bought it. They bought it and they
didn’t fix it. That’s exactly where we’re at.”
Cindy Luxem, Sechovec’s counterpart at the Kansas
Health Care Association, said she was well aware of the problems in New Mexico
and other states where managed care has been extended to Medicaid’s long-term
care populations. She said her group’s members are worried the same problems
could emerge here.
“We're concerned about things like timely claims
processing, the prompt-pay issue,” Luxem said. “Kansas had done a pretty good
job historically of getting providers paid in a timely way, and I can't
necessarily say that is the case in all the states I visit with, so that
prompt-pay piece is really important for us.”
Brownback officials have said they expect the
managed care companies to maintain advisory councils made of up providers and
their representatives so that concerns — such as those about prompt payment —
can be voiced and addressed. The administration’s contract proposal also would
allow bonus payments to companies that meet various performance standards,
including prompt payment of provider claims.
Introducing the profit motive
But the concerns of some in the state’s provider
network are more deep-seated. They view with alarm the introduction of the
profit motive to a segment of the social service system that deals with some of
the state’s most seriously disabled.
Tom Laing, executive director of Interhab, an
association that represents most of the community groups that provide services
to the state’s developmentally disabled, said Kansas has a long-standing
structure for providing those services that has worked well without including a
profit-seeking insurance company in the driver’s seat.
“We provide many aspects of a managed-care model
currently,” he said. “We have capitated rates where we assume the risk. We have
annual review and assessment … and as a result we’ve been able to save the
state millions and millions of dollars. Our costs per person served are
slightly less than they were 15 years ago. We've already done the transition to
managed care to the extent you can for our population.”
Laing said the Brownback administration signaled
early that it intended to expand managed care.
“Going into this conversation, we understood this
would be the administration’s goal,” he said. “They said it from the beginning.
And we’ve said from the beginning that we don’t think it is a good fit for the
developmentally disabled community, and we’ll continue to advise them and the
Legislature accordingly. There is so much here that is experimental that
somebody’s got to be looking at it.”"
No comments:
Post a Comment