MAG's Comments on Medicaid HMO

10.04 MAG's Comments on Gov. Sonny Perdue's Proposal for a Medicaid HMO

  • A Georgia Medicaid HMO will not have the intended effects of stabilizing the budget or reducing costs. The following are reasons why MAG believes it will not work:
    • States which have implemented Medicaid HMOs have not experienced either cost savings or improved quality of care. Rather, HMOs have been highly disruptive to the delivery of care. (MAG contacted Delaware, Tennessee, New Jersey, Texas, Arizona and Florida)
    • The proposal is flawed because it does not build on the strengths of the present Medicaid program which, with appropriate chronic disease planning, streamlining, and focus could improve the budget picture.
    • The proposal also has the potential for destroying the infrastructure of Georgia’s present Medicaid and indigent medical care system through the complete dismantling of the current program and through the probable under funding of a new HMO structure, which, if it fails, could not be easily replaced.
    • Physician participation in the Medicaid program would likely decline precipitously due to increased administrative hassles of having to deal with multiple plans and due to likely cuts in their reimbursement. In states which have implemented Medicaid HMOs, physician participation has dramatically declined with access to specialists becoming an acute problem. Physicians are currently providing care to Medicaid beneficiaries at less than their cost of providing care, a problem which would be exacerbated if the proposed budget cuts to physician services are implemented. (Georgia’s Medicaid program currently pays only 84 percent of Medicare RBRVS, with proposed cuts ranging from 3 percent - 5 percent bringing that number down to 79 percent to 81 percent of RBRVS. However, the RBRVS system is itself flawed and does not accurately reflect costs of providing care.)
    • It is unlikely than an HMO would save in administrative costs because the State’s current administrative costs are currently approximately 3 percent and most managed care companies’ administrative costs are in the 12 percent - 20 percent range. Georgia’s current per-patient spending is in the bottom one-third of states.
    • Now is not the time to dramatically change the system because it is anticipated that Congress will address modernizing Medicaid in 2005.
  • Savings could be better achieved through modifications of the current system and/or through expansion of the current Primary Care Case Management Program (“PCCM”).
    • Considerable savings could be attained through strict enforcement of the eligibility rules.
    • MAG also would urge a reexamination of current eligibility rules to determine if they are consistent with the goals of the program.
    • MAG also would suggest taking a hard look at reducing the number and variety of Medicaid Optional services now being offered. A reduction in services could provide sizeable savings.
    • Savings could be achieved through payment of hospital ambulatory surgery services at the rate currently paid to freestanding amsurg centers, rather than at twice the amount as recommended in the proposed budget.
    • The PCCM model is a managed fee-for-service arrangement utilizing a network of primary care physicians and health care providers to serve as the “medical home” for Medicaid patients and focusing on care management to the aged, blind, and disabled patients with chronic illness.
    • Georgia already has the beginnings of a PCCM model, with the Georgia Better Health Care case management program, but has yet to implement the disease management component, which offers the best opportunity for true cost savings over time. PCCM does not impose the same administrative hassles or service restrictions as used in more tightly managed HMO models making them more palatable. Texas reports with PCCM’s expansion over the next two years, the state is expected to save $18 million in Medicaid expenditures.
    • The case management guidelines should be developed and managed by physicians, rather than through case management organizations. MAG could play a key role.
    • To assure that Medicaid beneficiaries continue to have access to physicians, payments to physicians should be realistic – based on the cost of care and predicted utilization levels. Rates should be set at a minimum of 100 percent of RBRVS and physicians should be paid for any additional case management required by the program.
    • The program should include an educational component designed to educate patients regarding the appropriate use of services, including utilization of the emergency department. To mitigate against any inappropriate emergency department use, the program should promote access to physicians’ offices in the off-hours, including primary care clinics, with higher reimbursement.
    • To assure a smooth transition to a disease management model, it should be phased in.
    • The program should provide coverage for clinically effective preventive services and healthy lifestyle initiatives.
    • The program should allow intensive case management for high utilizers and realistic financial disincentives for beneficiary misuse of services.
    • To encourage continued participation in the Medicaid program, DCH should support legislation which would provide immunity from liability for treating Medicaid patients.
    • Many states experiencing failed HMO models are transitioning to the PCCM model for cost savings.
  • DCH also should consider alternative models to an HMO program
    • Several states are looking at the use of health care savings accounts within Medicaid, including Florida, Iowa and Vermont. (2004 Council of State Governments Report)
    • The AMA has proposed providing a system of federal and state tax credits to Medicaid beneficiaries to obtain insurance in the private market.

MAG’s Recommendations if DCH Proceeds With a Medicaid HMO

  • To mitigate against the occurrence of the types of problems which occurred with the flash-cut move to ACS, any HMO model should first be implemented as a pilot program.
  • The State should continue to offer its PCCM program as a competitive patient option.
  • The Department of Insurance, with its expertise in regulating managed care plans, should be vested with regulatory authority over the plans.
  • Medicaid beneficiaries should have the freedom to choose and retain a given primary physician within the plan and to request a change in physicians if dissatisfied.
  • Plans should be required to comply with Georgia’s Patient Protection Act.
  • Plans should be required to accept any qualified willing physician and not limit panel size. DCH should fully disclose selection criteria for plan physicians and other providers.
  • Plans should be required to pay physicians at realistic levels – at least 100 percent of RBRVS, with additional payments for any case management responsibilities. Capitated payments should not be allowed.
  • Plans should be required to assure accessibility to participating physicians, including specialists, throughout their geographic territories.
  • DCH should seek significant physician input in developing any plan medical policies, including the development and conduct of quality assurance, credentialing and utilization review programs. Managed Care Organizations should be required to follow the physician recommended guidelines in concert with AMA-CPT rules.
  • Plans should not be allowed to mandate links to their commercial programs.
  • A contingency plan should be developed in the event a plan goes bankrupt or exits the market.