A half-dozen Maryland managed-care organizations have agreed to meet a stiff set of expectations from the state on how to care for nearly 350,000 Medicaid enrollees starting June 2.
That's the inaugural date for HealthChoice, the Medicaid managed-care program authorized last year by the state Legislature after HCFA granted a waiver from standard Medicaid requirements.
Maryland's Department of Health and Mental Hygiene has spent the past six months compiling comprehensive requirements of its own, including standards for access to services, proof of expertise in various medical areas, and specifics of the benefit package to be delivered in return for capitated fees.
"Since we're paying in advance . . . we're making it real clear what we expect to get," said Joe Millstone, director of the state Medical Care Policy Administration.
The launch of the Medicaid managed-care initiative was delayed five months from its original starting date of Jan. 1 because of concerns that neither the healthcare industry nor the public were sufficiently prepared for the fundamental changes in store for them. HCFA didn't clear the program for launch until late October.
The aim during a five-month phased implementation is to enroll about 75% of the state's 440,000 Medicaid beneficiaries into managed-care organizations serving only Medicaid-eligible beneficiaries, as distinguished from HMOs that also serve a commercial population. A third of Medicaid beneficiaries already are in HMOs, Millstone said.
Of the six organizations judged qualified by the state to meet the expectations laid out in regulations, three were formed by existing HMOs and three are provider-sponsored organizations created for the HealthChoice program (See chart).
Besides providing care, the organizations face the task of collecting a broad base of data on medical encounters-not just services they provide but also any other pertinent medical history of Medicaid enrollees.
They'll have an incentive to show that encounter information to the state even with payment set in advance. That's because monthly capitation amounts are adjusted for the medical history and current condition of each enrollee, Millstone said.
The managed-care organizations get a per-member fee based on such factors as beneficiary age and sex, and one of two main classes of eligibility: low-income families with children or people with disabilities. Payments also differ by location, with Baltimore higher than the statewide average.
Medical history is another key factor in setting capitation amounts, Millstone said. For example, a new enrollee without a documented medical history generally brings a lower fee than an enrollee with documented medical problems.
"The crux of the system is the encounter information," he said. For the state, the data offer proof and reassurance that enrollees are getting the care they need. For the organizations, the data justify the cost of caring for enrollees with conditions requiring higher reimbursement.
For example, the capitated payment outside Baltimore for a male 45 years old or older is $286 a month without medical history. But the fee can go as high as $372 under the program's system of using ambulatory-care groups-an emerging payment methodology-to assign care costs based on medical problems, Millstone said.
The state will pay $2,000 a month in 1997 for a person diagnosed with AIDS. And the delivery of a baby will be reimbursed a flat $4,000.
Organizations that don't submit encounter data on new enrollees will continue receiving the initial amount as a "default" rate even if they're coping with higher-cost conditions, Millstone said.
Furthermore, the first-year rate table is based on 90% of what the state would pay if Medicaid had continued its fee-for-service payment scheme, said Peter Mongroo, president of Helix Family Choice, one of the six managed-care organizations in the program.
"They've already taken 10% off the top," Mongroo said, adding that the state also wants to see an 80% medical-loss ratio, or the amount of premium revenues devoted to actual patient care, in the first year, rising to 85% in future years.
Organizations have put up millions of dollars before the first enrollee dollar rolls in. The four provider partners in Maryland Physicians Care, for example, combined for about $5 million to cover required funding reserves and other startup costs, said Bob Rubin, its chief executive officer.
Blue Cross and Blue Shield of Maryland's Medicaid HMO, FreeState Health Plan, inked a risk-sharing partnership with a newly created Baltimore provider group that calls for a combined $5 million to capitalize the venture, said Jeff Valentine, spokesman for the Maryland Blues.
The provider group, called CarePartners, includes University of Maryland Medical System, its school of medicine, Mercy Medical Center and other primary-care and specialty provider groups in Baltimore.