After a wait of more than two years, the federal government granted New York's application for a Medicaid managed-care waiver last week, but HMO and consumer advocates were guarded about the program's chances for success.
The program would move more than 2.4 million of New York's 3.5 million Medicaid recipients into managed-care plans, making it one of the nation's most ambitious Medicaid managed-care initiatives.
At least 13 other states have received five-year waivers to restructure their Medicaid programs. New York's waiver application had been pending since March 1995.
Currently some 660,000 Medicaid recipients in New York receive services through HMOs and other prepaid health plans under a voluntary managed-care enrollment program that started in 1991.
The state's Medicaid budget is about $25 billion annually. The cost of implementing the managed-care program is estimated at $70 million over five years. Although the state expects to save hundreds of millions of dollars by shifting recipients to HMOs, it had no firm estimate of the exact amount.
New York is forging ahead with some caution after a rocky start on its voluntary enrollment program. After uncovering marketing abuses last year, the state tightened health plan standards and barred plans from directly enrolling members.
Mandated managed-care enrollment will be phased in, with eight counties in upstate New York launching the program later this summer. Next spring, New York City and eight additional counties that have yet to be identified are expected to begin the mandatory phase. The state hopes to make its target of 2.4 million managed-care recipients by December 2000.
But some serious issues remain, said Sheila Humiston, director of public policy at the HMO Conference of New York, whose member plans serve 450,000 Medicaid managed-care enrollees. For the program to function appropriately, it must be well funded, she said.
Speaking at a United Hospital Fund conference last week, Humiston cited figures showing that the average capitated rate the state pays to managed-care plans contracting with Medicaid dropped 22% to $104 in 1997 from $134 in 1994.
The rates are so low that many plans can't cover their costs, she said. Five plans have left the Medicaid managed-care program, Humiston noted.
But in an interview last week, State Health Commissioner Barbara A. DeBuono, M.D., defended the state's rates, saying they've been adjusted to reflect costs better. And, she added, plans get an automatic 5% rate hike in each county that becomes mandatory. "My view is, if (plans) effectively manage the care and manage the costs, they can do well with these rates," she said.
There are still about 50 plans that contract with Medicaid.
Also speaking at the United Hospital Fund conference, Susan Dooha, director of the healthcare access project at the Gay Men's Health Crisis, ticked off potential issues that could derail the managed-care train. They run from assuring adequate monitoring systems to implementing effective consumer education processes.
DeBuono said HCFA has 60 days to approve the state's operational protocols before any county may begin implementing mandatory managed care. No county would be allowed to move ahead unless Medicaid recipients have at least two plans to choose from.