Texas Medicaid tiptoes toward care coordination

Texas may not be expanding Medicaid to cover any of its millions of uninsured, but Gov. Rick Perry's administration has embarked on an innovative care-coordination program for existing Medicaid beneficiaries.

Despite pushback from some physicians and pharmacies, observers say it is starting to improve healthcare for millions of the state's low-income residents by significantly expanding the state's insurance company-run managed-care program for Medicaid.

Approved by the CMS three years ago, the five-year demonstration project moved almost 1 million Medicaid enrollees from traditional fee-for-service Medicaid into privately run managed-care plans. However, to receive payments from insurers, providers must participate in a regional healthcare partnership, which comprises hospitals, community mental health centers, local health departments and physician practices. In most of the 20 designated districts across the state, the local public hospital anchors the partnership and oversees planning.

Pharmacists balk at the changes. They say the change has resulted in beneficiaries not being able to get the drugs they need in a timely manner. Some doctors say they have been left out of the loop in implementing programs under the demonstration and that it has yet to prove if it can better the chances of finding a primary-care physician.

“Some (anchor) public hospitals did a better job than others in obtaining physician input,” said Dr. Stephen Brotherton, president of the Texas Medical Association. “Many physicians felt the process was perfunctory and not intended to forge meaningful or lasting collaboration or actual changes in the way care is delivered.”

It's too soon to tell if the changes implemented under the special CMS waiver will increase access to primary-care physicians, which is one of its primary goals. In 2012, only 32% of Texas physicians said they would accept new Medicaid patients, according to a survey by the TMA, down from 42% in 2010. Those who have been unable to find a doctor seek care at public clinics and federally qualified health centers.

But in the three years since the waiver under Section 1115 of the Medicaid law was granted, the state has broken down barriers and created new partnerships among payers and providers. Insurers involved in managing the programs are enthusiastic about the changes.

“This allows the (managed-care organizations) to better manage the care of the member by having full access to all claims and being able to coordinate across all provider types,” said Benjy Green, executive director of Cigna-HealthSpring Medicaid, whose plan membership grew from 11,000 to 26,000 in the state.

A massive state budget shortfall, which reached $27 billion in 2011, led to the request for a special waiver to help reduce the state's overall costs. The state Medicaid office also was looking for ways to encourage providers to stress preventive programs that would help reduce emergency room visits.

The program built on an existing Medicaid managed-care program known as Star, which serves low-income pregnant women and children. Another program called Star+Plus provides acute and long-term service and supports the aged, disabled, chronically ill and dual-eligibles, people who qualify for both Medicare and Medicaid. By adding up to 164 counties to managed-care Medicaid, it increased the total number of beneficiaries in the state's managed-care programs to more than 3.5 million people. The state's children's health insurance program was not included in the waiver.

The waiver was similar to the one the CMS granted California in 2010 with one major difference: California's waiver, known as Bridge to Reform, was explicitly designed to help the state prepare for Medicaid expansion under the Patient Protection and Affordable Care Act. That's not happening in Texas.

The complex funding mechanism behind the waiver more than doubled the uncompensated-care costs paid to Texas providers to $6 billion a year and split it into two pools: one for uncompensated care and another to encourage providers to develop effective programs to increase the quality and cost-effectiveness of care. To date, the state has paid out more than $2 billion for quality-and-cost improvement projects and $5 billion in uncompensated care funds.

Qualifying for project funding has been difficult for hospitals because of the time-consuming task of recruiting partners and getting CMS approval. To get the go-ahead, programs had to show the initiatives would meet metrics of success such as training a certain amount of staff or increasing access to primary care.

About 1,200 such projects have been approved across the state. They include expanding access to primary and specialty care by hiring more physicians and building and expanding clinics. Projects also focus on improving care quality by creating patient-centered medical homes and offering chronic disease management programs.

“We're building this airplane as we're flying it,” said Stacy Wilson, associate general counsel for the Texas Hospital Association. “It's been especially hard for public hospitals serving as anchors because of the administrative burden and the resources that are needed to put the regional healthcare partnerships together.”

“It was people who were not used to sitting in a room with each other, people who had competitive relationships,” said David Salsberry, chief financial officer of JPS Health Network, a publicly funded county hospital system near Fort Worth. Eventually, they put aside the awkwardness and got to work, he said.

Because the first two years were consumed by planning, development and getting approvals to move forward, data showing the cost-effectiveness of the program is not yet available. “It is in the latter part of the waiver that we will see the greatest direct patient impact and also associated improvements to health outcomes,” said Stephanie Goodman, a spokeswoman for the Texas Health and Human Services Commission.

While a boon to their enrollment figures, the Medicaid managed-care expansion has proven problematic for the 19 managed-care organizations active in the state. Molina Healthcare, for instance, said in its 2012 annual report to the Securities and Exchange Commission that it faced higher medical costs and “substantial losses” because of miscalculating the price of services in Texas.

“Because there is limited historical information on which to develop rates, certain assumptions are required to be made which may subsequently prove to have been inaccurate,” according to the company. The company saw its enrollment in the state swell from 155,000 at the end of 2011 to 249,000 today through the waiver program.

Forced to expand their operations to serve dozens more counties, insurers had to quickly hire hundreds of new staffers and open new offices. Craig Bass, president of Molina Healthcare of Texas, said as it continues to improve members' quality of care, its financials are “going in the right direction.”

One group resisting the rise of Medicaid managed care is local pharmacies, which are unhappy with the pharmacy benefit managers (PBMs) used by the managed-care organizations. Each PBM uses its own formulas to set reimbursements.

“Payments to pharmacies are all over the map, even for the same drug for the same patient,” said Michael Wright, executive director of the Texas Pharmacy Business Council. The group lobbies for American Pharmacies, the Texas buying cooperative that serves almost 700 independent pharmacies.

The PBMs are offering independents non-negotiable, take-it-or-leave-it contracts with dispensing fees that are $5 to $6 less than in the old program, he said. Some have closed because they have a high percentage of Medicaid patients. “Many more independents are just hanging on, hoping that the state will do something to bring some fairness and consistency to payments,” Wright said.

However, others point to the continued growth of large chains such as CVS Caremark Corp. as the real cause of the disappearing independent pharmacy. “The prophecies of doom are incorrect,” said Billy Millwee, the former Texas Medicaid director who ran the program when the waiver was approved. “Beneficiaries still have access to pharmacy drugs.”

Community health center providers are cautiously enthusiastic about the program's prospects. “This waiver is seeking a transformation—and transformation doesn't happen overnight,” said Melissa Rowen, healthcare policy director for the Texas Council, which represents 39 community health centers across the state.

But consumer advocates are less than impressed by the initiative. They point to the larger failing of Texas' approach to helping the near poor: The state government's refusal to expand Medicaid under the national reform law to cover adults earning up to 133% of the poverty level. “Medicaid expansion would yield many, many, many billions more dollars per year than the waiver does,” said Anne Dunkelberg, associate director of the Center for Public Policy Priorities in Austin.

Follow Virgil Dickson on Twitter: @MHVDickson