How to avoid a Medicaid managed-care fiasco

Health system CEO Mary Starmann-Harrison said she and her staff tried to be patient in dealing with Molina Healthcare's Medicaid managed-care plan in Illinois.

Approving a provider at one her hospitals to be in-network sometimes took as long as six months, said Starmann-Harrison, CEO of Hospital Sisters Health System, which has 13 hospitals across Illinois and Wisconsin.

Prior authorizations were difficult to get and reimbursement was slow and unreliable. Her system complained repeatedly about these issues but to no avail. “We tried for a solid year to work with (Molina) on the operational issues, and we just felt we're at a point where we were not serving the patient well,” she said.

So, HSHS last December stopped dealing with Molina.

A Molina spokeswoman said HSHS severed the relationship without cause, adding “we worked with them in good faith in an attempt to come to an agreement, but unfortunately (we) could not reach a resolution.”

Challenges in Illinois are a cautionary tale for the rest of the country and highlight how important it is for Medicaid managed-care plans to work effectively with providers.

“The backbone of any managed-care program begins with your provider network,” said Mark Rivera, founder of MCC, a managed-care consulting firm. “Keeping them happy and paying claims on a timely basis is critical.” 

Other states have faced their own woes in implementing Medicaid managed care in recent years. Iowa's program faces severe financial challenges. Amerigroup, AmeriHealth Caritas and UnitedHealthcare lost an estimated $450 million combined since the program began in 2016. The state recently asked the federal government for $225 million in risk-corridor payments to make up for the losses. Last October, the CMS rejected Kansas' request to extend its managed-care program, KanCare, saying it failed to meet federal standards and risked the health and safety of enrollees.

In February, Illinois Gov. Bruce Rauner, a Republican, announced plans to revamp the state's Medicaid managed-care program and canceling existing contracts two years before they were set to expire. That was partly because other providers had raised similar concerns about other Medicaid plans.

It's unprecedented for a state to cancel Medicaid managed-care contracts midterm, said Ernest Jaramillo, founder of Salud Actuarial Consulting, who negotiates rates with Medicaid plans on behalf of a number of states.

The rationale of state adoption of managed care has gradually changed over the past two decades, according to Judy Solomon, vice president for health policy at the Center on Budget and Policy Priorities.

In previous years, Solomon said she would have cited predictability of spending as a primary driver. “While I think that is part of it, states are increasingly developing types of managed-care arrangements that are intended to enhance coordination of care, including across behavioral and physical health, and improve outcomes,” she said.

Thirty-nine states were using managed care for at least part of their Medicaid population as of Dec. 31. Nationally, about 73% of Medicaid beneficiaries, more than 50 million people, now are covered by private plans, according to research firm PwC.

Medicaid managed care expanded in Illinois in 2011 when the state mandated that 50% of its 3 million Medicaid beneficiaries be enrolled in a plan by the start of 2015. 

Now Rauner is proposing to expand the number of beneficiaries in managed care and reduce the number of participating insurers from 12 to no more than seven by June 30. The new program would start on Jan. 1, 2018.

He also wants to squeeze more savings out of Medicaid to mitigate the state's budget woes. The value of the contracts would total $15 billion if 80% of the state's beneficiaries were served through managed care, up from 65% now.

Samantha Olds Frey, executive director of the Illinois Association of Medicaid Health Plans, said her member plans have not been able to perform to the best of their ability because they were not being paid. As of April, the state of Illinois owed Medicaid plans nearly $3 billion in capitation payments, Frey said. The state has not had a budget for two years because of a political battle between Rauner and the Democratic-controlled legislature.

“In order to care for our Medicaid members and support our provider partners, we need appropriate resources” Frey said.

Dr. James Leonard, CEO of Health Alliance, a health plan serving central Illinois, cited the state's budget problems as the reason his plan left the Medicaid managed-care program at the end of 2016. “Financial losses from the Medicaid managed-care business line are not sustainable, and we expect no significant change in the situation,” he said in a written statement.

A spokesman for the Illinois Department of Healthcare and Family Services, the state Medicaid agency, did not respond to a request for comment on the back-pay claims.

Rauner administration officials hope the new contracts and consolidation of plans will result in increased efficiencies and lower overall costs for the state. They want to strengthen incentives for plans and providers to coordinate care for patients.

“A greater focus on prevention and enhanced care coordination, and offering services that are evidence-based and data-driven, will improve healthcare delivery while ensuring sustainable program costs,” said John Hoffman, a spokesman for the Illinois Department of Healthcare and Family Services.

Nationally, the plans that are best at managing care for Medicaid patients are those that effectively coordinate their care, said Robert Saunders, an associate vice president at the National Committee for Quality Assurance. His company has annually ranked plans based on the quality of their services for more than decade.

But Illinois' Medicaid plans haven't been doing well on care coordination, some providers say. There has been little effort to ensure patients are taking their medications or have transportation to appointments. And plans haven't done a good job of keeping primary care providers informed about their patients' specialty care.

“The secret sauce of managed care is supposed to be care management,” said Dr. John Jay Shannon, CEO of the Cook County Health & Hospitals System based in Chicago. “Certain plans attempted to do it on the cheap using phone banks to make the occasional call, instead of a more proactive approach.”

His system's Medicaid managed-care plan, CountyCare, relies on a face-to-face strategy with a care manager meeting with patients to discuss the care they need.

Fallon Health, a Massachusetts-based plan that the NCQA ranks as one of the nation's top Medicaid plans, uses predictive modeling to identify beneficiaries who are overusing emergency departments. The plan connects those patients with a care coordinator, said Dr. Thomas Ebert, the plan's chief medical officer.

As the Rauner administration moves forward in revamping the Illinois Medicaid managed-care program, providers are concerned that the administration hasn't learned the lessons about why the previous program had so many problems.

Scott Kiriakos, senior vice president for clinical integration for Memorial Health System based in Springfield, Ill., said the governor's timetable is far too ambitious to ensure a smooth rollout.

“There isn't the necessary amount of time to do the preparation that must occur,” Kiriakos said. “The governor's proposed program is even more ambitious than the last one. We're concerned we're going to recreate the same administrative issues we had the first time around.”