Kaiser Health News is a national health policy news service. It is an editorially independent program of the Henry J. Kaiser Family Foundation which is not affiliated with Kaiser Permanente.
Georgia bill aims to limit profits of Medicaid managed-care companies
ATLANTA — Georgia lawmakers will consider a bill that could force the state’s Medicaid managed-care insurers to repay millions of dollars if their spending on medical care doesn’t reach a certain threshold.
Tucked inside the legislation is a provision that would require the Medicaid managed-care companies to refund payments to the state if they don’t spend enough on medical care and quality improvements for patients.
Georgia Health News and KHN reported in September that Georgia was one of only a few states that doesn’t mandate a minimum level of medical spending for its Medicaid insurers.
Each year, Georgia pays three insurance companies — CareSource, Peach State Health Plan, and Amerigroup — a total of more than $4 billion to run the federal-state health insurance program for low-income residents and people with disabilities. For 2019 and 2020, the companies’ combined profits averaged $189 million per year, according to insurer filings reported by the National Association of Insurance Commissioners.
“Instead of ensuring adequate health care networks for Georgia’s children, Georgians with disabilities, and Georgians in nursing facilities, hundreds of millions of dollars go instead to the Georgia [insurers’] bottom lines,” said Roland Behm, a board member for the Georgia chapter of the American Foundation for Suicide Prevention.
Behm, who advised lawmakers on the bill, said the KHN and Georgia Health News article helped bring the issue to the attention of legislators crafting the bill.
Georgia is among more than 40 states that have turned to managed-care companies to run their Medicaid programs — and ostensibly control costs. According to an August report from the U.S. Department of Health and Human Services’ Office of Inspector General, 36 of those states and the District of Columbia set a benchmark “medical loss ratio” for the minimum spending by insurers on medical care. Besides Georgia, the report said, the five states not requiring a managed-care spending threshold were Kansas, Rhode Island, Tennessee, Texas, and Wisconsin.
Republican state Rep. Todd Jones, a co-sponsor of the new bill, told KHN that Georgia lawmakers should establish a strong benchmark for insurers to meet. “We should look at what other states are doing,” he said.
Most states with a spending requirement set that ratio at a minimum of 85% of premium dollars that insurers are paid. So when a Medicaid insurer spends less than that on medical care and quality improvements, it must return money to the government.
The Georgia bill also calls for setting the threshold at 85%. If the bill is approved, the Medicaid insurers would face the medical spending requirement in 2023.
If the benchmark had been in place in recent years, it could have forced a recoupment from the Peach State company, which has the largest Georgia Medicaid enrollment of the three insurers. State documents show it failed to reach the 85% mark from 2018 to 2020, KHN previously reported.
Andy Schneider, a research professor at Georgetown University’s Center for Children and Families, called the 85% mark “a win for taxpayers, for Medicaid providers, and for Medicaid beneficiaries.” He also said it would be more than fair to the Medicaid insurers, which could keep 15% of what the state pays them for administrative costs and profit.
Because Ralston is the lead sponsor of the bill in the House, it’s expected to pass that chamber.
But the insurance industry likely will work to remove the medical spending provision.
An industry official, Jesse Weathington, executive director of the Georgia Quality Healthcare Association trade group, declined to comment on the legislation.
Fiona Roberts, a spokesperson for the state Department of Community Health, which oversees the Medicaid program, said the agency needs time to review the measure before commenting on it.
The main provisions of the bill require insurers to provide coverage for mental health care or substance use treatment at the same level as other physical health needs.
The legislation would provide education loan support for people training in the fields of mental health and substance use disorders and seek to expand behavioral health services for children. It would also facilitate “assisted outpatient treatment” — when a judge could order a person with a serious mental illness to follow a court-ordered treatment plan in the community.
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