DSS outlines options to move HUSKY away from capitation – or not

At yesterday’s Medicaid Care Management Oversight Council (formerly known as the Medicaid Managed Care Council), DSS outlined three policy options to restructure HUSKY’s financing. The options were a response to direction in the latest budget to move HUSKY from a fully insured, capitated system to a self-insured, ASO model; the budget included approximately $75 million this year in savings from the switch. The options include a non-risk ASO model using the current Medicaid provider network – similar to the successful Behavioral Health Partnership, a non-risk ASO model using the current HMO provider networks, or continuing the current capitated managed care arrangement with the tweak of risk corridors -- essentially limiting potential profits and losses by the HMOs. The last, most regressive option, appears to be DSS’ favorite.

Advocates pointed out that, while the current Medicaid provider network is admittedly inadequate, when dental care and behavioral health services were carved out to non-risk arrangements, the number of participating providers increased significantly. Advocates pointed out that the HMOs in this program have never really been at financial risk -- they have consistently received whatever they ask for in negotiations, largely because of a lack of oversight and extreme aversion to re-bidding. Advocates also noted that while DSS considers leveling the playing field and paying all providers equal rates in an ASO arrangement as a disadvantage (rates for a few providers might decrease slightly), it is probable that providers would welcome a system that is more fair. When you are being underpaid, it is some comfort to know that at least everyone else is in the same situation. Other advantages to the non-risk ASO models include improved transparency, accountability, and a better ability to provide incentives for quality care directly to the providers who are most directly connected to care. Advocates also pointed out that DSS neglected to consider potential savings from re-bidding the contracts to bring in plans with larger provider panels and lower costs through competition. All of DSS’ options include negotiating with the same three companies that now participate in HUSKY and Charter Oak. Expanding the potential number of competitors could significantly improve the state’s position in those negotiations, save tax dollars, support accountability, and expand access to care for families. The reason for not re-bidding has always been administrative burden on DSS and timing – they don’t have time to capture the savings. Neither of those reasons applies now.

DSS also strongly recommended using the same payment structure for all Medicaid programs – for HUSKY, ABD (aged, blind and disabled) and LIA (low-income adults). This decision will cover at least $4.5 billion/year in health coverage for over half a million state residents. Council members were clear that this is a very large, very important decision that should not be rushed into, despite DSS’ concerns that they will not meet the savings targets in the budget negotiated by the Governor and legislature. A committee of Council members will meet with DSS to explore the options and report back next month.

At the meeting, we neglected to thank DSS for outlining options to the Council and soliciting our input before a decision has been made. This is a welcome change for the department and they should have been recognized for it. I regret missing that.
Ellen Andrews