Medicaid Council update

Financial numbers released at Friday’s Medicaid Care Management Oversight Council meeting highlighted the need for more sophisticated accountability or, even better, moving the program to a self-insured ASO model and removing any HMO incentives to game the system. The Council first heard about Aetna’s underwhelming and vague performance improvement programs; Aetna’s quality performance for members varied between the 25th and 90th percentiles among states. No numbers were given to quantify any efforts by Aetna to improve members’ health. In several areas, it was not clear that Aetna’s programs were making any difference at all given considerable efforts by public health programs such as Healthy Start and community health centers.

Interestingly, Aetna was the only plan among the three HUSKY HMOs to make a profit on every program – HUSKY A, B and Charter Oak – in both 2009 and 2010. Aetna was paid more per person than either of their competitors for each program in each year, in one case 31% higher, and spent less on medical care than any other HMO or program in both years. The three Mercer actuaries at the meeting (yes, three actuaries at the meeting) stated that they build in a 1% profit margin into their rate estimates – that would be about $8 million/year for all three HMOs. Aetna alone made $14.7 million in profits on HUSKY and Charter Oak in 2009. In fairness, their profits were down to only $5.3 million on HUSKY A in FY 2010, but both AmeriChoice and CHN reported losing money last year. Aetna’s unique profit experience in the program raises concerns about adverse selection, especially given that the plans were given essentially unlimited authorization for marketing during the time frame. From the poor performance measures described at the beginning of the meeting, Aetna’s profits are unlikely to be due to keeping members healthier than the other plans.

DSS was then questioned about their decision in August, retroactive to July, to allow the HMOs to reduce provider payments below Medicaid-fee-for-service levels. The Council only learned of the policy change at last month’s meeting. DSS claims they don’t believe the policy change will impact access to care and that they are monitoring it. Concerns were raised that it is not reasonable to assert that reductions in rates will not reduce access in a program that has struggled with poor provider participation over most of its history. Advocates also questioned relying on DSS’ inadequate monitoring, which even if it can pick up a reduction in access, would not find it until months or years have passed, and serious damage has been done.

In response to the rate reduction policy change, each of the HMOs reported that they have no intention and have not reduced provider rates below the Medicaid fee-for-service floor. However, this advocate reported that I have seen a letter to a provider citing the new policy and reducing rates to 70% of Medicaid fee-for-service levels.

All these concerns would be erased if the program moved to an ASO-model as was included in the latest budget passed by the General Assembly and signed by the Governor projected to save the state $79 million this year. Advocates, policymakers and the plans could get back to working on improving care in the program.
Ellen Andrews