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Stakes high for Medicaid transition

New Hampshire Union Leader

December 07. 2013 7:45PM
Debbie Magee, a N.H. Healthy Families program coordinator, is seen talking to clients during a tour of the new Bedford call center by Jay Gonzales, Healthy Families president and CEO, on Thursday. Healthy Families is one of three managed care companies now running Medicaid in the state. (Thomas Roy/Union Leader)

Debbie Magee, a N.H. Healthy Families program coordinator, is seen talking to clients during a tour of the Bedford call center by Jay Gonzales, Healthy Families president and CEO, on Thursday. Healthy Families is one of three managed care companies now running Medicare in the state. Thomas Roy/Union Leader

BEDFORD - Employees at the newly opened N.H. Healthy Families call center in Bedford started work Monday, expecting to field calls from Medicaid clients anxious to learn more about how their health care would be handled now that the state has turned the program over to for-profit, managed care companies.

They didn't expect to defuse a potentially dangerous situation.

"A call came in on the first hour of the second day from someone who said they had a gun and wanted to hurt someone," said Jay Gonzales, president and CEO of N.H. Healthy Families, one of three companies that won the right to manage health care for the state's Medicaid recipients in a transition that went live Dec. 1.

Gonzales said the call center's response, which defused the situation and helped the caller get the mental health care he needed, is one example of how managed care can save the state millions of dollars in Medicaid costs, while at the same time improving outcomes for Medicaid recipients.

The state Legislature is so confident the move will save money, it has already reduced the state contribution to Medicaid by $16 million and hopes to save as much as $45 million in the current two-year budget.

There's a lot riding on the transition of Medicaid in New Hampshire from a "fee-for-service" program managed by employees in the Department of Health and Human Services to an HMO-style program run by for-profit companies. The stakes are highest for the 130,000 low-income individuals who meet the eligibility requirements for the subsidized health-care program, with costs split between the state and federal government.

But every New Hampshire taxpayer has an interest in what amounts to the largest contract in state history, worth $2.2 billion over the next three years, and the impact it could have on one of the state's biggest expenses.

The state's contribution to Medicaid from the General Fund ranges from $600 million to $800 million each year, according to Lisabritt Solsky, deputy Medicaid director in the Department of Health and Human Services. According to Solsky, the state has already realized savings from the conversion in two ways.

"First, when the budget was written, there was an arbitrary assessment of what the Legislature wanted in savings, and they just cut that out of our appropriation, so we now have to manage within that amount," she said. "The other piece is that we now have a level of budget predictability that we haven't enjoyed in the past. By going to care management, if the caseload stays where it has been, we know exactly what we will have to pay each month."

Unrealistic expectations?

The expectation of savings is based in part on what happened in the other 47 states, many of which switched to managed care for Medicaid years ago. With New Hampshire's conversion, Alaska and Wyoming are now the only holdouts.

New Hampshire will pay each of the three managed care companies a fixed amount per patient or "member," based on a variety of factors, including recent claims history.

"It's a per-member, per-month rate that, in the words of federal law, has to be actuarially sound," Solsky said. "That means it has to be an amount of money that is adequate to meet the needs of that member."

If the managed care company spends less, it keeps the savings as profit. Conversely, Solsky said, "If they spend more, they can't come back and ask us for more money."

Opponents of the conversion to managed care say the system creates a bias against authorizing procedures or tests, so that more money falls to the bottom line of the managed care companies.

"That would have been a fair assessment of the 1980s- or 1990s-style HMO," said Solsky, "but there are a tremendous number of checks and balances now that are written into the law, particularly for Medicaid. Our contract has some of the most stringent quality measures and reporting requirements of any contract in the country. So we are holding them accountable to improve the health status of the members."

Deb Fournier is a policy analyst at the Fiscal Policy Institute in Concord, which represents the interests of the state's low-income population in the Legislature. She says budget writers overestimated the amount of savings to be realized from the Medicaid conversion to managed care, at least in the first few years.

"We pointed out that the savings that were imagined would not be realized in the short-term," she said. "Savings might be realized five and 10 years out, but expecting a managed care system to immediately produce savings seems optimistic to us."

"High-touch" operations

Fournier said managed care is not inherently good or bad. It depends on how the companies operate and how they are funded. "It remains to be seen whether or not these rates are sufficient to ensure that folks get the access to the services they need," she said. "One week into it is too soon."

Solsky points out that the state used a lot of the tools of managed care when it ran the program, and didn't just pay bills as they arrived from providers. "We did prior authorization, so it wasn't as if the fee for service program was unmanaged," she said, "but now we are going to a highly managed environment."

She described the managed care companies as "high touch."

"They do a lot more coordination of care and have a very integrated, whole-person management philosophy," she said. "We are buying the capability for that high-touch care coordination and the whole-person model. They have to cover at a minimum what we did, and they can do more things, be a little more nimble and flexible in the benefit arena."

One plan offers a child safety seat for members who complete the requested number of prenatal appointments. Another offers a cash-rewards program to encourage preventative medicine.

Gonzales said managed care companies can offer more services, improve outcomes and save money by eliminating waste and encouraging healthier behaviors.

"A lot happens in the delivery of health care, particularly with Medicaid, that is wasteful," he said during an interview at the new Healthy Families call center on Executive Park Drive Bedford, which has a staff of 46, including several registered nurses. N.H. Healthy Families is the New Hampshire subsidiary of Centene Corp., a national company with health care plans in 19 states.

So far, so good

Healthy Families has enrolled 35,000 of the 104,000 Medicaid clients in a managed care plan as of Dec. 1 and has created a provider network that includes all 26 of the state's hospitals.

The other two companies awarded a state contract - Meridian Health Plan, which now operates in five states, and Well Sense Health Plan, affiliated with the Boston Medical Center - were unable to immediately answer inquiries about their enrollment, provider network or call center location.

The relatively smooth launch of managed care coverage for Medicaid on Dec. 1 was obscured by the ongoing debate in Concord over expanding Medicaid under Obamacare to embrace another 58,000 New Hampshire residents, which is an entirely different matter.

Providers have some concerns (see related story), but are withholding judgment for now.

"We have not experienced anything out of the ordinary or anything unexpected," Solsky said. "The call volume has been light. We were fully staffed and ready to take calls on Sunday, and we got none. We're already getting some good news stories from out in the community."

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