ANNAPOLIS – Maryland’s managed care Medicaid program is crumbling, and the experts all agree why: there isn’t money in the program to cover insurers’ administrative costs, pay providers enough to keep them in the system and support a pool of enrollees grown well beyond state estimates.
The providers, insurers, legislators and health department officials who have a role in maintaining the system recognize potential solutions but can’t agree on which ones to implement and when.
Most agree HealthChoice is a better care program than the alternative “fee-for-service” system, under which providers are paid directly by the state. Unlike fee-for-service, HealthChoice keeps doctors and patients together and gives clients a better preventive health education.
The most pressing issue is increasing provider reimbursements, but it has the most complicated solution.
Federal rules bind Maryland’s Medicaid reimbursement rates to 1997 figures, which, most agree, were even then well out of date.
As a result, hospitals and physicians lose money on HealthChoice patients, and many are forced to abandon the program to keep their practices solvent. To change the payment rates, the General Assembly must legislate an amendment to the contract, which must then be federally approved.
Insurance companies want the state to pay for the increase, but the state can’t afford what it’s paying now. Medicaid deficits are projected to run $457 million deep by 2003, and a lukewarm economy has Gov. Parris N. Glendening reluctant to make drastic budget changes.
The alternative to boosting program funds is to cut Medicaid costs and funnel savings into provider payments and administrative costs. Physicians’ groups and health officials have different ideas on how to accomplish this.
Officials at the Maryland Department of Health and Mental Hygiene want to work with managed care groups to trim administrative expenses. Debbie Chang, the department’s deputy secretary, says she’s been meeting with insurance groups to determine where those cuts may be made.
Chang estimates managed care administrative costs swallow between 8 and 15 percent of their Medicaid budgets, adding, “their administrative costs have profit in them.”
Insurers have testified before two House committees this fall that they’re not turning a profit. HealthChoice insurers, on average, pay providers more than what the state would under fee-for-service and must cover their administrative expenses with out-of-pocket funds.
“Administrative costs were not factored into the original plan six years ago,” a representative from Priority Partners, one of the largest HealthChoice insurers, told the House Environmental Matters Committee in September.
Chang isn’t sure that’s enough to explain the insurers’ expenses.
“Managed care companies are coming in with higher-than-expected costs,” she said. “We need to know why, and whether they’re legitimate.”
The department is also recommending comprehensive and independent audits of managed care insurers, Chang says. So far all the department’s MCO information has been self-reported, but she said she plans for the DHMH to conduct its own audits this spring.
Meanwhile, providers and budget experts say the state can reduce costs more immediately by reducing HealthChoice coverage.
“Maryland covers populations it doesn’t have to under federal law,” said David Romans, a legislative budget analyst.
Maryland Medicaid’s “optional services” are supported by federal payments but add to the overall size of the state’s Medicaid budget.
“They have created unrealistic expectations in the minds of their constituents,” said Christy Carton, office manager at Medica, an Easton-based obstetrics and gynecology practice.
Carton leads a group of Easton health care providers who have been meeting since last spring to discuss HealthChoice problems.
She says the state should seriously consider dropping benefits like occupational therapy and speech therapy from the HealthChoice program in order to increase payments to primary care providers.
“I think the solution is to be realistic. Realistic means you’re gonna have to pay the providers to provide services,” Carton said. “It may mean you have to decrease the amount of services you provide. . . .
“To tell somebody they have health insurance but they can’t find a referral doctor?” Carton said. “(The state is) not able to fulfill the contract they have implicit with these people.”
HealthChoice officials say the state already cut most optional services in the early 1990s.
“There are not a lot of optional services we could cut anymore,” said Susan Tucker, executive director of the Office of Health Services for Medicaid. The bulk of the state’s Medicaid services go to children, she said, and can’t be cut.
About 300,000 of the 440,000 residents enrolled in Medicaid are eligible for children’s services, Tucker said.
All parties agree something must be done quickly to keep managed care afloat. Already, provider losses have depleted the network of physicians on the Eastern Shore. Insurance group losses are threatening to leave Garrett County without managed care for new members.
HealthChoice players have met before the House several times this year. Their message is always the same: It comes down to money.