A dif­fer­ent kind of Med­i­caid ex­pan­sion

Med­i­caid man­aged-care in­sur­ers pre­pare to of­fer plans on in­sur­ance ex­changes, test­ing whether more Amer­i­cans are ready for econ­omy-class health cov­er­age

Modern Healthcare - - COVER STORY - —with Har­ris Meyer M.P. McQueen is a free­lance writer based in New York.

Agrow­ing num­ber of Med­i­caid man­aged-care in­sur­ers have re­ceived ap­proval from state reg­u­la­tors and state in­sur­ance ex­change of­fi­cials to en­roll non-Med­i­caid mem­bers on the ex­changes in Oc­to­ber, mark­ing the first time th­ese spe­cial­ized in­sur­ers will of­fer health cov­er­age to the gen­eral pub­lic.

Th­ese in­sur­ers are rolling out new plans that meet the ben­e­fit and other re­quire­ments of the ex­changes, which were es­tab­lished by the Pa­tient Pro­tec­tion and Af­ford­able Care Act. Some also will be sell­ing non-Med­i­caid plans out­side the ex­changes. They are ex­pected to of­fer com­pet­i­tive pre­mi­ums given their tra­di­tion­ally lower provider-re­im­burse­ment rates. Ex­perts say that could drive down pre­mi­ums in the ex­changes over­all. Th­ese com­pa­nies also are ex­pe­ri­enced in co­or­di­nat­ing care for lower-in­come en­rollees and those with chronic con­di­tions.

The en­try of th­ese in­sur­ers into the ex­change mar­ket will test whether a broader seg­ment of Amer­i­cans will ac­cept the econ­omy-class health cov­er­age that Med­i­caid ben­e­fi­cia­ries have got­ten used to.

Med­i­caid man­aged-care com­pa­nies al­ready have re­ceived ap­proval to serve ex­change en­rollees in Cal­i­for­nia, New Mex­ico, New York, Ore­gon and Wash­ing­ton, among oth­ers. In Cal­i­for­nia, Med­i­caid in­sur­ers par­tic­i­pat­ing in the ex­change in­clude Alameda Al­liance for Health, Con­tra Costa Health Ser­vices, Molina Health­care, L.A. Care Health Plan, Ven­tura County Health Care Plan and Val­ley Health Plan.

In Ore­gon, they in­clude Tril­lium Com­mu­nity Health Plan and Pa­cific Source Health Plans, a com­mer­cial in­surer that runs Med­i­caid man­aged-care plans in Idaho and Mon­tana and plans to par­tic­i­pate in the health ex­changes there, too. In New York, they in­clude Fidelis Care, Affin­ity Health Plan, Health­first and Metro Plus Health Plan. Some of th­ese are for-profit com­pa­nies, and oth­ers are not-for-profit plans formed by safety net hos­pi­tals and com­mu­nity health cen­ters.

Molina Health­care, a pub­licly traded Med- icaid man­aged-care com­pany based in Long Beach, Calif., is ask­ing reg­u­la­tors for ap­proval to of­fer ex­change plans in 2014 in nine of the 10 states where the com­pany op­er­ates Med­i­caid plans: Cal­i­for­nia, Florida, Michi­gan, New Mex­ico, Ohio, Texas, Utah, Wash­ing­ton and Wis­con­sin. In 2015, it ex­pects to of­fer plans on the health ex­change in Illi­nois, where it just started run­ning Med­i­caid plans, a com­pany spokes­woman said.

More con­ti­nu­ity of care

Ma­jor com­mer­cial in­sur­ers that have Med­i­caid man­aged-care units—in­clud­ing Unit­edHealth Group and Aetna, which re­cently ac­quired Med­i­caid man­aged-care provider Coven­try Health Care—did not comment for this ar­ti­cle on their in­ten­tions. An­other big Med­i­caid player, Cen­tene Corp., would not comment ei­ther, al­though a top Cen­tene ex­ec­u­tive made pub­lic re­marks in a con­fer­ence ear­lier this year in­di­cat­ing it is eye­ing the mar­ket be­cause an­nual spend­ing on the ex­changes in the 19 states where the com­pany does busi­ness is ex­pected to reach $50 bil­lion by 2016, ac­cord­ing to a lo­cal busi­ness jour­nal.

Reg­u­la­tors and con­sumer ad­vo­cates, as well as the in­sur­ers them­selves, say the par­tic­i­pa­tion of th­ese Med­i­caid man­aged-care in­sur­ers in the ex­changes will ben­e­fit con­sumers by let­ting them re­main with the same in­surer and provider net­work if their in­come changes and they have to switch be­tween a pri­vate ex­change plan and Med­i­caid. That, they say, will in­crease con­ti­nu­ity of care and re­duce ad­min­is­tra­tive costs.

Un­der the ACA, Amer­i­cans with in­comes from 138% to 400% of the fed­eral poverty level will qual­ify for sub­si­dized pri­vate cov­er­age through the state ex­changes in 2014. Those be­low 138% of poverty will qual­ify for an ex­panded Med­i­caid pro­gram in many states, where many will be served by Med­i­caid man­aged-care plans. Where Med­i­caid man­aged-care in­sur­ers also serve as ex­change in­sur­ers, peo­ple mov­ing be­tween th­ese in­come thresh­olds could stay with the same in­surer and net­work.

“This is po­ten­tially a very pos­i­tive de­vel­op­ment,” said Matt Salo, ex­ec­u­tive di­rec­tor of the National As­so­ci­a­tion of Med­i­caid Di­rec­tors. “By hav­ing Med­i­caid plans start to par­tic­i­pate in the non-Med­i­caid ex­change mar­ket, we will have a way to ad­dress churn is­sues. As peo­ple’s in­come fluc­tu­ates, it will be re­ally im­por­tant that they not be handed off from one health plan to an­other and in­stead stay with the same plan.”

Betsy Imholz, spe­cial projects di­rec­tor at con­sumer ad­vo­cacy group Con­sumers Union, agreed. “Over­all it is a good thing be­cause lines are blur­ring be­tween the Med­i­caid and non-Med­i­caid pop­u­la­tion un­der the Af­ford­able Care Act,” she said.

In ad­di­tion, some ex­perts pre­dict th­ese plans will of­fer ex­change con­sumers lower pre­mi­ums. In New York, for in­stance, Med­i­caid spe­cial­ists Fidelis and Metro Plus came in at the low end for pre­mi­ums in the in­di­vid­ual ex­change mar­ket, with Fidelis of­fer­ing a sil­ver plan for sin­gle adults at $349 a month, the sec­ond-low­est rate.

“If you looked at the ap­proved rates, in gen­eral they are at the lower end com­pared with some of the com­mer­cial plans,” said David Sand­man, se­nior vice pres­i­dent of the New York State Health Foun­da­tion.

But the Med­i­caid in­sur­ers are not al­ways the low­est in ev­ery state and mar­ket. In Port­land, Ore., for ex­am­ple, Tril­lium came in

“It is es­sen­tial that you have com­mu­nity providers. They are nat­u­ral parts of our net­works to­day. We have deep re­la­tion­ships with many of the nav­i­ga­tors and soon-to-be as­sis­tors.”

—Lisa Ru­bino Se­nior vice pres­i­dent of Molina

high­est—$329 a month—for a sil­ver plan for a 40-year-old non­smoker.

Some physi­cians and hos­pi­tals ex­press con­cern that al­low­ing Med­i­caid man­aged-care plans to move into the non-Med­i­caid ex­change mar­ket may drive down pay­ment rates. Providers gen­er­ally re­ceive sig­nif­i­cantly lower fees from Med­i­caid plans than from com­mer­cial plans, though there are no avail­able data on this. The CMS’ Of­fice of the Ac­tu­ary re­ported that in 2009, Med­i­caid pay­ments to physi­cians were about 58% of pri­vate plan pay­ments. Hos­pi­tal and physi­cian groups fear that ex­change plan rates could be driven down near Med­i­caid lev­els, dis­cour­ag­ing providers from serv­ing mil­lions of ex­pected new ex­change en­rollees in 2014 and un­der­min­ing the health­care re­form law.

Anne McLeod, se­nior vice pres­i­dent of the Cal­i­for­nia Hos­pi­tal As­so­ci­a­tion, said Med­i­caid man­aged-care in­sur­ers will be of­fer­ing “a brand new prod­uct in the health ex­change, and the rates need to be ne­go­ti­ated be­tween the hos­pi­tals and health plans. In no way should a Med­i­caid rate come into play be­cause this is a com­pletely new mar­ket­place.” She said Cal­i­for­nia hos­pi­tals al­ready ex­pe­ri­ence a $5.8 bil­lion short­fall from Med­i­caid pa­tients an­nu­ally.

New York hos­pi­tal of­fi­cials also have ex­pressed worries about pay­ment rates fall­ing to Med­i­caid lev­els. The head of the New York ex­change has re­as­sured them that ex­change plan rates will not be based on Med­i­caid rates.

Lisa Ru­bino, a se­nior vice pres­i­dent at Molina, de­clined to dis­cuss her com­pany’s provider com­pen­sa­tion strat­egy in its new ex­change plans, and a num­ber of other Med­i­caid in­sur­ers did not re­turn calls for comment.

Some provider or­ga­ni­za­tions and con­sumer ad­vo­cates also note that Med­i­caid plans gen­er­ally of­fer more limited provider net­works than com­mer­cial plans do, al­though Cal­i­for­nia re­quired Med­i­caid in­sur­ers to en­hance their net­works to par­tic­i­pate in its state-run ex­change. There have been crit­i­cisms in some states that Med­i­caid plans do not of­fer ad­e­quate ac­cess to physi­cians, par­tic­u­larly to spe­cial­ists.

Some Med­i­caid plans de­liver care pri­mar­ily through pub­lic hos­pi­tals and com­mu­nity health clin­ics rather than through a net­work of pri­vate hos­pi­tals and physi­cian of­fices. Molina, for in­stance, serves its Med­i­caid mem­bers through its net­work of pri­mary-care physi­cians, spe­cial­ists and hos­pi­tals as well as through about 25 Molina clin­ics with em­ployed physi­cians that are op­er­ated by a sub­sidiary called Amer­i­can Fam­ily Care in Cal­i­for­nia, Florida, New Mex­ico and Wash­ing­ton state.

Lower-in­come pop­u­la­tions

“We be­lieve (Med­i­caid plans) are well­po­si­tioned to care for the pre­dom­i­nantly lower-in­come pop­u­la­tion that is sub­si­dized be­cause of their his­tory of serv­ing low­in­come pop­u­la­tions and us­ing ex­ist­ing re­la­tion­ships with the safety net providers typ­i­cally ac­cessed by lower-in­come in­di­vid­u­als,” said Joe Moser, in­terim ex­ec­u­tive di­rec­tor of Med­i­caid Health Plans of Amer­ica, a trade as­so­ci­a­tion in Wash­ing­ton.

It re­mains to be seen whether th­ese Med­i­caid-style net­works will ap­peal to non-Med­i­caid con­sumers with rel­a­tively higher in­comes. Open en­roll­ment in the new ex­changes is sched­uled to start Oct. 1 na­tion­ally.

Sand­man said com­mer­cial in­sur­ers are con- cerned that ex­change en­rollees may switch from plans spon­sored by Med­i­caid man­aged-care in­sur­ers to their plans if they face med­i­cal prob­lems and need a broader net­work of providers.

But to keep their pre­mi­ums com­pet­i­tive, the com­mer­cial in­sur­ers sell­ing ex­change plans also are ex­pected to of­fer nar­rower provider net­works than in the past.

Ru­bino said Molina’s 32 years of ex­pe­ri­ence serv­ing low-in­come Amer­i­cans gives it an ad­van­tage in serv­ing ex­change en­rollees, a sig­nif­i­cant per­cent­age of whom will be just above the poverty line. “We are fa­mil­iar with deal­ing with reg­u­la­tors and with build­ing net­works,” she said. “It is es­sen­tial that you have com­mu­nity providers. They are nat­u­ral parts of our net­works to­day. We have deep re­la­tion­ships with many of the nav­i­ga­tors and soon-to-be as­sis­tors,” the com­mu­nity-based or­ga­ni­za­tions charged with help­ing peo­ple sign up for ex­change cov­er­age, Ru­bino said. “We are fa­mil­iar with risk ad­just­ments. I think we have some pretty tremen­dous ad­van­tages.”

A com­pany spokes­woman points out that in Mas­sachusetts, which es­tab­lished a state in­sur­ance ex­change in 2006, some ex­change en­rollees have cho­sen Med­i­caid man­aged­care of­fer­ings based on price, and have been sat­is­fied us­ing their Med­i­caid-like net­work.

Sand­man notes that in New York, Med­i­caid man­aged-care plans have demon­strated a high level of per­for­mance based on National Com­mit­tee for Qual­ity As­sur­ance mea­sures, and have ex­ten­sive provider net­works.

The ex­pan­sion of Med­i­caid man­aged-care

in­sur­ers into the non-Med­i­caid mar­ket holds clear fi­nan­cial prom­ise for th­ese in­sur­ers. Cur­rently, 36 states and the Dis­trict of Columbia have en­rolled some or all of their Med­i­caid pop­u­la­tion in pri­vate plans. Last year, Med­i­caid man­aged-care plans re­ceived $108 bil­lion out of the to­tal $435 bil­lion spent on Med­i­caid na­tion­ally, ac­cord­ing to the Med­i­caid and CHIP Pay­ment and Ac­cess Com­mis­sion. The Con­gres­sional Bud­get Of­fice projects that 7 mil­lion peo­ple will sign up for cov­er­age through the state ex­changes in 2014, and 25 mil­lion will be en­rolled by 2023.

“It is a big growth op­por­tu­nity for them but it’s a game that’s pretty new,” Sand­man said. “The big chal­lenge is what kind of re­im­burse­ment rates the plans will ne­go­ti­ate with the providers. Whether they want to pay rates sim­i­lar to Med­i­caid or more like com­mer­cial rates, and where they will be able to set­tle, we will have to find out.”

Moser sug­gested that not all Med­i­caid man­aged-care com­pa­nies may jump into the ex­change mar­ket, at least ini­tially. “At the end of the day, ex­change par­tic­i­pa­tion is a busi­ness de­ci­sion that each com­pany must make based on mar­ket fac­tors,” he said.

Dr. Jef­frey Cain, pres­i­dent of the Amer­i­can Acad­emy of Fam­ily Physi­cians, ex­pressed guarded sup­port for Med­i­caid in­sur­ers mov­ing into the ex­changes. “Any pro­posal that ex­pands cov­er­age to more in­di­vid­u­als falls un­der the over­ar­ch­ing goal of health­care for all,” he said.

But he added that physi­cians worry about pa­per­work and ad­min­is­tra­tive has­sles in deal­ing with all man­aged-care plans.

Lisa Ru­bino talks to the crowd at a mall in San Bernardino, Calif., at a ‘Get Our Kids Groov­ing’ event in 2012. It was a com­mu­nity event where the com­pany led a free hip-hop dance class to cre­ate aware­ness about be­ing healthy and ac­tive.

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