Medicaid blues
“T hat’s all I have to say about that—I have to go bury the dead,” undertaker Stephen Holland said after listing his grievances with his state’s Medicaid politics early one Friday morning in June. Holland is one of a handful of white Democrats left in Mississippi’s House of Representatives, and he helped shape the past 20 years of Medicaid history when he chaired the panel with jurisdiction over the program. Reliving that history rattled him.
Mississippi Deltans in conversation often link death and Medicaid. A 26-year-old barber in B.B. King’s hometown of Indianola, who asked to be identified as Calvin Klein in case he gets tended to by a doctor who reads Modern Healthcare, sang his mantra: “If you ain’t bleeding, you ain’t dying, and if you ain’t dying, you ain’t trying to see the doctor.”
Arguably, this feeling has become a fact that drives the Delta’s health crisis. Medicaid is the foundation and structure of its healthcare system, but there are so many gaps for people to fall through that many don’t believe in it. If you are not disabled or pregnant, you can’t get coverage unless you have a young child or become pregnant. Then you have to make less than $5,000 per year as part of a family of three. Poor Deltans don’t trust much else about the system, including the hospitals and doctors who run it.
And hospitals and clinics often don’t see the illnesses of this impoverished region—consistently rated by the Robert Wood Johnson Foundation as the sickest in the state and one of the sickest in the nation—until they have blown up. HIV and Stage 3 AIDS infection rates are among the highest in the country, according to the National Institutes of Health. The state’s health data system shows the Delta’s outsize rates of hypertension, heart disease, chronic liver disease, diabetes and preterm births.
The health crisis has led to an existential crisis for the Medicaid industry, with battle lines drawn over saving money and finding profit. Insurers and hospitals are fighting over billions of dollars Medicaid has yielded for managed-care plans since 2011, even as politicians say they can’t afford to cover any more of the state’s poor.
Medicaid duels
Like most states, Mississippi dipped its toes into managed care in the 1990s. By the late 2000s, the state had started to bid out about 20% of its Medicaid population to private companies.
In 2011, the state contracted with UnitedHealthcare and Centene
Corp., which does business as Magnolia Health in Mississippi. That first year, the two insurers combined had just over 50,000 people on their rolls and grossed nearly
$88 million after paying claims. By
2014 they had 186,000 enrollees and grossed more than $200 million.
Last year, nearly 600,000 people—70% of the Medicaid population—were on the rolls, and they brought in $235 million.
These companies have grossed more than $1.1 billion since 2011, not including their administrative costs, according to state insurance filings. The state's Medicaid program costs over $6 billion annually, about $4.5 billion of which is paid by the federal government. More than a quarter of Mississippi’s 3 million residents are on Medicaid even though it imposes some of the country’s strictest enrollment limits.
Mississippi’s story mirrors the national push to managed care. In 2010, roughly 71% of people on Medicaid were in a managed-care plan—jumping to 81% in 2016, according to the Kaiser Family Foundation. At the end of 2017, Centene led Medicaid insurers nationally with a 12% market share, followed by UnitedHealthcare at 11%, according to analysis by Mark Farrah Associates.
While insurers in Mississippi profited, hospitals felt left behind, especially since the GOP-led Legislature and governor refused to expand Medicaid coverage under the Affordable Care Act. They wanted in.
Spearheaded by the state’s hospital association, more than 60 hospitals came together in 2017 to form Mississippi True, a Medicaid provider-sponsored insurance plan.
“Lack of (Medicaid) expansion was the brainchild for the provider-sponsored plan,” said Tim Moore, CEO of the Mississippi Hospital Association.
The hospital case
Scott Christensen moved to Greenville, Miss., five years ago to take over Delta Regional Medical Center.
Year over year, he watched Delta Regional’s financials decline. Total operating revenue dropped $5.6 million from fiscal 2016 to 2017, according to audited financial statements. Income from operations sank by $3.1 million. The hospital wrote off close to $1 million in charity care.
“Self-pay,” which often means no pay, and Medicaid each make up about 26% of Delta Regional’s payments. Adjusted on a per-capita basis for population, Washington County, where Delta Regional sits, ranks top in the state in Medicaid patients. Medicare accounts for a little under 50% of the payer mix. The 215-bed, Level 3 trauma center resides in a town of just 30,000, but its emergency department gets 50,000 visits a year.
The burgeoning Medicaid managed-care population brought pre-authorizations and denials and tighter margins. Christensen saw a way out with the creation of Mississippi True. He took the risk, contributing $5 million, the largest single investment in the company’s initial $40 million capital fund.
“Capital is really tight for us and we invested $5 million into the plan to get it going,” he said. “But the board here, and the doctors, everyone here, agreed it was legit.”
The clash
Early in 2017, the state’s Division of Medicaid issued a request for proposals for the next batch of five-year Medicaid contracts. In addition to UnitedHealthcare and Centene, the division would add a third plan.
Enter Mississippi True.
Providers worked with the Virginia-based consulting firm Evolent Health on the structure of their HMO. Evolent