|
|
|
Hoping for
Medicaid Hikes
Diminishing number of providers learn that, with unprofitable services,
you can't ‘make it up on volume'
|
Business New Haven
3/9/1998
By: Lori Green
|
By next month, when Oxford Health Plan will have closed the doors of its Connecticut Medicaid program, seven of the eight HMOs currently serving the state's low-income population will still be left standing.
But for how long?
Citing substantial losses, Oxford Health informed the state last year that it intended to sell off its Medicaid operation as soon as possible. The company is finding, however, that getting out of the Medicaid business may be a lot harder than it was to get in.
Some legislators are accusing Oxford of trying to profit from the sale its Medicaid unit to Meriden-based HealthRight Inc. by unloading its Medicaid clients onto a poorly run plan. HealthRight serves only Medicaid clients, and although financial gains have not yet accrued, the company claims that its members are satisfied with their care and that member retention is high.
According to Oxford's new CEO, Norman Payson, M.D., participation in government programs will likely be “de-emphasized and not regarded as central to our business,” and that the company would focus on its commercial markets. Payson's turnaround strategy of “putting efforts where you are doing well and downsizing losses where you aren't” portends Oxford's withdrawal from New York and New Jersey Medicaid markets in the near future.
“Losses in Medicaid have been posted by all the plans,” says Sylvia Kelly, vice president and executive director of Medicaid Programs at Healthchoice of Connecticut, a Farmington-based HMO that merged with Yale Preferred Health last month.
“We're waiting for April when the state plans to announce the new rates being offered,” Kelly says. “Also, we are hoping to be able to lock in members to one-year contracts with plans, which will help reduce some administrative costs. They can still have a 90-day 'look-see' period in which they can change, but if lock-in is phased in, it will make it easier for members and plans to have consistency.”
Successful managed care delivery of Medicaid benefits is something both the state and the bidding HMOs seem to want. Returning to the “old way” is no longer possible. In fact, the galloping rate of change that continues to re-vamp the health care system has produced a kind of long-term memory loss across the industry.
“I think the managed-care model of providing Medicaid services can work providing that the rates are there,” says Keith Stover, spokesman for the Association of Connecticut HMOs. “The Rowland administration is being responsive on the issue and we are all committed to making it work.”
If you're an HMO, the Medicaid market looks fairly appetizing at first blush. It's funded annually to the tune of more than $1.9 billion - 50 percent coming from the federal government in matched funds, and the rest from an array of state tax revenues.
The largest single appropriation in the Medicaid budget for FY 1997-98 is $347 million, representing contract dollars going to managed care health plans. Additional funds, such as the $10 million for launching the HUSKY plan, are expected to be added to the Medicaid pot when HUSKY comes on line later this year, providing health care coverage for nearly 25,000 uninsured children across the state. The Clinton administration has earmarked $24 billion in funds for the Children's Health Insurance Program, with $42 million recently released to Colorado to expand its managed-care system for low-income children.
The catch is that the cost of good health care can be reduced only so much before it becomes poor health care, or even negligent and therefore risky. That's why HMOs, particularly for-profit enterprises like Oxford, appear unwilling to absorb losses from their Medicaid business, even while other market segments are growing. If rates do not rise sufficiently to entice the remaining HMOs to stay in the market, can two or three survivors win on volume?
Says Stover: “There is a point at which rates are so inadequate that volume won't make up for it. If you lose money on covering ten lives, you will lose even more money by covering 30,000 lives.”
Stover believes that aside from the economics, managed care's emphasis on the role of primary care will best serve the quality and access needs of the Medicaid population.
Oxford decided that it wasn't worth fighting the yearly Medicaid rate battle. Of course, they have more pressing matters to attend to than trying to figure out how to deliver good quality care to those with the least ability to pay - such as how to pay their own astronomical bills, patch things up with the physicians networks, fix computers and line up further debt financing for a quick recovery on the balance sheet.
|
Go FirstGo PreviousGo
NextGo LastGo
to Index
|
|
