Medicaid to get new managed-care rules

HARTSVILLE, Tenn. — Lynda Douglas thought she had a deal with Tennessee. She would adopt and love a tiny, unwanted, profoundly disabled girl named Charla. The private insurance companies that run Tennessee’s Medicaid program would cover Charla’s health care.

Douglas doesn’t think the state and its contractors have held up their end. In recent years, she says, she has fought to secure essential care for Charla.

“If you have special-needs children, you would not want to be taking care of these children and be harassed like this,” Douglas said. “This is not right.”

Across the country, state Medicaid programs, which operate with large federal contributions, have outsourced most of their care management to insurance companies like the ones in Tennessee. The companies cover poor and disabled Medicaid members in return for fixed payments from taxpayers.

That helps government budgets but sets up a potential conflict of interest: The less care these companies deliver, the more money they make. Nationwide, such firms had operating profits of $2.4 billion last year, according to regulatory data compiled by Mark Farrah Associates and analyzed by Kaiser Health News.

In an attempt to manage that tension, Washington regulators are about to initiate the biggest overhaul of Medicaid managed-care rules in a decade. Prompted by the growth of Medicaid outsourcing and concerns about access to care, the regulations are expected to limit profits and set stricter requirements for quality of care and the size of doctor networks.

“We want the enrollees to have timely access to integrated, high-quality care,” James Golden, who oversees Medicaid managed care for the Department of Health and Human Services, told a group of insurance executives in February.

Tennessee Medicaid contractors — operated by BlueCross BlueShield of Tennessee, UnitedHealthcare and Anthem — are among the most profitable Medicaid plans in the country, according to data from Milliman, a consulting firm.

State officials point to data on quality and survey results as evidence that the companies are doing a good job while allowing the state to spend far less on Medicaid than predicted. In a survey last year, more than 90 percent of customers using TennCare, as the program is known, said they were very satisfied or somewhat satisfied, officials note.

TennCare Director Darin Gordon worries that new federal rules could hinder states from improving Medicaid quality while controlling costs. “Don’t hamstring us,” he said.

But doctors and patient advocates say state savings and insurer profits come at the price of inadequate physician networks, long waits for care and denials of treatment. Answering another question in the survey, 30 percent of adults said the quality of their TennCare care last year was fair or poor.

More than half of Medicaid beneficiaries in the nation now receive coverage from managed-care companies. That shift helped prompt inquiries by the HHS inspector general last year that found widely varying state requirements for access to doctors and poor information for members on where to find them.

Policy experts believe that the proposed rules, expected soon, will set stricter standards.

In Tennessee, where TennCare’s member-per-doctor ratio for primary care is one of the worst among states that have such rules, views diverge sharply on whether those rules are necessary. Many, like Lynda Douglas, say the system is far from adequate.

Douglas, 69, knew that she wanted to adopt Charla a decade ago, as soon as she took the girl for foster care from the state. Charla’s problems include cerebral palsy, a badly curved spine and frequent seizures. She is 16, cannot speak, weighs less than 80 pounds and loves Barney the dinosaur.

Douglas, who lives about an hour east of Nashville, was grateful that TennCare contractors sent daytime nurses to monitor Charla’s seizures and maintain a tube that delivers medicine or nourishment eight times a day.

Then, more than a year ago, UnitedHealthcare reduced the nursing to one hour a day, even though Charla’s condition hadn’t improved. Douglas protested with the help of the Tennessee Justice Center and a pro bono lawyer and won. But TennCare appealed. It took two more rounds of adjudication before a judge ruled in Douglas’s favor late last year.

The managed-care companies “are making a mint down here,” Douglas said. “They’re getting rich at the expense of the kids. This is not right.”

UnitedHealthcare made an operating profit of $236 million last year on revenue of $2.8 billion in its Tennessee Medicaid business, according to state filings. Anthem’s operating profit for TennCare came to $53 million on revenue of $946 million. BlueCross’s operating profit for TennCare was $121 million on revenue of $1.8 billion. Those results do not include expenses for taxes, depreciation and other items not directly related to health coverage.

“Our care teams worked with the family and with 1/8Charla Douglas’s3/8 physicians and other providers to assure that her services were appropriate,” UnitedHealthcare said in a statement. The plan followed TennCare’s contract and care guidelines, it said.

Gordon, the TennCare director, rejects suggestions that managed-care networks are inadequate or that contractors deny needed care.

TennCare members sometimes have trouble seeing specialists, but so do patients in commercial plans, he said. Like many state Medicaid directors, he wonders how HHS can publish network rules for 50 states with widely varying geographies and health systems.

He also doesn’t accept that Medicaid plans need rules that limit profits and force them to spend a minimum portion of revenue on medical care. Written the wrong way, the standard could discourage spending on coordinators who improve care quality at decreased cost, he said.

“Yeah, we’re a little concerned,” he said. “There are some things that we think may have adverse effects.”

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