Dual eligible financing proposals differ from state to state

October 17, 2012 | Anthony Brino – Contributing Writer

PhysBizTech

 

State proposals for new dual eligible financial alignment models are currently being considered by the Centers for Medicare & Medicaid Services (CMS), as part of the agency’s efforts to fix costly and fragmented delivery systems for the roughly 9 million Americans eligible for both Medicare and Medicaid.

Nationwide, annual per capita health spending for dual eligibles is around $16,000, more than twice the costs for the average American. In total, dual eligiblepatients are estimated to cost around $300 billion a year.

Only 10 percent of dual eligibles are currently served through managed care organizations, and budget-strapped state governments are increasingly turning to managed care for dual eligibles. The market for managed care services is expected to grow to between $86 billion and $183 billion with the next five years, the consulting firm Booz & Company has estimated.

How much exactly will be spent is an open question, but some of it depends on the financing model states choose. As a recent Kaiser Family Foundation report explains, there are two models CMS has offered to the states, one a capitated model, with a few variations, and another more traditional fee-for-service model.

In the spring of 2012, 26 states submitted proposals to CMS, asking to test either or both of the models. So far, only Massachusetts’ plan has been approved, with a demonstration using community-based managed care and a global capitated payment model.

Of the 26 states, the Kaiser report found, 21 want to use the demonstration plans for all of their dual eligible population. Massachusetts will focus on people ages 21-64. South Carolina’s plan focuses on seniors who are not in nursing homes, and the proposals of Wisconsin, Missouri and New York focus on people with certain conditions and in certain age groups.

Eighteen states want to test the capitated model, five want to test the managed fee-for-service model, and three — New York, Oklahoma and Washington — want to test both, according to the Kaiser report. For the capitated model, CMS will have to approve a prospective blended rate for Medicare-covered services. The capitated rate plan must also provide upfront savings to both CMS and the state.

Only a few states guessed at what they might save from adopting managed care for dual eligibles, according to Kaiser, and only a few have suggested what they’d do with the potential savings. Arizona said it wants to expand Medicaid benefits, reduce drug co-pays and provide care managers. Colorado wants to reinvest its savings, offering more benefits or expandingprovider incentives. Texas wants to reinvest savings in its long-term care services and support programs.

Half of the states propose sharing savings with insurers and organizations running the managed care organizations and half of the statessaid they would share savings with providers.

Hawaii, Massachusetts, Michigan, Minnesota, Tennessee and Wisconsin will require risk provisions like risk corridors or stop loss provisions, and another six states may require risk corridors or other risksharing arrangements. Only one state, Idaho, requires that the plan assume full risk.

Massachusetts, New Mexico, Oregon, Rhode Island and South Carolina will require plans to include community-based healthcare workers in their integrated care teams.

Massachusetts, North Carolina and Ohio will offer independent long-term services and support coordinators.

 

Link: http://www.physbiztech.com/news/dual-eligible-financing-proposals-differ-state-state

ACO Report Findings: Readmissions Down, Significant Savings for Dual Eligibles

Written by Alyssa Gerace

October 17, 2012

Senior Housing News

Reimbursing healthcare services based on outcomes rather than volume through an Accountable Care Organization (ACO) payment model produced overall savings while reducing rehospitalization rates, found a recent study conducted by the Dartmouth Institute for Health Policy and Clinical Practice. 

The study looked at cost savings generation by the Physician Group Practice Demonstration, a Medicare program run from 2005 to 2010 that closely resembled today’s ACO model with pay-for-performance and shared savings characteristics. 

The PGPD had a value-based payment model which produced annual savings of $114 per Medicare beneficiary, according to study analysis. For dual eligibles, who qualify for both Medicare and Medicaid, the demonstration realized savings of $532 per beneficiary. 

On the rehospitalization side, rates for 30-day medical readmissions decreased 0.67% overall for both populations (Medicare beneficiaries, and dual eligibles) and 1.07% for dual eligibles. 

Surgical readmissions for dual eligibles decreased 2.21% overall.

The findings are “statistically significant,” according to the researchers, because they’re based on an experimental group of nearly a million Medicare, Medicaid, and dual eligibles and a control group consisting of more than 7.5 million beneficiaries. 

“The study shows promise for the new healthcare delivery system reforms,” said Carrie H. Colla, lead author of the study and assistant professor at The Dartmouth Institute for Health Policy and Clinical Practice. “And these reforms should align incentives for payers, providers and patients.”

While the physician groups participating in the PGPD demonstration could receive as much as 80% of the savings they produced, the ACO model savings are slightly less at between 50% to 70%. 

Based on the study, Colla says ACOs have the potential “to improve health care and reduce spending” for dual eligibles. 

“The current fee-for-service payment system has contributed to the fragmented, poorly coordinated care that manypatients, especially those who are sick, experience every day,” said Elliott S. Fisher, M.D., one of the authors of the report, in a statement. “New payment models like ACOs are intended to encourage providers to coordinate care by offering them a share of any savings achieved when they improve care. Theseresults indicate that when organizations really try to adapt to these new models, they can benefit their patients’ lives and their bottom lines.”

Link: http://seniorhousingnews.com/2012/10/17/aco-report-findings-readmissions-down-significant-savings-for-dual-eligibles/

Centene to terminate Kentucky Medicaid contract

By David A. Mann, Reporter

Date: Wednesday, October 17, 2012, 12:32pm EDT – Last Modified: Wednesday, October 17, 2012, 1:53pm EDT

Business First

 

Kentucky Spirit Health Plan has terminated its Medicaid managed-care contract with the Kentucky Cabinet for Health and Family Services. The termination will be effective July 5, 2013, about a year ahead of schedule, according to state officials.

The company, which is a subsidiary of St. Louis, Mo.-based Centene Corp. (NYSE: CNC), also has filed a formal dispute with the cabinet for damages incurred under the contract.

Specific information about the dispute was not immediately available.

 

In July, Centene reported a second-quarter net loss of $38.8 million on revenue of $2.11 billion, mostly on higher medical costs, including increased medical costs in its Kentucky health plan caused by the retroactive assignment of members and a higher level of non-inpatient claims receipts.

 

“Since the inception of the contract, we have been in discussions with the cabinet about our concerns with the Medicaid managed-care program but have been unable to resolve our differences.” Jesse Hunter , executive vice president of operations for Centene, said in a news release. “Consequently, we do not believe there is a viable path to a sustainable managed-care program in Kentucky. As a result, we are in the unfortunate position of having to take steps to terminate the contract and exit the market.”

 

The move will terminate 200 technical and specialized jobs in Lexington, Ky., which represent more than $12 million in annual wages and benefits, said Carol Goldman, executive vice president and chief administrative officer of Centene, told the St. Louis Business Journal.

Centene anticipates recording a pre-tax premium deficiency reserve ranging from $60 million to $70 million related to the Kentucky operations in the quarter ended Sept. 30. Third-quarter results will be released on Oct. 23.

 

Kentucky Spirit is one of three companies serving Medicaid recipients in 104 Kentucky counties, not including Jefferson County or those immediately surrounding it. CoventryCares of Kentucky and WellCare of Kentucky are the others.

 

Starting next year the latter two, as well as, Humana Inc. (NYSE: HUM) and Passport Health Plan, also will begin serving Medicaid recipients in the Louisville area.

 

The cabinet issued its own news release on the contract termination, saying Kentucky Spirit was abandoning its obligation to the commonwealth.

 

“Our top priority remains the continued health care of Medicaid patients, and we will make sure those patients experience no disruption in health services,” Kentucky Gov. Steve Beshear said in the state’s new release. “However, we are disappointed in Kentucky Spirit’s decision to break its contract. We have worked with the company toaddress its questions since Kentucky Spirit agreed on the contract terms last year. We will continue to work within the contract process to make sure members are provided health care services and providers get the payments they are due. We will hold this company accountable to its contractual commitments through whatever means necessary on behalf of both the members and taxpayers.”

 

The exact nature of the dispute was not discussed in either release. Phone calls to both Centene and the cabinet were not immediately returned Wednesday afternoon.

 

Link: http://www.bizjournals.com/louisville/news/2012/10/17/centene-to-terminate-kentucky-medicaid.html

Statewide Medicaid Operator Kentucky Spirit Plans to End Contract Early

 

By KENNY COLSTON 

WKU Public Radio

11:33 AM WED OCTOBER 17, 2012

 

Governor Steve Beshear says he’s disappointed that one statewide Medicaid operator has announced it is leaving the state. Kentucky Spirit, part of Centene Corporation from Missouri, announced Wednesday that they would terminate their operations next July, before their contract is up.

Kentucky Spirit is one of the private Medicaid operators that took over the program for the state last year. The company encountered problems, however, and was in dispute with the state and doctors over reimbursement rates and other details of Medicaid operations.

Recently, its CEO blasted Kentucky officials for how they are handing privatized Medicaid.

The company is owned by Missouri-based Centene. In a release, company officials say they’ve notified the state Cabinet for Health and Family Services of their intent. Kentucky Spirit says it will stop working in Kentucky on July 5, 2013.

The company also plans to recover money from the state it says it lost unfairly.

Beshear says the state will help members of Kentucky Spirit transition to the other statewide MCOs, CoventryCares and WellCare, before July.

“There won’t be a problem with folks having the care, I’m just disappointed that a company that ought to know better is stepping up and breaking its contract,” Beshear says.

Kentucky Spirit claims the state isn’t making the Medicaid system affordable for the private companies. Because of that dispute, Kentucky Spirit says it will close it’s Lexington office and eliminate 200 jobs as it exits the state by July 5, 2013.

Beshear says Kentucky Spirit’s decision is likely to end up in court.

“Well Kentucky Spirit is breaking their contract and that will end up in court, because they don’t have a right to break their contract. There’s a dispute system that’s built into the contracts and they could have availed themselves to that. But there’s no right to just arbitrarily quit and go home,” he says.

Beshear says the two other statewide MCOs, CoventryCares and WellCare, will be able to pick up the slack.

In a release, Cabinet for Health and Family Services Secretary Audrey Haynes called Kentucky Spirit’s move “frustrating.”

“I am deeply frustrated that this publicly traded, Fortune 500 company has chosen to put profits above people and will not honor the terms of its contract. The managed care model is working in many states and is working here in Kentucky.  The recent RFP process in Region 3 demonstrated that the managed care market in Kentucky is healthy and viable,” she says.

And the state is unlikely to invite any other private company to bid to finish out Kentucky Spirit’s contract. Instead, Beshear says the state will just send out requests for proposals next year to bid out 2014 to 2016.

That also raises questions about savings in the private operator program, since Kentucky Spirit gave the lowest bid fees of the three original statewide operators.

 Here is the full announcement from Kentucky Spirit:

Kentucky Spirit Health Plan (Kentucky Spirit), a wholly-owned subsidiary of Centene Corporation (NYSE: CNC), has notified the Cabinet for Health and Family Services that it is exercising a contractual right that it believes allows Kentucky Spirit to terminate its Medicaid managed care contract with the Commonwealth of Kentucky effective July 5, 2013. In addition, Kentucky Spirit has filed a formal dispute with the Cabinet for damages incurred under the contract.

Kentucky Spirit entered the market in November 2011 with the intent of helping the Commonwealth achieve a high-quality healthcare program at a significantly reduced cost for tax payers. Since the inception of the contract, there have been concerns about the sustainability of the Commonwealth’s Medicaid managed care program. The decision to terminate the contract comes after months of effort by Kentucky Spirit and the Cabinet to resolve these concerns and only after it has become clear that there is not a viable path to a sustainable Medicaid managed care program in Kentucky,

“We are proud of the outcomes we have achieved in the short time under the contract. In keeping with our mission of providing high-quality, cost-effective care delivered locally to the Medicaid population, Kentucky Spirit has achieved many successes,” said Kentucky Spirit President and CEO Jean Rush. These include: ·

a 30 percent increase in well child visits; · a 53 percent increase in diabetes testing; · a 94 percent decrease in ‘doctor shopping’ for narcotics; · a 30 percent reduction in pharmacy costs; · a 30 percent decrease in one-day hospital admissions; · a 23 percent reduction in hospitalreadmissions; and a 17 percent decrease in medical and surgery costs.

Rush continued, “Kentucky Spirit remains committed to a smooth transition for the more than 140,000 individuals and families it serves.” Centene recognizes that the only way to achieve outcomes like these is through a strong local approach. As a result, Kentucky Spirit created more than 200 high-paying technical and specialized jobs in Lexington in order to meet the health needs of Medicaid recipients across Kentucky.

“We regret the loss of these high quality jobs, which represent over $12 million in annual wages and benefits eliminated from the local economy and state tax base,” said Carol E. Goldman, Executive Vice President and Chief Administrative Officer of Centene. “The company is working closely with its employees to provide them with the appropriate levels of support and resources during this transition.”

Kentucky Spirit also will continue to offer excellent service to its members and healthcare providers through the termination date and will work with the Kentucky Department for Medicaid Services to make sure the transition for members is easy. Members may call Kentucky Spirit’s Member Services at 1.866.643.3153 for more information.

Link: http://wkyufm.org/post/statewide-medicaid-operator-kentucky-spirit-plans-end-contract-early

Media: Centene pulls out of Kentucky Medicaid managed care deal

By STAFF | Published: OCTOBER 17, 2012

Provided by insiderlouisville.com 

 

Just when you thought the Beshear Administration’s Medicaid managed care organization plan couldn’t be a bigger mess, it becomes a bigger mess.

The financial advice website RTT News is reporting St. Louis-based Centene Corp. not only is pulling out of its MCO contract with Kentucky, it’s seeking damages from the state.

From the website:

Centene Corp. (CNC: Quote) announced Wednesday that its subsidiary, Kentucky SpiritHealth Plan, has notified the Cabinet for Health and Family Services that it is exercising a contractual right that it believes allows Kentucky Spirit to terminate its Medicaid managed care contract with the Commonwealth of Kentucky effective July 5, 2013. In addition, Kentucky Spirit has filed a formal dispute with the Cabinet for damages incurred under the contract. ”Since the inception of the contract, we have been in discussions with the Cabinetabout our concerns with the Medicaid managed care program but have been unable to resolve our differences. Consequently, we do not believe there is a viable path to a sustainable managed care program in Kentucky. As a result, we are in the unfortunate position of having to take steps to terminate the contract and exit the market,” said Jesse Hunter, Executive Vice President of Operations for Centene.

RTT also reports Centene execs anticipate losing between $60 million to $70 million in the Kentucky MCO contract through the expiration date of September, 2013.

Centene is one of two MCOs – the other is Bethesda, Md.-based Coventry Cares –  being sued by providers including Appalachian Regional Healthcare in Lexington.

ARH is suing Centene Corp. claiming Kentucky Spirit delayed paying $5.9 million in unchallenged services as of March.

At the same time the insurer is dragging its feet paying, the ARH suit states,Kentucky Spirit is collecting millions monthly in capitated payment from Kentucky Medicaid Assistance Program.

ARH also is claiming that Kentucky Spirit underpays for services, as well as renewing charges that state Medicaid reimbursment methodology is “grossly inadequate.”

Here’s Bloomberg BusinessWeek’s version of events in their post titled, “Medicaid provider to terminate contract with Ky.”

The Bloomberg post makes it clear Centene executives are serious, or at least seriously bluffing, talking about trying to transfer their 200 employees inKentucky (Louisville, specifically) and handing over to another MCO their 140,000 Medicaid members.

The back story on Kentucky’s Medicaid Managed Care Meltdown:

In April, 2011, state officials asked health insurers to submit managed-care proposals for the $6 billion worth of care 800,000 poor and elderly Kentuckians receive annually under the federal/state Medicaid program. At the time, Gov. Steve Beshear touted the switch to managed care from fee-for-services as saving the state $375 million over the life of the initial three-year contracts. Insiders said officials in other states such as Georgia took as long as 18 months to make the change while Kentucky tried to do it in less than six months.

The three companies receiving MCO contracts were Centene, WellCare and CoventryCares, all publicly traded companies. (Passport Health Plan, a Louisville-based non-profit controlled by providers, is the managed care insurer for Jefferson County and 17 surrounding counties.)

Each bid for the Kentucky MCO business was based on per-member, per-month healthcare costs projections. Low-bidder Centene bid $330 per member, per month, according to documents submitted to Insider Louisville. WellCare bid was based on $400 per member per month, and Coventry bid $436 per member per month.

The algorithm state officials used to choose the winners favored the low-cost plans, obviously, because therein lies the savings.

The state methodology initially assigned members to a plan, with the two lowestcost plans getting more members than the highest.

If Centene’s manged care system actually got each member to spend less than $330 per month, they’d make a profit. But crucial to getting costs that low would mean cutting reimbursements to health care providers such as doctors and pharmacies, which meant losing some.

 

Link: http://insiderlouisville.com/news/2012/10/17/media-centene-pulls-out-of-kentucky-medicaid-managed-care-deal/

Medicaid Operator Kentucky Spirit Plans to Break Contract, Beshear says He’s Disappointed

By KENNY COLSTON 

 

WFLP.org 

 

Governor Steve Beshear says he’s disappointed that one statewide Medicaid operator has announced it is leaving the state.

Kentucky Spirit, part of Centene Corporation from Missouri, announced today that they would terminate their operations next July, before their contract is up.

Kentucky Spirit is one of the private Medicaid operators that took over the program for the state last year. The company encountered problems, however, and was in dispute with the state and doctors over reimbursement rates and other details of Medicaid operations.

Recently, its CEO blasted Kentucky officials for how they are handing privatized Medicaid.

The company is owned by Missouri-based Centene. In a release, company officials say they’ve notified the state Cabinet for Health and Family Services of their intent. Kentucky Spirit says it will stop working in Kentucky on July 5, 2013.

The company also plans to recover money from the state it says it lost unfairly.

Beshear says the state will help members of Kentucky Spirit transition to the other statewide MCOs, CoventryCares and WellCare, before July.

“There won’t be a problem with folks having the care, I’m just disappointed that a company that ought to know better is stepping up and breaking its contract,” Beshear says.

Kentucky Spirit claims the state isn’t making the Medicaid system affordable for the private companies. Because of that dispute, Kentucky Spirit says it will close it’s Lexington office and eliminate 200 jobs as it exits the state by July 5, 2013.

Beshear says Kentucky Spirit’s decision is likely to end up in court. 

“Well Kentucky Spirit is breaking their contract and that will end up in court, because they don’t have a right to break their contract. There’s a dispute system that’s built into the contracts and they could have availed themselves to that. But there’s no right to just arbitrarily quit and go home,” he says.

Beshear says the two other statewide MCOs, CoventryCares and WellCare, will be able to pick up the slack.

In a release, Cabinet for Health and Family Services Secretary Audrey Haynes called Kentucky Spirit’s move “frustrating.”

“I am deeply frustrated that this publicly traded, Fortune 500 company has chosen to put profits above people and will not honor the terms of its contract. The managed care model is working in many states and is working here in Kentucky.  The recent RFP process in Region 3 demonstrated that the managed care market in Kentucky is healthy and viable,” she says.

And the state is unlikely to invite any other private company to bid to finish out Kentucky Spirit’s contract. Instead, Beshear says the state will just send out requests for proposals next year to bid out 2014 to 2016.

That also raises questions about savings in the private operator program, since Kentucky Spirit gave the lowest bid fees of the three original statewide operators. 

In response to questions from lawmakers that Kentucky Spirit’s departure would add costs to the state, a cabinet spokeswoman says the state would try to recover those additional costs fromKentucky Spirit. The state also says there shouldn’t be issues with the federal government’s approval of statewide privatized Medicaid in Kentucky with Kentucky Spirit’s departure.

 Here is the full announcement from Kentucky Spirit:

Kentucky Spirit Health Plan (Kentucky Spirit), a wholly-owned subsidiary of Centene Corporation (NYSE: CNC), has notified the Cabinet for Health and Family Services that it is exercising a contractual right that it believes allows Kentucky Spirit to terminate its Medicaid managed care contract with the Commonwealth of Kentucky effective July 5, 2013. In addition, Kentucky Spirit has filed a formal dispute with the Cabinet for damages incurred under the contract.

Kentucky Spirit entered the market in November 2011 with the intent of helping the Commonwealth achieve a high-quality healthcare program at a significantly reduced cost for tax payers. Since the inception of the contract, there have been concerns about the sustainability of the Commonwealth’s Medicaid managed care program. The decision to terminate the contract comes after months of effort by Kentucky Spirit and the Cabinet to resolve these concerns and only after it has become clear that there is not a viable path to a sustainable Medicaid managed care program in Kentucky,

“We are proud of the outcomes we have achieved in the short time under the contract. In keeping with our mission of providing high-quality, cost-effective care delivered locally to the Medicaid population, Kentucky Spirit has achieved many successes,” said Kentucky Spirit President and CEO Jean Rush. These include: ·

                        a 30 percent increase in well child visits; ·

                        a 53 percent increase in diabetes testing; ·

                        a 94 percent decrease in ‘doctor shopping’ for narcotics; ·

                        a 30 percent reduction in pharmacy costs; ·

                        a 30 percent decrease in one-day hospital admissions; ·

                        a 23 percent reduction in hospitalreadmissions; and

                        a 17 percent decrease in medical and surgery costs.

Rush continued, “Kentucky Spirit remains committed to a smooth transition for the more than 140,000 individuals and families it serves.” Centene recognizes that the only way to achieve outcomes like these is through a strong local approach. As a result, Kentucky Spirit created more than 200 high-paying technical and specialized jobs in Lexington in order to meet the health needs of Medicaid recipients across Kentucky.

“We regret the loss of these high quality jobs, which represent over $12 million in annual wages and benefitseliminated from the local economy and state tax base,” said Carol E. Goldman, Executive Vice President and Chief Administrative Officer of Centene. “The company is working closely with its employees to provide them with the appropriate levels of support and resources during this transition.”

Kentucky Spirit also will continue to offer excellent service to its members and healthcare providers through thetermination date and will work with the Kentucky Department for Medicaid Services to make sure the transition for members is easy. Members may call Kentucky Spirit’s Member Services at 1.866.643.3153 for more information.

Link: https://wfpl.org/post/medicaid-operator-kentucky-spirit-plans-break-contract-beshear-says-hes-disappointed

Kentucky Spirit Health Plan to terminate Medicaid contract with state

Written by
Tom Loftus
The Courier-Journal

FRANKFORT, KY. — In a bitter split with Gov. Steve Beshear’s administration, Kentucky Spirit Health Plan said Wednesday that it will terminate its Medicaid managed care contract with the state effective July 5.

The company also has filed a formal dispute with the Cabinet for Health and Family Services for damages it has incurred.

But the Beshear administration fired back later Wednesday saying that Kentucky Spirit’s decision violates its contract, which runs through July 5, 2014. Any damages, state officials said, will be paid by the company — not the state.

“We will hold this company accountable to its contractual commitments through whatever means necessary on behalf of both the members and the taxpayers,” Beshear said in a news release.

State Sen. Julie Denton, a Louisville Republican who heads the Senate Health and Welfare Committee, said the company told her in a “courtesy call” Wednesday that it is losing $10 million a month under the contract.

Termination of the contract also will cost the Lexington area, where Kentucky Spirit is based, “more than 200 high-paying technical and specialized jobs,” the company said in its announcement.

Cabinet Secretary Audrey Tayse Haynes said in the state news release that she was “deeply frustrated that this publicly traded, Fortune 500 company has chosen to put profits above people and will not honor the terms of its contract.”

Coventry Cares and Wellcare also operate Medicaid managed care programs in the 104-county area in which Kentucky Spirit operates, and state officials said the more than 125,000 recipients who are now covered by Kentucky Spirit will be moved to one of those providers without interruption in care.

The area does not include Jefferson County, which is part of a separate 16-county region that is now served by Passport but will be served by four providers starting in January.

The move by Kentucky Spirit, a subsidiary of Centene Corp., is the latest setback in the state’s effort to cut costs by having outside providers manage Medicaid recipients’ care. Earlier this year, KentuckyOne Health, the state’s largest health system, terminated its contracts with Coventry Cares.

(Page 2 of 2)

When Beshear launched the Medicaid effort last year, he said it would save $1.3 billion over three years in the 104 counties, including $375 million in state funds.

The state took bids and awarded three contracts in July 2011. The cabinet said Wednesday that Kentucky Spirit had the lowest bid, charging the state an average $311 a month per covered member. Coventry Cares bid $341 and Wellcare $360 per member per month.

The state awarded three contracts because the federal government required that Medicaid recipients have a choice.

Based on the per-member numbers, if the 125,000 Kentucky Spirit members were to be evenly split between the other two companies, its move would cost the Medicaid program about $60 million more in 2013-14. About three-fourths of that would be federal dollars, with the rest coming from the state.

But Haynes told the legislature’s Interim Joint Health and Welfare Committee on Wednesday that Kentucky Spirit must pay for any loss. “They are responsible for the damages and the cost,” Haynes said. “They are responsible for upholding the contract.”

Haynes told the committee that Centene’s stock rose as a result of Wednesday’s announcement, estimating that the company earned about $230 million. “Sounds like enough to cover any expenses we might have,” she said.

The state’s news release Wednesday did not specify what legal actions Kentucky may take against Kentucky Spirit. But both Beshear and Haynes said they expect the matter to end up in court.

Deanne Lane, Centene’s vice president for media and community affairs, said she could not elaborate on the statement Kentucky Spirit released, but would have more to say “in the coming days.”

Kentucky Spirit said in its news release that it had discussions with the state for months, but the talks were unable to resolve its concerns about its contract. “It has become clear that there is not a viable path to a sustainable Medicaid managed care program in Kentucky,” the company said.

Haynes took issue with that opinion. “The managed care model is working in many states and is working here in Kentucky,” Haynes said.

She noted that Centene offers Medicaid managed care services in 19 states and that she expected it had a “sound and tested business strategy” when it bid for a Kentucky contract last year.

Denton said she was told the company will be pulling out of the state completely.

“Now it’s a matter of moving those Medicaid recipients to one of the other two companies,” she said.

Sen. Alice Forgy Kerr, R-Lexington, said she was “devastated” by the pending loss of 200 jobs.

Sen. David Givens, R-Greensburg, said, “I’m struck by the loss of good jobs. … But just as frightening is this: What if what this company is saying is true and Kentucky’s whole managed care approach is unsustainable?”

When Beshear launched the Medicaid effort last year, he said it would save $1.3 billion over three years in the 104 counties, including $375 million in state funds.

The state took bids and awarded three contracts in July 2011. The cabinet said Wednesday that Kentucky Spirit had the lowest bid, charging the state an average $311 a month per covered member. Coventry Cares bid $341 and Wellcare $360 per member per month.

The state awarded three contracts because the federal government required that Medicaid recipients have a choice.

Based on the per-member numbers, if the 125,000 Kentucky Spirit members were to be evenly split between the other two companies, its move would cost the Medicaid program about $60 million more in 2013-14. About three-fourths of that would be federal dollars, with the rest coming from the state.

But Haynes told the legislature’s Interim Joint Health and Welfare Committee on Wednesday that Kentucky Spirit must pay for any loss. “They are responsible for the damages and the cost,” Haynes said. “They are responsible for upholding the contract.”

Haynes told the committee that Centene’s stock rose as a result of Wednesday’s announcement, estimating that the company earned about $230 million. “Sounds like enough to cover any expenses we might have,” she said.

The state’s news release Wednesday did not specify what legal actions Kentucky may take against Kentucky Spirit. But both Beshear and Haynes said they expect the matter to end up in court.

Deanne Lane, Centene’s vice president for media and community affairs, said she could not elaborate on the statement Kentucky Spirit released, but would have more to say “in the coming days.”

Kentucky Spirit said in its news release that it had discussions with the state for months, but the talks were unable to resolve its concerns about its contract. “It has become clear that there is not a viable path to a sustainable Medicaid managed care program in Kentucky,” the company said.

Haynes took issue with that opinion. “The managed care model is working in many states and is working here in Kentucky,” Haynes said.

She noted that Centene offers Medicaid managed care services in 19 states and that she expected it had a “sound and tested business strategy” when it bid for a Kentucky contract last year.

Denton said she was told the company will be pulling out of the state completely.

“Now it’s a matter of moving those Medicaid recipients to one of the other two companies,” she said.

Sen. Alice Forgy Kerr, R-Lexington, said she was “devastated” by the pending loss of 200 jobs.

Sen. David Givens, R-Greensburg, said, “I’m struck by the loss of good jobs. … But just as frightening is this: What if what this company is saying is true and Kentucky’s whole managed care approach is unsustainable?”

 

Link:  http://www.courier-journal.com/apps/pbcs.dll/article?AID=2012310170073

 

Small-group plans driving insurance exchange benchmarks

Pediatricians in particular remain concerned that minimum benefits levels for private plans on the exchanges won’t cover children’s services adequately.

By JENNIFER LUBELL, amednews staff. Posted Oct. 15, 2012.

Washington Uncertainty continues to surround the essential health benefits provision of the Affordable Care Act, which will determine the minimum level of care that health plans must cover in upcoming health insurance exchanges. Roughly half of the states have yet toselect a plan option to serve as the benchmark for these benefits. Among those states that have chosen their benchmarks, however, small-group plans are emerging as a popular, cost-effective option.

Starting in 2014, qualified plans on state health insurance exchanges, and some plans outside of the exchanges, must offer essential health benefits packages covering 10 broad categories of services. States had until Oct. 1 to submit benchmark plans to the Dept. ofHealth and Human Services, but HHS officials assured states that this wasn’t a hard deadline and that the department would work with any state whose plan decision came in after this date. States drew from guidance HHS issued in 2011 to make their decisions.

In reviewing some of the most popular health plans operating in their jurisdictions, each state had the option ofselecting a benchmark plan from one of four plan types: small-group, federal employee, state employee or commercial HMO. Most appear to be choosing the small-group option, according to initial estimates.

At this article’s deadline, Statereforum.org, which tracks health reform implementation, reported that 23 states and the District of Columbia had made recommendations on what their benchmark plans should be, with 16 choosing small-group options.

The Institute of Medicine’s recommendation that HHS look to the small-group market for guidance on whatbenefits an exchange plan should offer is partly why Connecticut ended up choosing ConnectiCare, a popular small-group HMO plan, said Kevin Counihan.He’s the chief executive officer of the state’s health insurance exchange.

IOM had been concerned about the impact of the ACA’s minimum benefits requirement on small businesses that offer coverage to their workers through the exchanges. If the benchmark plan had been too generous with its coverage, it would freeze out these businesses and make it difficult for them to retain employer-sponsored insurance, Counihan said. “I think there was pretty strong, inherent logic on why they picked small-group.” In setting guidance for essential benefits, HHS said the largest small-group plan in the state would become the default benchmark if that state declined to choose one.

It makes sense that states are choosing these types of plans on their own, said Matthew Katz, executive vice president and CEO of the Connecticut State Medical Society. “When you develop an exchange that allows small businesses and individuals to buy insurance, you want to have something that’s familiar” and in line with what the market already is offering, he said.

The Connecticut medical society does not take an official position on the plan option the state selected. ConnectiCare’s benefits package is not as generous as some and not as limited as others, “so it seems to be the middle-of-the-road selection they’ve gone with. But coverage does not necessarily mean access,” Katz said. ConnectiCare’s plan may serve as the model for benefits coverage, but ultimately it’s how those benefits are going to be interpreted and applied by the other insurance plans on the exchange that will matter more than the plan design, he said.

Concerns about children’s benefits

Counihan said the state’s selection also was based on the ability to serve a wide segment of people, “children being one of them.” Pediatric services, including oral and vision care for kids, are one of the 10 required categories of services an essential health benefits package must offer. However, various medical organizations, such as the American Academy of Pediatrics and the American Medical Association, have voiced concerns that too many of the private benchmark plan options available to states would fall short on needed children’s benefits.

In its own research, the AAP found that public insurance options such as Medicaid and the Children’s Health Insurance Program provided more expansive children’s coverage than the private-plan options, and it has advocated that these public programs serve as the benchmark for children’s benefits. Under current HHS guidance, public programs are not among the benchmark plan options available to states.

AAP President Robert Block, MD, acknowledged that some states might end up choosing benchmark plans that “have a thorough menu for coverage for what kids are going to get.” But a problem might arise if a neighboring state fails to pick a plan that covers all of those needed benefits, he said.

Many commercial insurance plans have incomplete benefits for children, Dr. Block said. Whether it’s behavioral health or well-child care, “all of those things are worthy investments, because the long-range outcome of lack of care is simply more sickly adults, and then we have to spend lots of dollars trying to fix what we could have prevented. And that just doesn’t make economic sense,” he said.

Counihan said physicians in Connecticut had yet to raise concerns about inadequate children’s coverage in the benchmark benefits package. A former pediatrician sits on the state’s insurance exchange board, and physicians on the board’s advisory committees also had theopportunity to weigh in on this decision, he said. The state medical society, nevertheless, was disappointed that final decisions on the essential benefits benchmark “were made by the board, which does not have a practicing physician,” said the society’s Katz.

The small-group Blues plan that Kansas recommended, as its benchmark option did not include pediatric vision, dental and habilitative services. But in the event such a required category of service isn’t in the plan a state selects, “you have to pull it from something else,” said Sandy Praeger. She’s the state’s insurance commissioner and chair of the health insurance and managed care committee of the National Assn. of Insurance Commissioners.

Praeger said HHS ultimately would determine how these services will be covered. Under these circumstances, federal officials could opt to use CHIP to cover the missing pediatric services, although the Federal Employees Health Benefits Program, which also has some level of coverage in these areas, is another possibility.

Based on the coverage the two programs offer, “we would hope they’d choose the CHIP plan,” she said.

Link: http://www.ama-assn.org/amednews/2012/10/15/gvsb1015.htm