If Only Governor Patrick Knew What His Medicaid Office Was Up To

While Governor Patrick has been pleading with the Legislature to act on his February 2011 payment reform bill that would move our health care system towards global payments and accountable care organizations, his MassHealth (Medicaid) office has moved in the opposite direction. (You can read my testimony on the Governor’s bill here)

In March 2011, the MassHealth program changed their default enrollment policy for new enrollees that did not affirmatively select a managed care option–either one of the 5 Medicaid managed care organizations (MCO) or the Primary Care Clinician Plan (PCC).

Before the switch, if an individual, after being determined eligible for Medicaid, did not affirmatively select a managed care option, the MassHealth office would auto-enroll them into either one of the 5 Managed Care Organizations or the PCC Plan on an equal basis. While deemed part of the “program of managed care” by MassHealth, the PCC program reimburses participating providers based on a fee-for-service method of payment.  MCOs, on the other hand receive a capitated payment that is calculated on a per member per month basis.  This capitated payment puts the MCO at risk and covers the cost of caring for the entire member.

The original move to assign members to only the PCC Plan was initially referred to as a “temporary” policy aimed at preserving cash flow.  Keeping members in the FFS PCC plan allows the state to avoid making the upfront capitation payment to MCOs and additionally, not have to pay for members enrolled in the PCC plan unless the member goes to the doctor. As one employee informed me, “sometimes these PPC plans end up being cheaper for the state due to lower utilization.”

The debate over how heavily the state should rely on MCOs has been ongoing for years in the Commonwealth. The topic has surfaced more recently as numerous states around the country have moved to fully embrace managed care in their Medicaid population including states as diverse as Florida and California.

CMS estimated that 39 million Medicaid beneficiaries in 2010 were in managed care, or more than 70 percent of all enrollees. That is a big change from just ten years ago when only 3 million beneficiaries were enrolled in managed care. Massachusetts has one of the lowest percentages of Medicaid enrollees in managed care of states that use managed care, 54% in 2010. By contrast, multiple states are moving to 100% managed care.

For full background, the MassHealth program has historically had some groups they have kept out of managed care and who are specifically placed on a fee-for-service coverage — those receiving long term care of any age, and members with Medicare and private insurance coverage.

The removal of the more diverse auto-enroll process is a clear change in policy that directly conflicts with the stated goals of the Administration for the broader health care market. As a result, an estimated 7,500 members per month are being put into the PCC program instead of one of the managed care organizations. So do the cost justifications support moving to PCC over managed care? No one knows! Not even the Legislature.

The Patrick Administration has never shown a willingness to fully engage in the debate over managed care, and as a result the Legislature has taken a number of actions to push the issue, and this year is no different. For example, see outside section 61 in the House budget, or Section 178 of Chapter 131 of the Acts of 2010, which established a Managed Care Advisory Committee.  The study established in Chapter 131 has never been completed and moreover, the Administration has never even convened the Committee.

Pioneer has attempted to obtain additional information about the Administration’s decision making process on managed care but has been rejected on the grounds that the documents we requested are off limits because they are covered by the deliberative process exemption, which names as exempt from disclosure “inter-agency or intra-agency memoranda or letters relating to policy position being developed by the agency.” Which I assume covers every past and current report or analysis if you decide to stretch it broadly enough. Pioneer has appealed.

This is no small issue as MassHealth makes up ~36% of the state budget, and has continued to crowd out spending on other priorities like education and public safety. From a high level, the public policy response to this increase in enrollment and costs by the leaders of the Commonwealth has been to cut benefits and/or provider rates. However, the price setting taking place in the program will most likely have a limited life because of doctor’s concerns about under reimbursement. If doctors refuse to take new MassHealth patients—as they already are—the safety net will wither further.

I am not of the opinion that global payments or accountable care organizations will be the panacea to our health care situation, and the Attorney General’s landmark transparency report (finding 2) along with many new academic papers seem to support this skepticism. However as the Governor ultimately controls the MassHealth program  and is pushing payment reform, one is left to wonder when he will be asked what the Medicaid office is up to.

Find me on twitter: @josharchambault