Medicaid premium offer has insurers grumbling; 2-stage state proposal may not be enough, companies say


The state health department proposed yesterday to increase Medicaid premiums by 1.5 percent in November and another 2 percent in July, but managed care organizations said that may not be enough to keep them participating in the program.

"For us, it's not a question of making a profit. The question is whether we can break even," said Eric R. Wagner, president of Helix Family Choice, which is part of the MedStar Health hospital group. "I don't think the whole package gets us there."

He said the managed care organizations, as a group, would lose about $35 million this year, with all but one posting deficits.

A pullout by managed care groups would jeopardize the Medicaid Health Choice program, which began in 1997 and provides care for about 350,000 low-income Marylanders.

The state pays monthly premiums to managed care organizations (MCOs); some are commercial health maintenance organizations, others are hospital-sponsored entities created for the program, such as Helix Family Choice.

The dispute over rates has gone on since July 1998, when the health department said the organizations were overpaid and proposed a rate cut. Eventually, the state cut rates 2.3 percent in February, but only for six months so the department could review what it should pay.

Dr. Georges C. Benjamin, the state health secretary, said his proposal was "a responsible balancing of the needs of Medicaid recipients for access to high-quality care, MCO financial needs and the fiscal reality of the state budget." The state spends about $800 million a year on the program.

Benjamin made the proposals at a meeting of an advisory group on Medicaid rates at the University of Maryland, Baltimore County.

The advisory group is to meet again after the MCOs analyze the impact of the state's proposal. The health department plans to make a final proposal by Oct. 1, which would need a legislative committee's approval to go into effect Nov. 1.

In addition to the rate increases, which would bring the managed care organizations $23.2 million over 14 months, Benjamin recommended: An additional $4 million for treating patients who are HIV positive.

An additional $4.7 million to increase rates paid to dentists, in an effort to attract more dentists into the program. Many children have been unable to get dental care because not enough dentists accept Medicaid payments, the health secretary said.

$38 million to compensate for lower-than-expected payments to the MCOs based on how sick the patients are. The plan is designed to pay MCOs more for sicker patients, but doesn't have enough data on all the patients to make all the adjustments needed.

The MCOs argued that the $38 million was not "new money," since it was already in the budget. The health department said the $38 million would be savings to the state unless action was taken to use it.

"This is not a significant amount of money," said Donald Blanchon, chief financial officer of Maryland Physicians Care, an MCO sponsored by four hospitals.

Benjamin said he would consider the MCO comments, might "tinker" with his proposal, and still hoped to reach a consensus.

Then, the issue will go to the legislature's joint Administrative, Executive and Legislative Review Committee, which would have to OK new rates.

Pub Date: 9/09/99

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