Dec 082011

Who’s included in the reform proposal?
Medicaid eligible children and pregnant women, CHIP eligible children, low income adults, persons with disabilities.  Dual eligible Medicare and Medicaid beneficiaries, foster children, and children with disabilities may voluntarily enroll.  
Making enrollment with a managed care organization and requiring enrollment of dual eligible or other non-covered groups may be part of the “global waiver” request to the federal government.
On January 1, 2013, beneficiaries would be automatically assigned to one of the 3 Managed Care Organizations (MCOs) to achieve a fair distribution of age, health needs, and geographic location.  Beneficiaries can choose another MCO within 90 days.  Once assigned, beneficiaries must stay with the MCO for 12 months or until the next open enrollment period occurs. The contract limits marketing by the MCO’s during the enrollment period. 

What services are covered and how will services be delivered?
The MCOs must assure that all medically necessary services currently available through the Medicaid State Plan and Home and Community Based Services waiver will be included in their benefit plans. The MCOs must provide medical necessity standards for services and adopt guidelines to ensure services are available statewide and in an amount, duration, and scope no less than required through traditional Medicaid.
The MCOs may provide other “value added” services including gift cards and vouchers, medical equipment, additional transportation, and Health Opportunity Accounts. The benefit package must also include health literacy and prevention training, health risk assessment examinations, and health homes. 
MCOs must develop provider networks and service locations to meet access standards for covered services, including primary and specialty care, pharmacy, mental health care, emergency services, and long term care services. Access standards are enforced with penalty provisions in the contract.
Health Homes are included for beneficiaries with two or more chronic conditions, one chronic condition and risk factors for a second, or severe and persistent mental illness. Chronic conditions mentioned in the request for proposal (RFP) include mental illness, substance abuse, asthma, diabetes, heart disease, and obesity. The RFP describes the components of a health home and the requirement that they must be available within 12 months of awarding the contract for beneficiaries with mental illness or diabetes. 

How will Medicaid services be paid for and where are the savings?
The MCOs must demonstrate an 8 to 10 percent increase in savings to the State within the Medicaid program over the three years of the contract. The savings “should” be achieved by care coordination
The MCOs will pay providers for services delivered. The RFP requires that this payment is the same as current rates (“Medicaid rates”’) for in- network providers.  Providers may request alternative reimbursement from the MCO’s subject to state approval. Hospitals and nursing facilities are entitled to 3 reasonable offers at or above the Medicaid rate. The state has ultimate responsibility for setting nursing facility rates. 
The MCO’s are paid based on a per -member, per -month rate partially established in the RFP process. The state will calculate an average “Low Cost Estimate” rate to cover all beneficiaries, services, and regions within the existing Medicaid program. The MCO will offer discount amounts in their RFP responses between 0% and 10% to be applied to the “Low Cost Estimate”.  That discount level will be a determining factor in awarding the contract. The final rates will be calculated based on the Low Cost Estimate, the MCO’s discount, and other factors to create payment rates by population group, age, gender, and region. 
The MCO’s will have 3% of their payments withheld for a pay for performance (P4P) incentive. The RFP describes 6 performance standards that must be met to receive the full payments.  The number of performance measures and level of performance increase over the second and third years of the contract. So the MCOs must show they are improving the quality and efficiency of care.
The RFP includes incentives for holding or reducing medical costs. Actual payments for health services will be compared to the MCO rates paid. If MCO costs for health care exceed the amount paid through the per -member, per -month rate, the state and the MCO share in the additional cost. If per -member, per -month payments are greater than the actual health care costs, the MCO keeps a portion of the excess and returns the remainder to the state.

Things to look for …
How will the MCO’s differentiate their responses to the RFP? Through additional services, more cost control, expanded provider networks.
How much competition will there be among the winning MCO’s for Medicaid beneficiaries? 
How much of the savings are based on reducing costs of health care services? Is that achieved by reducing the number of units delivered, changing the type of service, reducing demand for services, etc?
Scott Brunner
Kansas Health Institute