Health Care For All Coalition
139 Vanderbilt Ave., West Hartford, CT 06110
(860) 947-2200 x304.
Before Connecticut Gives Away $10.5 Million to For-Profit HMOs, Taxpayers Have 2 Demands.
Every year, Medicaid HMOs cost the State more money. This year, CT lawmakers
plan to give more money to the HMOs serving HUSKY A/Medicaid than we would have paid under the old fee-for-service system – with nothing in return!Right now, the State pays the four HMOs that serve Medicaid clients (Anthem Blue Cross, Preferred One, Physician’s Health Services and the nonprofit Community Health Network) almost $400 million. The HMOs still want more, and they are getting it.
1) The Rowland Administration has announced it is increasing by $7.6 million per year the already high capitated reimbursement rates CT pays these four plans.
2) The State is now paying an additional $8 million a year to these health plans to make sure they do not discharge Medicaid patients too early from psychiatric hospitals. We are "reinsuring" them for providing in-patient psychiatric care, a service that is already covered under their contracts, in order to stop what the Dept. of Social Services calls "premature discharges that occurred under managed care when the hospitals were not reimbursed for extended stays."
3) Now the Governor wants to give an annual $10.5 million tax credit to the three for-profit Medicaid HMOs.
Budget director Marc Ryan admitted at a March 10, 2000 Finance Committee hearing that, with this additional indirect payment, we will be paying more for health care for HUSKY A families than we would be paying without the HMO model!
Mark Ryan stated: "If we were to increase the [capitation] rates, even though we would get 50-percent [federal] reimbursement, HCFA [the federal Medicaid agency] may decide that that is not allowable because we would fail the cost-effectiveness test [compared to fee-for-service]."
Note: DSS has acknowledged in its filings with HCFA that the "prevention" services claimed to be more generous under managed care "would be in place even in the absence of a managed care program."
Does this tax cut make any sense? Not to the taxpayers.
Physician’s Health Services made $27 million dollars in profits last year from its Connecticut managed care business.
Even if the legislature still decides to give $10.5 million in corporate welfare to these health companies, then it should also do the following two inexpensive things:
What Lawmakers Should Do:
1) Oppose the HMO tax cut this year until we have more information.
Then, get more information about the HMO finances - adopt the Medicaid HMO accountability provisions in House Bill 5823.
This bill was JF’d by the Human Services Committee, and will allow legislators to know exactly what proportion of the taxpayers' money is going to health care, as opposed to administrative costs and profits. (e.g., a New Mexico report found that that state’s Medicaid managed care behavioral health subcontractors, one of which also is used by CT's Blue Care Medicaid plan, consume 51 cents of every dollar for administrative costs).2) Require a study of alternatives to capitated managed care for Medicaid recipients, including but not limited to the primary care case management (PCCM) model that has been successfully adopted by other states. Under PCCM, primary care providers are paid a little extra to act as non-financially interested gate-keepers to other health services. This kind of study will give lawmakers realistic choices for saving money next year.
If the accountability bill is adopted, the study of the differences between the current capitated system and the alternatives can be an informed one. Legislators should work hard to ensure we won’t be over a barrel next year when the HMOs come back to demand still more money!
