Minnesota waits for HCFA waiver approval allowing county-level Medicaid contract
Minnesota waits for HCFA waiver approval allowing county-level Medicaid contracting
Counties and coalitions prepare to assume local control of Medicaid dollars
The long-awaited inauguration of county-based Medicaid purchasing in Minnesota will be even longer in coming. Federal permission allowing Minnesota counties to broker Medicaid services for their residents is not yet in hand, forcing state lawmakers this spring to consider legislation that would float the statutory implementation deadline until some time after the Health Care Financing Administration (HCFA) gives the go-ahead.
Local officials have not let the lack of a waiver slow their progress in implementing the 1997 state legislation that authorized county-based purchasing.
"We are going to get this waiver," predicts a confident Mary Mahoney, director of integrated care management for St. Paul’s Ramsey County. Already she is interviewing finalists to serve as the county’s administrative services organization and writing requests for proposals for health services. Ramsey County officials late last year gave the green light to pursue county-based purchasing after years of studying the issue.
A little foot-dragging?
State officials didn’t apply to modify Minnesota’s 1115 Medicaid waiver until January 1999, leaving insufficient time for HCFA to approve a waiver modification and for counties to respond to it before lawmakers’ original Oct. 1, 1999, implementation deadline. Some local officials are less patient with the state than Ms. Mahoney.
"We’re ready to go," says a commissioner from one of the Minnesota counties that spearheaded the development of county-based purchasing three years ago. "The state’s holding us back. They’re costing us money," says Renville County Commissioner Bob Ryan.
Will shift increase cost?
State officials are concerned with adequately justifying the shift to county-based purchasing and assuring federal officials that the proposal won’t increase overall Medicaid costs. Jim Chase, director of health care purchasing within Minnesota’s Department of Human Services, notes that the waiver caps the aggregated cost for medical care and administrative services at what it would have been under a fee-for-service model.
He concedes that the project appears to add "another layer of administration," the additional costs of which must be offset by savings from service and utilization efficiencies.
State officials received before their April 1 application deadline four proposals to implement county-based purchasing in 26 counties. The operational problem for counties is that they are working under a waiver application that HCFA ultimately may want to modify before allowing Minnesota to proceed. Mr. Chase recognizes the chicken-and-egg problem this presents but is confident it can be addressed.
The state’s own chicken-and-egg problem is that the waiver application demanded documentation for how county-based purchasing would improve Medicaid services before counties realistically could hammer out the local details.
"In fairness, it doesn’t have to be better,’ it has to be as good as,’" contends Eric Snyder, executive director of Primewest Health System, the 10-county purchasing coalition that includes Renville County.
The benchmark for evaluating the proposals’ costs also seems to be uncertain. Mr. Chase notes that because county-based purchasing will implement mandatory Medicaid managed care in areas that do not have it, administrative costs likely will be lower than in fee-for-service Medicaid. On the other hand, Mr. Chase isn’t sure the administrative costs for county-based purchasing would be lower than in commercial HMOs providing Medicaid services.
If all are approved, the proposals collectively would add about 31,700 people, mostly rural residents, to Minnesota’s Medicaid managed care population. Medicaid managed care already is well established in Minnesota, covering about 72% of the 240,000 beneficiaries who are elderly, needy, or eligible through participation in the Temporary Assistance to Needy Families program.
As described in the 28-page waiver modification request, county-based Medicaid managed care in Minnesota will be able to assume a variety of forms. Purchasers can be either single counties or groups of counties organized under Minnesota’s joint powers legislation. Counties or coalitions can keep the risk or assign it to a third party.
While counties do not have to be licensed as health maintenance organizations or "community integrated service networks"—the state’s conceptualization of provider-sponsored networks—they do have to meet vir tually all financial and consumer protection requirements now imposed on health plans. The requirements address, among other things, insolvency, enrollee information, and complaint systems. The county-based plans cannot pledge their taxing authority to establish their financial solvency.
A county or county coalition will receive a predetermined per-member-per-month capitation rate for each beneficiary in its jurisdiction and be responsible for contracting with providers. Multicounty plans can and are expected to apportion both medical risk and administrative costs among the counties. In general, Mr. Snyder likens the administration of county-based Medicaid purchasing to that of self-insured health plans.
Representatives from both county governments and Minnesota’s HMO trade association acknowledge that health plans have become much more responsive to local government concerns in the past two years, but disagree on what is driving the shift. Renville County’s Mr. Ryan attributes the greater sensitivity to more county leverage in the marketplace, but the executive director of the Minnesota Council of Health Plans has a more prosaic explanation: statutory changes that gave counties a role in the state’s health plan contracting.
"In the past, the counties weren’t part of the process," says Michael Scandrett, JD. "Because of the state law change, the plans are listening more to county priorities and less to statewide priorities," he says.
Still, he doesn’t envision that Medicaid county contracting ever will challenge the 11 association members who collectively cover 2.5 million Minnesota residents. "I think the health plans know how difficult this is to do. They know how hard it would be for a county to be a threat to them in the sense of somehow taking over all the business," he says.
Mr. Scandrett does worry, however, that allowing more local autonomy will add to the cost of providing health services.
"A lot of this is a power struggle between the state and the local governments about what the priorities are going to be, what we’re going to pay for, and what we’re going to require health plans to do under these contracts.
"It becomes really challenging if you’re a statewide health plan and you’ve got to deal with 40 or 50 different local governments setting different public health priorities. We understand health care is local and conditions do vary a lot, so we do want to be sympathetic to that. But we have to balance that against making the whole system fall apart because of county-by-county contracts that require the counties to do things differently from county to county."
The market concentration that generates cost savings is precisely what worries state some state and local officials. In its modification request, the state notes that increasing market concentration among plans has left purchasers—and presumably provi ders—at a "potential disadvantage" and local markets vulnerable to the failure of a single plan. For rural areas, say state officials, health plans that choose not to concentrate with all available providers exacerbate what already may be limited choice in choosing a plan.
Furthermore, state officials concede that their attempts to encourage competition through the development of provider-based networks has been "largely unsuccessful."
Mr. Snyder says counties in his organization, which already are involved in purchasing mental health and other services, are uniquely capable of integrating care for local Medicaid enrollees.
"The hope is that by giving counties the responsibility for the purchase of health services and social services, you’ll have a better delivery system," he says.
A bigger end game
He defends the initiative’s explicit goal of protecting local providers. He notes that failure of a local drug store or departure of a physician weakens a local economy and reduces choice for all residents, even those with private insurance. Furthermore, he says, counties will exploit their ability to understand and address the concerns of the local residents, something he says commercial managed care plans cannot do.
"Economic models don’t always work in rural America. There’s a bigger end game than just making a buck," he says.
Contact Mr. Scandrett at (651) 603-2692, Mr. Chase at (651) 215-0125, and Mr. Snyder at (320) 523-3491.
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