Executive Council Approves Largest State Contract Ever - Barely

Work Shifts to Stakeholder Groups and Provider Contract Negotiators

Valerie Acres, Sheehan Phinney Capitol Group 

On May 9th, the Executive Council approved contracts worth a combined $2.2 billion dollars to engage three commercial insurers (MCOs) to manage the state's Medicaid program, or health insurance program for the poor. Approval was delayed for several weeks as councilors worked hard to understand details of the program - to the degree they are available - and to transmit questions and concerns from constituents to the Department of Health and Human Services in an attempt to improve understanding of the contracts and ease fears, particularly among populations currently served in the state's long-term care, rather than acute care, system.

The 5-member Council appeared to be split throughout the deliberations with Councilor Chris Sununu a question mark for a while. He tipped his hand, however, the Sunday before the vote with an op-ed in support of the program published in the Union Leader's Sunday News. Councilor Sununu wrote that the current fee-for-service Medicaid program lacks accountability, is financially unsustainable, and is not able to provide adequate long-term care for New Hampshire citizens.  He was ultimately persuaded that the proposed Medicaid managed care system will resolve these problems by reinvesting cost savings back into the system for new programming and services, involving stakeholders and advocates in the ongoing design of the program, implementing holdbacks on the per member-per month payments to MCOs until they meet certain benchmarks, establishing a process for Medicaid beneficiaries to appeal issues directly to the state Department of Health and Human Services, and retaining oversight by the Executive Council in the form of annual review and approval of rates paid to MCOs. Ultimately, the contracts were approved by a 3-2 vote.

Medicaid has increasingly become an issue of interest to the general business community since underpayment of health care providers in the system has been subsidized by increased insurance premiums paid by employers and employees. These contracts are an issue of specific interest, as well, to the health care segment of the business community.

Consumer stakeholder groups have raised legitimate concerns about the transition to Medicaid managed care. For example, they wonder how managed care companies can earn a profit and generate savings for the state without significantly cutting provider reimbursement rates unless access to care is limited or quality of care suffers. These concerns are valid and, while contract provisions aimed at quality outcomes do exist, the details have largely been left for a later date.

The primary concern of providers, who seem assured for now at least that reimbursement rates will not be cut significantly and/or across the board, seems to be the timing of payments. Anecdotes from other states are that MCOs have delayed payments to providers for long periods of time creating cash flow issues that threaten the survival of some. The Department of Health and Human Services has issued two guidance documents indicating that this should not be a problem in New Hampshire. According to these documents, the MCO contracts set stricter deadlines for payment of clean claims than are currently in place: 95% of clean claims must be paid within 30 days and 100% of clean claims must be paid within 60 days. The Department further points out that these are minimum standards and they do not preclude providers and MCOs from agreeing to even more aggressive timetables for payment.

Approval of these contracts by the Executive Council is definitely not the end of this story; in part, because so many details still need to be determined. The House Finance Committee will hold a public meeting to discuss implementation of Medicaid managed care and its impact on the state budget next Thursday, May 17^th at 1 PM (or 30 minutes after the end of the House session scheduled for that day). And, the Department of Health and Human Services will conduct two 10-part series of facilitated forums to discuss implementation of the program, with implementation of the acute care program being addressed in the late spring to early summer and implementation of the long-term care program being addressed in the late summer to early fall.

As the biggest state contract ever, and with such a significant indirect and direct impact on the state's employers, this is an issue worthy of continued vigilance.

More to come. And more information available at:

DHHS materials - http://www.dhhs.nh.gov/ocom/care-management.htm

NH Fiscal Policy Institute white paper -

http://www.nhfpi.org/wp-content/uploads/2012/04/Critical_Questions_Remain_Unanswered_in_Medicaid_Managed_Care_Contract1.pdf

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