Back in January, we reported that opting in to Medicaid expansion under the Patient Protection and Affordable Care Act could be a good thing for New Hampshire's economy by injecting more than $2.5 billion in federal dollars into the state, creating an estimated 700 jobs, and saving citizens more than $92 million - all while helping working families afford critical health coverage. 

We also noted that it could help reduce the shifting of Medicaid deficits to private health insurance premiums paid by employers and individuals throughout the state. What we didn't discuss then was the fact that Medicaid expansion can only work in New Hampshire if Medicaid managed care is successfully implemented. Otherwise, there simply isn't enough state money to provide fee-for-service Medicaid coverage to the approximately 50,000 additional individuals who would be eligible for it. DHHS Commissioner Nick Toumpas put it bluntly last week when he provided an update to the Long Term Care subcommittee of the Joint Legislative Oversight Committee on Health and Human Services. He said, "As a practical matter, it would be suicidal for us to engage in Medicaid expansion without Medicaid managed care."

So, what is going on with implementation of Medicaid managed care and what are its prospects? Answers: 1) Not much. And, 2) Not good. At least according to some.

There is a lot of negotiating going on between the three Managed Care Organizations (MCOs) that entered contracts with the state and various health care providers they will need in their networks. And there is a lot of planning going on at DHHS and in segments of the provider community to be prepared for implementation if the negotiations are successful. However, Medicaid managed care cannot move forward unless at least two of the three MCOs can establish statewide health provider networks and, so far, none has been successful in doing so.

There are two key provider groups that have not signed on, each with its own barrier to participation. Hospitals, particularly hospitals that are not designated as "critical access hospitals" under federal law, have been slow to sign on in large part due to low Medicaid reimbursement rates and recent changes to the Medicaid Enhancement Tax (MET) and Disproportionate Share Program that have cost that segment of the health delivery system multi-millions of dollars. Lawsuits have been filed and most everyone agrees that resolution of the MET tax and uncompensated care issue must be achieved before many, if any, of these hospitals will sign onto managed care networks. Community mental health centers, too, have been slow to sign on. This is more due to the newness of including behavioral health in managed care and, therefore, the absence of data or experience to show how it would work, particularly for many of the support services that are needed to assist chronically ill people live and thrive, to the best of their ability, in community settings.

It really is a house of cards in some respects and something has to happen soon. The Governor's proposed budget, which was passed largely intact by the House and is now pending before the Senate Finance Committee, is based on successful implementation of Medicaid managed care and having New Hampshire opt-in to Medicaid expansion. In the current biennium, DHHS had estimated $1.5 million in lost savings for each month that implementation of Medicaid managed care is delayed. I expect the lost savings would be about the same in the next biennium and those savings will have to be found elsewhere if managed care does not proceed. And, full implementation will not occur until 120 days after DHHS receives "assurance" by at least two MCOs that they have adequate state-wide provider networks.

The other question is, how much longer will the three MCOs stay in New Hampshire with employees on the ground and costs being incurred when they are not up and running and making money?

Many budget watchers are focused on the battle between gambling and the gas tax/tobacco tax as revenue sources to fund the budget. But, this issue is also worth watching on the spending side.