DSS answers Medicaid Managed Care Council on HUSKY and Charter Oak costs

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Yesterday’s Medicaid Managed Care Council was standing room only for what is generally a dry actuarial discussion about rate setting. Questions from legislators and advocates were pointed but answers were fuzzy.
First, representatives from Shramm and Raleigh, DSS’ no-bid financial contractors, described how Charter Oak’s costs and benefit package were arrived at. The original bids for the original package promised by the administration from the only three HMOs to apply — Community Health Network, Aetna Better Health, and AmeriChoice – was $335 per member per month, higher than the $250 premiums the Governor had promised. So they asked the HMOs how they could tweak the package to save 24% and keep the Governor’s promise. They arrived at the $100,000 annual limit on benefits. The auditors acknowledged that this provision will cause a number of very ill patients every year to incur significant medical debt as a planful part of the program’s design – they didn’t know how many, but they will get back to us. They also revealed that the actual premiums for members at lower income levels are higher than the $256 paid by un-subsidized members. While this doesn’t matter to those members, their maximum contributions are set in statute, DSS acknowledged that this increases the state’s financial risk, especially given that so far the large majority of enrolling members are in those subsidized income ranges. Many concerns were raised about the state’s financial risk and the sustainability of Charter Oak. There was no answer to the question posed by Kevin Lembo, the State Health Care Advocate, about when we will know if the costs are in a death spiral and what will be done about it.
Council members also had serious concerns about Mercer’s presentation on how the 24% increases in the HUSKY HMO rates were arrived at. Questions focused on the 8.2% increase to bring provider rates under the HMOs up to the fee-for-service floor. Sen. Harp, Co-Chair of Appropriations, stated that the legislature’s understanding was the HMOs were using the 4 to 4.5% increases they have received every year for over a decade to raise provider rates and last year’s fee-for-service increases were just to catch up. She was very concerned to learn that we were paying the HMOs yet again to raise rates. Members also questioned why price increases were included in the 8.2% item as well as in the 5.6% trend adjustment raising concerns that price increases were being counted twice. Significant concerns were raised about the 5.3% increase (over $30 million) allotted for “Change in MCO financial position.” This appears to be money to cover HMO profits and for “negotiations.” We can only imagine those negotiation sessions, when DSS needed three HMOs to run the program and only got three bids.
When asked about the Governor’s dismissive response to the Council’s unanimous resolution advising DSS to slow implementation of the HUSKY transition and until the HMOs have adequate provider panels (as required under federal law), the Commissioner stated that a handful of members are receiving care now.
The meeting then turned to those inadequate provider networks which continue to grow very slowly. Despite that DSS intends to begin enrollment in New Haven, Tolland and Litchfield counties October 1st and the rest of the state November 1st. Middlesex County began enrollment the first of this month, but thankfully less than 7% of consumers have switched into the skeletal plans. The large majority of those have chosen CHN, the already existing HMO based on the state’s community health centers. All HUSKY families will have to choose one of the three HMOs by November 25th or they will be randomly defaulted into a plan on December 1st.
The next Council meeting will be October 10th at 9:30am and will discuss revenues and expenses for HUSKY during the last year and progress on the dental carve out. Can’t wait.
Ellen Andrews