Two years ago, the state increased payment rates to providers in the Medicaid fee-for-service program and required that the HUSKY HMOs pay providers at least fee-for-service rates within the managed care program. The change in HMO contracts to require higher rates was included in the program’s federal waiver and capitation rates paid to plans were raised to pay for the change. (At the time, advocates found the HMO rate increase interesting as plans maintained that they routinely paid providers above fee-for-service rates.)
At the last Medicaid Care Management Oversight Council meeting DSS reported that they have reversed that policy and exempted the plans from the requirement to pay at least fee-for-service rates, retroactive to July 1st. However there has been no reduction in capitation rates to plans allowing the HMOs to reduce their medical costs and divert more state funds to administration and profit. At the October Council meeting we learned that the HUSKY HMOs made $19 million in profit on the program last year while they were still required to pay fee-for- service rates.
A group of advocate and provider organizations have sent a letter to CMS alerting them to the violation of the terms of the federal waiver that “threatens substantial harm” to more than 400,000 HUSKY members struggling now to access care in the program. Advocates are concerned that payment rate reductions will cause more providers to leave the program that already suffers from low provider participation rates. The advocates are asking CMS to intervene and reverse DSS’ policy decision to reduce provider rates.