The final word – HUSKY ASO cost less than HMOs – or it should have

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At Friday’s Medicaid Oversight Council meeting Mercer actuaries gave us the final comparison of the costs of the HUSKY program under the ASO/PHIP arrangement compared to the costs under capitated HMOs. We learned that in 2008 during the PHIP period, when the Governor removed any financial risk from the HMOs and the program ran as a self-insured ASO model, medical costs per member per month actually dropped $2.78 pmpm (per member per month) compared to the next year when the program was fully capitated under the HMOs (comparing 2009 adjusted dollars). Unfortunately because the shift to PHIP was sudden and the state was at the mercy of the HMOs, we paid them $5.47 pmpm more to administer the program than they spent the next year – when they were spending their own money (again in 2009 adjusted dollars). The bottom line is that, moving forward, as the state is negotiating new contracts with the HUSKY HMOs, if we return the program to the self-insuring ASO/PHIP model and pay the HMOs the more-than-reasonable administrative rate that they managed with in 2009, again for emphasis when they were spending their own money instead of ours — the state could save over $41 million (in 2011 dollars). This would involve no disruption in care continuity, no change in quality of care, but would increase access to care immeasurably. No brainer.

If we bid it out, we might bring in new players with more providers and save even more.

At the Council meeting, we also heard AmeriChoice’s extremely disappointing performance improvement report. They measured their performance in four areas – adolescent wellcare, timely prenatal care, comprehensive diabetes care and mammograms. In no area was the plan’s performance above the 50th percentile; in two of the four cases it was at the 10th percentile. The plan acknowledged that these created “key opportunities for improvement.” No meaningful corrective plan was provided; there was no indication of accountability for the plan by DSS.

Consultants Meryl Price and Marcia Stein of Health Affairs Matters presented their report to the Council on the success and potential of varying Medicaid payment models from other states. The consultants emphasized that their study was not an evaluation of CT’s program, but a comparison of other states’ models. PCCM and MCOs provide roughly equal opportunities for improving quality and managing costs. States found having both programs in place provided incentives for each to perform better and a robust PCCM program gives states important negotiating leverage with HMOs. Patient centered medical homes offer more levers, particularly to improve quality and add value. Accountable Care Organizations (ACOs), which are very new and have not been evaluated, in theory offer even more opportunities. However CT is far from prepared to create Medicaid ACOs at this point (see above). The report serves as a starting place for the Council and other policymakers to begin discussions on Medicaid payment reform. An important theme emphasized by many states was that the specific payment structure is far less important than strong oversight, solid evaluation data to act on, and a willingness to follow through.

In response to a question, DSS announced that they have been separately working with provider groups to design payment reform plans for Medicaid consumers in the fee-for-service program moving them into some form of managed care. The Council created a subcommittee to track DSS on their plans and advise the Council.
Ellen Andrews