Safeguard added to plan to shift poor to managed care Provision requires HMOs to use 80 percent of state payments to treat patients

January 12, 1996|By Diana K. Sugg | Diana K. Sugg,Sun Staff

Responding to concerns that managed-care plans make too much profit while providing too little service, state health officials have written a safeguard into their proposal to shift roughly 220,000 poor Marylanders into managed care.

Managed-care organizations would have to devote roughly 80 percent of the money the state pays them to providing patient care or the state would stop payment.

The provision -- announced yesterday as officials prepare to unveil their program to state legislators -- is at the heart of a nationwide debate over who should take care of the poor.

Most people with private insurance already are in health maintenance organizations or some form of managed care. By coordinating care and restricting access to expensive and sometimes unnecessary specialists, these plans have been able to cut health costs.

But people on Medicaid, the federal-state health program for the poor, have mainly received their care through grass-roots community clinics and neighborhood physicians.

In Maryland and across the country, states strapped by huge Medicaid costs have begun moving these patients into managed-care plans.

Traditional care givers have passionately fought the switch, arguing that for-profit plans that ignored these patients in the past should not benefit now.

Dr. Martin P. Wasserman, state health secretary, said these concerns prompted him to put in the new requirement.

Objections from HMOs

But managed-care representatives objected, saying that as long as they continue to provide quality care to patients within certain dollar amounts, executive salaries and other areas shouldn't be an issue.

"We're an easy target for a lot of individuals who are not happy with the changes that the system is forcing them to make," said Camille Dobson, spokeswoman for the Maryland Association of Health Maintenance Organizations.

David Iannucci, vice president for policy and planning at Prudential Mid-Atlantic, also said that the 80-percent requirement seemed to be in conflict with administrative demands, such as the state data-gathering requirements.

Roughly a quarter of the state's 467,000 Medicaid patients -- half of whom live in Baltimore -- are already voluntarily enrolled in managed-care plans.

Another 220,000 are in a less restrictive system and will be moved into the HMOs. All told, the proposal would affect three-quarters of Maryland's Medicaid patients.

Legislature's approval

To make the switch, Dr. Wasserman must win the approval of the legislature. The proposal initially was expected to need federal approval as well, but pending legislation in Congress might make that unnecessary.

Dr. Wasserman's staff has been working for months with a committee of about 125 people representing diverse aspects of health care to put together the plan.

At a meeting yesterday, com- mittee members seemed generally impressed with the presentation of the final version. Managed-care representatives called the plan "very fair."

Others, including nurses and mental health advocates, also praised the open process and final product.

"The focus has shifted from wanting to kill it [the plan] to moving to the details," said Joseph M. Millstone, director of medical-care policy administration at the state Department of Health and Mental Hygiene.

Health officials are beginning to work out a myriad of details, such as how much providers will be paid and how to care for children with special needs.

State lawmaker pleased

Sen. Larry Young, a Baltimore Democrat who chairs a health subcommittee of the Senate Finance Committee, was briefed yesterday and he called the proposal a "good plan." He was pleased that it promises physicians who have a substantial number of Medicaid patients that they will be able to join a managed-care network.

But the industry intends to fight that provision.

"We feel very strongly that we should have the ability to form our networks as we feel is appropriate and necessary to serve our members," said the HMO association's Ms. Dobson.

She said HMOs don't want to be forced to take physicians who don't meet their requirements.

Meanwhile, others expressed concerns about some of the proposed standards.

One would allow a 90-day waiting period for an office appointment, and a 45-day period for a referral.

David Shippee of Chase-Brexton Health Services, which serves AIDS patients, said those standards might be fine for healthy patients, but not for patients with chronic serious illnesses.

Maryland officials expect to lose $37 million in federal funds for Medicaid in 1997. But they project to save $19 million that year with their plan, cutting the budget shortfall to a more manageable $18 million.

All told, over five years, officials hope to get roughly $473 million in savings.

"We're taking one step at a time," said Dr. Wasserman, who said the program could start a year from now if legislators approve.

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