Tomorrow, the first enrollment packets will go in the mail, beginning an experiment that will shift 330,000 Maryland Medicaid recipients into health maintenance organizations over five months.
For the state, it's an effort to stop the escalation of costs, yet provide better care to the state's welfare families and disabled. For most of the patients, it's an involuntary introduction to the era of managed care that most Marylanders have already come to know.
And for the HMOs, it's also a plunge into the unknown. Participation offers a chance to pick up tens of thousands of new enrollees, but that's balanced against the uncertainties of new enrollment procedures, new care requirements, new reimbursement rates, new competition and new members including the homeless and other difficult-to-serve populations.
"It's a very complicated program," says Lorraine Doo, director of the Medicaid program for FreeState Health Plan, an HMO owned by Blue Cross Blue Shield of Maryland. "You only go in if you're prepared to commit the resources. You can't run it like you run a commercial HMO."
The program is designed to reduce, or at least control, the state's Medicaid spending -- $2.3 billion in the current fiscal year, up 21 percent from five years ago. At the same time, the new program should provide better care for the poor and disabled, said Dr. Martin P. Wasserman, the state's health secretary.
By giving each patient a "medical home" including a primary-care doctor, and by paying HMOs a flat rate that creates incentives for preventive care and efficient "disease management," Dr. Wasserman said, the state should be getting improved health and lower costs. He said that made the decision to launch the program, which the state is calling HealthChoice, "a no-brainer."
Until now, most Medicaid recipients have been covered on a fee-for-service basis, although some have enrolled in HMOs voluntarily. Maryland is one of 17 states that have received federal approval for shifting at least some Medicaid patients into managed care, according to the National Conference of State Legislatures.
Two HMOs besides FreeState -- Prudential and United Healthcare (formerly Chesapeake Health Plan) -- have elected to participate in the program. Joining them are three HMO-like organizations -- the state calls them managed care organizations, or MCOs -- established by hospitals.
The hospital-based MCOs were launched in part to assure urban hospitals that HMOs would not be sending their patients elsewhere.
"Maryland General didn't want to stand around and take the chance the other MCO-HMOs would simply drain off their patients," said Bob Rubin, chief executive officer of Maryland Physicians Care MCO. Maryland Physicians Care is owned by Maryland General Hospital and three Western Maryland hospitals. The other hospital-based MCOs formed to participate in the Medicaid program were launched by the five-hospital Helix Health system and by Johns Hopkins, in partnership with a group of community health clinics.
It also gives the hospital industry a chance to test the idea of providing services directly, cutting out the insurance middleman. The Maryland Hospital Association has tried unsuccessfully the last two legislative sessions to pass a law permitting hospitals to create HMO-like operations that could contract directly with employers.
As for the HMOs, some are betting that they can provide the care the state requires and still make a profit. Others have decided they can't, and have opted not to participate.
"We looked at the program and just didn't think it would work for us. We didn't feel the rates would cover the expected costs," said Elizabeth Sammis, director of government health services at Mid-Atlantic Medical Services Inc, which has been serving about 35,000 Medicaid recipients under a voluntary HMO program that will expire as HealthChoice makes managed care mandatory.
The Medicaid managed care field "is not dissimilar to Medicare in that you need a substantial investment to develop the infrastructure and to support the bureaucracy the state insists upon," said Jeff D. Emerson, CEO of NYLCare of the Mid-Atlantic, another HMO that opted not to participate. "You need a very significant outreach program. The logistics involved in communicating with the Medicaid population are very different than Medicare or commercial."
To cope with the logistics of communicating with its members, for example, Chesapeake Family First, the Medicaid MCO of United HealthCare, has dedicated about a dozen staff members to orient new enrollees and to track down those who cannot easily be reached by mail or phone, said Terry Farsace, government programs director for United.
Similarly, Doo said FreeState figures it will need one case manager for every 5,000 Medicaid members -- a higher staff ratio than it would use for commercial members -- and one outreach worker for each 2,500 members.
