Medicaid HMOs to get less from Md.

Panel limits 2.3% cut to 6 months amid fears providers would quit

April 07, 1999|By M. William Salganik | M. William Salganik,SUN STAFF

The state cut the rates it pays Medicaid HMOs yesterday, but softened the effect by limiting the 2.3 percent reduction to six months.

In approving the cut, the General Assembly's joint Administrative, Executive and Legislative Review Committee also created a commission to review payments and other Medicaid issues and report in time to consider whether the lower rates should be extended further.

Since the committee was acting on an emergency request from the state health department, its vote on the rate cut is binding.

The action represents the latest twist in a saga that has continued for nearly a year -- and now will grind on for at least six more months.

Dr. Martin P. Wasserman, the state health secretary, first said in July that the state was overpaying the HMOs that care for about 300,000 Maryland Medicaid recipients, mostly mothers on welfare and their children.

Wasserman had recommended a 7.5 percent rate cut in February based on a consultant's study. But the HMOs and groups representing hospitals and doctors said the cut could compromise care and cause providers to leave the program.

Yesterday, Dr. Wasserman, joined by Budget Secretary Frederick W. Puddester, proposed a 2.3 percent cut over 20 months.

The joint panel accepted the rate cut but for only six months, responding to complaints from the industry that the effective rate was 4.5 percent and would force HMOs to pull out of Medicaid if extended for 20 months.

"The administration has come a long way -- more than halfway -- to address the concerns" of legislators and HMOs who had objected to the 7.5 percent cut, Puddester said. Without a rate cut, he said, the state would be continuing to overpay the HMOs.

State officials estimate that the overpayment since July is $44 million.

The HMOs and other medical groups complain that the rates are already too low and that the proposed 20-month period failed to allow for inflation.

Fran Doherty, vice president for government affairs for CareFirst BlueCross BlueShield, told the joint committee that the new rates would force the insurer "to carefully consider whether we want to continue to participate [in Medicaid] in calendar year 2000." CareFirst covers about 80,000 Medicaid enrollees.

The lower rate also could cause hospital-sponsored HMOs to drop out from Medicaid, just as HMOs did when the federal government cut rates for Medicare, said Michael V. Johansen, a lobbyist for Maryland Physicians Care, a Medicaid HMO run by Maryland General Health System and three Western Maryland hospitals.

"More than 160,000 current [Medicaid] enrollees will have to find new providers from out-of-state, corporate HMOs," Johansen warned the committee.

Representatives of medical groups fear a rate cut may cause some doctors to stop treating Medicaid patients.

After some discussion, the committee voted 13-2 to impose the new rates for six months and create a commission to study Medicaid issues.

Two Baltimore Democrats, Dels. Nathaniel T. Oaks and Clarence Davis, said they favored maintaining current rates while the new commission completes its study.

"There were two legitimate points of view colliding, and I think we worked out a good compromise," said Sen. Christopher Van Hollen Jr., a Montgomery County Democrat who co-chairs the committee.

After the vote, Wasserman said, "The important thing is that the legislature has made a rate reduction consistent with what we've asked for."

But Peter Mongroo, president of Helix Family Choice, a hospital-sponsored HMO, said, "The jury is out on whether we'll be able to sustain this for six months."

Pub Date: 4/07/99

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