Pullout extends to all of state

CareFirst leaving Medicaid patients effective April 1

January 04, 2001|By M. William Salganik | M. William Salganik,SUN STAFF

CareFirst BlueCross Blue- Shield, which announced three months ago that it was pulling out of the Medicaid program in most of Maryland, said yesterday that it was leaving the state program entirely.

About 40,000 Medicaid enrollees, almost all in Baltimore, will have to choose new HMOs by April 1, when the CareFirst pullout takes place.

Debbie I. Chang, deputy health secretary, said most of the 40,000 would be able to stay with the same doctors by choosing other HMOs with which their doctor participates. "We still have the capacity to deliver essential health care services to Medicaid enrollees," she said. In Maryland, there are about 400,000 participants in the Medicaid program, which the state calls HealthChoice.

Advocates said they are concerned that re-enrollment could bring interruption in care for the Medicaid members, mostly children of families receiving welfare and disabled children, despite the best efforts of the health department.

"We're talking about real children here - children in the middle of treatment," said Carol Fanconi, health director of Advocates for Children and Youth, a group which recently issued a report critical of some aspects of the Medicaid program.

And, while seven other HMOs remain in the city, several expressed caution yesterday about enrolling members who had produced losses for CareFirst. Cynthia Demerest, chief operating officer of Priority Partners, a plan affiliated with Johns Hopkins Medicine, said, "We have a large Baltimore City population today, and if it increased, it could bring us into losses."

The CareFirst pullout was triggered by the collapse of CarePart- ners, an arrangement under which University of Maryland Medical Center, Mercy Medical Center and Total Health Care provided most of the care for CareFirst's Medicaid members in the city.

Under the deal, CareFirst's FreeState Health Plan took 10 percent of the premium off the top for administrative costs, and the hospitals and clinics assumed most of the risk for losses in the program - which they said were projected to be $5 million to $7 million this year.

When CareFirst pulled out in the rest of the state last year, saying it was losing $11 million for the year, it stayed in Baltimore and parts of Baltimore County, where CarePartners would be absorbing the losses. However, Mercy and University decided late last week they could not continue to run in the red, and CareFirst decided to exit altogether.

"While FreeState had hoped to continue participating in the HealthChoice program, it is clear that it cannot continue to absorb such significant losses alone," the insurer said in a written statement. "To do so would be unfair to CareFirst's other commercial members whose premiums would have to be increased to offset losses in this program."

Mercy and University were among a number of providers who agreed to accept risk when the state moved its Medicaid program into HMOs three years ago, in order to hold onto patients.

But with rates not keeping up with the increase in medical costs, officials said yesterday, they have decided to continue to deliver care to the poor, but leave the risk to the HMOs. "We're going to focus on being a provider. You don't need to own the insurance risk to assure patient flow," said Thomas Mullen, president and chief executive officer of Mercy.

While the state's Medicaid rates for this calendar year increased 5.7 percent on average, both Mercy and University said that, with their patients in Baltimore, their rates would actually be going down under the revised formula. The rate-setting system is designed to "risk-adjust" - paying more, for example, for AIDS patients - so the amount the rates go up or down depends on what patients the HMO treats.

"The city rates were such that we didn't think we could afford to accept that kind of risk," said Nelson Sabatini, executive vice president of the University of Maryland Medical System.

Other participating HMOs also thought the state's payments in the city are a problem. "Our analysis shows the city rates raise serious concerns," said Mark Puente, associate vice president for Americaid, which has frozen its enrollment in the Northwest and Northeast sections of the city while expanding elsewhere.

Chang, however, said the state's payments this year are, for the first time, based on a detailed analysis of the care given to different categories of patients. "We established the rates through a collaborative and data-driven process, and we feel the rates are fair," she said. "We owe it to the taxpayers to be fiscally prudent, and to set the rates where efficient plans can operate."

She said the transition for CareFirst members in the rest of the state - announced in October and effective Jan. 1 - had been "very smooth," and that she was optimistic about re-enrolling Baltimore members in the second phase of the pullout.

But Laurie Norris, staff attorney at the Public Justice Center, said problems from the initial transition of 60,000 CareFirst members could surface as the patients start seeing their doctors, "My feeling is that we really don't know yet how good or bad this is going to be for recipients," Norris said.

Fanconi praised the efforts of CareFirst and the health department in making the transition, but said the department needed to upgrade its data systems to provide information to enrollees and make re-enrollment easier in the future.

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