Medicaid HMOs push Md. for raise

$20 million increase in rates is sought as deadline nears

September 27, 2001|By M. William Salganik | M. William Salganik,SUN STAFF

With a deadline looming Monday, several HMOs told a legislative hearing in Annapolis yesterday that they are still unsure whether they will limit or drop their participation in the state's Medicaid program as of Jan. 1.

"The funding for the whole program is inadequate," Eric R. Wagner, president of Helix Family Choice, told the House Environmental Matters Committee. "It could lead to exits [by HMOs], haphazard returns to fee-for-service and disruptions to patients."

Representatives of several HMOs said another $20 million - half state funds and half federal - on top of already-recommended increases would be enough to keep the program going smoothly.

Debbie I. Chang, deputy health secretary, said that the rates the state pays the HMOs are scheduled to increase 8 percent, or $80 million, over the current year.

This should be enough for "efficient" health plans to operate. She said the state had a contingency plan to treat some patients on a fee-for-service basis if there aren't enough participating HMOs.

Disagreeing with Chang's calculations, HMO representatives testified that rates would be increasing just 3 percent to 5 percent - less than the expected increase in medical costs. The actuarial consultant to the state health department had projected that medical costs would increase by 8.3 percent.

"I think we've got a real problem," Del. John A. Hurson, a Montgomery County Democrat who chairs the committee, said after the hearing. "If you start losing providers, the system reverts to fee-for-service, and that basically means we've failed."

Hurson said legislators cannot block or modify the proposed rates, but he hopes the health department decides to increase them. The committee chairman believes the legislature would cover the extra cost once it reconvenes in January.

The HMOs have to tell the state by Monday whether they will continue to participate in the Medicaid next year.

Through the program, called HealthChoice, the state contracts with HMOs to provide care for more than 420,000 people - welfare mothers and their children, moderate-income children and the handicapped. The state pays the HMOs a monthly fee for each member, and the HMOs, in turn, pay doctors and hospitals for care.

The health department also is trying to determine the changes that may be needed over the next two years. Much of yesterday's hearing focused on that evaluation.

Dr. Georges Benjamin, state health secretary, said as part of the evaluation process, he was looking to add money to increase the rates physicians get from the HMOs, correcting a shortage of participating physicians in some parts of the state.

"One of our top priorities in the budget process is to fix the physician component, but we've got to do it in a very constrained environment," he told the committee. That increase could not come until July, when a new budget year begins.

Dr. Fayette Engstrom, representing the Maryland chapter of the American Academy of Pediatrics, said a shortage of Medicaid doctors in the mid-Shore could spread to the Lower Shore, Western Maryland and Baltimore.

Pegeen Townsend, a lobbyist for the Maryland Hospital Association, said, "This evaluation may be meaningless if the rates you put into place Oct. 1 are not adequate."

If HMOs and doctors decide the rates are too low to stay in the program, "it may unravel before you get a chance to say what changes you want to make," Townsend said.

Chang said the rates the state would pay the HMOs beginning in January are in regulations awaiting final approval by the health department. The rates had been developed after discussions with the HMOs and an actuarial study.

Wagner, whose Helix Family Choice is part of the Medicaid program, testified that the rates represented "miscalculation" and smoke and mirrors."

Members of the House committee also were concerned that next year's rates were not sufficient to keep HMOs and doctors in the program.

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