MM Curator summary
GA MCO contracts are expected to be rebid soon and journalists are reporting that current contracts lack financial controls that are standard in other states.
The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.
(Hannah Norman / KHN photo illustration / Getty Images)
Just before Frank Berry left his job as head of Georgia’s Medicaid agency this summer, he said the state “will be looking for the best bang for the buck” in its upcoming contract with private insurers to cover the state’s most vulnerable.
But whether the state — and Medicaid patients — are getting an optimal deal on Medicaid is up for debate.
Georgia pays three insurance companies — CareSource, Peach State Health Plan and Amerigroup — over $4 billion in total each year to run the federal-state health insurance program for low-income residents and people with disabilities. As a group, the state’s insurers averaged $189 million per year in combined profits in 2019 and 2020, according to insurer filings recorded by the National Association of Insurance Commissioners. Yet Georgia lacks some of the financial guardrails used by other states.
“Relative to other states, Georgia’s Medicaid market is an attractive business proposition for managed-care companies,” said Andy Schneider, a professor at Georgetown University’s Center for Children and Families.
Georgia is among more than 40 states that have turned to managed-care companies to control Medicaid costs. These contracts are typically among the biggest in these states, with billions of government dollars going to insurance companies. Insurers assume the financial risk and administrative burden of providing services to members in exchange for a set monthly fee paid for each member.
The health plans, though, have at times drawn questions both on spending and quality of care delivered to Medicaid members.
“The transition to managed care was supposed to save states money, but it’s not clear that it did,” said Katherine Hempstead, a senior policy adviser at the Robert Wood Johnson Foundation. (KHN receives funding support from the foundation.)
States can require Medicaid insurers to pay back money if they don’t hit a specified patient-spending threshold. That threshold is typically 85% of the amount paid to the insurance companies, with the rest going to administration and profit.
But Georgia does not require its Medicaid insurers to hit a specific target for spending on patient care, a federal inspector general report noted. Though Georgia is trying to “claw back” $500 million paid to its Medicaid insurers, it could have lost out on recoupment dollars, the report indicated.
And state documents show that the Peach State company, which now has the largest Medicaid enrollment of the three insurers, failed to reach the 85% mark from 2018 to 2020.
Overall, Georgia’s Medicaid “medical loss ratio,” which assesses how much was spent on patients’ claims and expenses, was fifth from the bottom nationwide last year, behind only Mississippi; Washington, D.C.; Wisconsin; and Arkansas, according to data from the insurance commissioners association. Spending rates on patient care in the state fell from 82.9% to 80.8% in 2020. (The NAIC uses a different method for calculating the ratio than the state and federal governments do.)
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“Profits for Georgia Medicaid HMOs are very healthy,” said Allan Baumgarten, an independent analyst and consultant.
When asked whether Georgia planned a spending requirement in the new contract, Fiona Roberts, spokesperson for the Department of Community Health, which runs Medicaid, said “a number of considerations are being discussed.” She noted that the state having a low medical loss ratio does not necessarily translate to “unreasonable profit” for the insurers.
The insurers also make money off their management services firms. In 2020, the insurer Peach State paid a subsidiary of its parent company, Centene Management Company, $114.7 million for administrative services. The nonprofit CareSource paid its management services firm $86.5 million in 2020.
“Fees paid to subsidiary companies represent another source of revenues for the parent companies,” said Baumgarten. “And it’s done in a way that does not allow the state to hold the HMOs accountable.”
The state’s latest performance data, which covers 2019, shows the plans did as well or better than the national median on many measures, including on access to a primary care provider.
But low birthweight rates appear to be on the rise despite the state’s goal of bringing them down to 8.6% or less. The companies hovered at an average of about 9.8% in 2019, the latest available data.
“We continue to hear stories from families and health care providers about children in Medicaid managed care who have considerable trouble getting the services they need — whether it’s medication to control their asthma, getting connected to behavioral health care after a mental health crisis lands them in the emergency room, or any number of health challenges,” said Melissa Haberlen DeWolf, who directs research and policy at the Voices for Georgia’s Children advocacy group.
Compared with other states, Georgia has a stunningly low rate of referring poor children to specialty services under Medicaid, according to a recently released National Health Law Program report. DCH said recently it’s investigating why the rate is so low.
And, currently, the state is reporting low covid vaccination rates for those 12 and older covered by the Medicaid managed-care companies. A state posting shows the rates for the three companies are each below 10%, far lower than Georgia’s overall rate.
The companies, when asked about profitability, quality of care and administrative costs, directed a reporter to Jesse Weathington, executive director of the Georgia Quality Healthcare Association trade group. He said he could not comment on individual companies’ financial performance.
“Our goal is to continue to drive quality improvement, and successful patient outcomes, in the most cost-efficient manner for taxpayers who fund Georgia Medicaid,” Weathington said.
Georgia is expected to open the high-stakes bidding process on a new Medicaid contract next year. The bid process typically is fierce and the results often contested.
It’s not clear, though, when Georgia’s new contract process will be completed as the timelines have hit snags in several other states. North Carolina rolled out its managed-care system July 1 after two years of delays. It will spend $6 billion annually, the largest contract in the state health agency’s history.
Last year, Louisiana’s contract process fell apart after insurers that lost out disputed the results. And Centene and other companies are protesting Pennsylvania’s decision not to award them contracts, delaying implementation.
St. Louis-based Centene has more Medicaid managed-care business nationally than any other company. Centene last year acquired WellCare, a Medicaid insurer in Georgia, then closed down that operation in May.
Centene has also faced questions about overbilling. Ohio settled an $88 million pharmacy fraud lawsuit it filed against Centene months before awarding it a contract, while Mississippi settled with it for nearly $56 million. Now Georgia is expected to get money back under the $1 billion that Centene set aside to settle with other states affected by the pharmacy overbilling.
Consumer groups want the state to take stronger steps to advance the health of those who rely on Medicaid and to make the deals with the insurers more transparent.
“Medicaid members are best served when they have ready access to providers, insurers are eager to resolve their health care needs, and policymakers exercise strong oversight to ensure members’ health and well-being are prioritized over profits,” said Laura Colbert, executive director of Georgians for a Healthy Future, a consumer advocacy group.
A bill that aimed to bring more transparency and accountability to the state’s health care plans was vetoed last year by Republican Gov. Brian Kemp. The legislation would have allowed a committee to examine records of health care contractors and compel the state to respond to questions about them. Kemp said the bill would have violated the separation of powers doctrine between the executive and legislative branches of government.
Clipped from: https://khn.org/news/article/georgia-medicaid-contract-managed-care/
