Category: Medicaid

Universal Medicaid Managed Care in Kentucky: Month Five.

Long-term recommendations from the State Auditor, and a “Modest Proposal” from me.

Two days ago, Adam Edelen, Kentucky’s new Auditor of Public Accounts, began his term in office with a bang by releasing the results of his initial investigation of the performance of Kentucky’s four Medicaid managed care vendors. There is obviously a practical limit to the amount of information that can be collected and analyzed in a short time, and the Auditor’s office appropriately acknowledged this. Nonetheless, the results were consistent with anecdotal reports and legislative hearings, and were correspondingly very discouraging. The State Auditor offered suggestions in hopes of improving future services.

In early February, Mr. Edelen asked the Commonwealth’s four Medicaid Managed Care Organizations (MCOs) to provide his office with information from the months of November and December of 2011. He asked for basic statistics such as: the number of members served, the number of claims filed and paid, the dollar value of those claims, and the number and value of rejected claims with the reasons for rejection. (Note that we are only talking about two months.)

In a press release of February 29, the Auditor noted that the managed care organizations had received $708 million while paying out only 420 million as of February 15. That is a float of $288 million! Although there was plenty of criticism of the MCOs, the Auditor also shared some of the blame on the Cabinet which was said to have failed to learn the lessons of the difficult transition to Passport 14 years ago and was ill-prepared to monitor and enforce its contracts with the new MCOs. Continue reading “Universal Medicaid Managed Care in Kentucky: Month Five.”

Kentucky Medicaid Still a Mess: Month 4

Primum non noccre.  First do no harm.

Attributed to Hippocrates, the above aphorism is often cited in discussions of medical ethics.  The fact is that it is impossible to practice medicine without causing some harm.  Nothing from taking a medical history to administering chemotherapy and everything in between is free of potential harm.  As in life, few things are simple and a ballance of risk and benefit is always made.  The aphorism should be rewritten as:

Primum minimus noccre.  First do the least harm.

I no longer see patients and have no first-hand experience with the new state-wide Medicaid Managed Care systems.  I can however still read, and it is clear that things are not going very well, at least if the testimony at Frankfort hearings is generalizable.  Some of the reports sound just plain awful.  I cannot conceive that a stable epileptic would have medicines dolled out two weeks at a time.  Is there a copay involved that would also double?

Managed care companies are charged with weeding out the unnecessary or poor quality medical care that physicians and other providers are unable or unwilling to tackle themselves.  I acknowledge and even applaud those efforts. Active managed care however is very difficult to do and requires cooperation from both patients and providers– cooperation that has never been in abundance.  As a result, managed care companies have evolved to depend more on things like preauthorizations, copays, formularies, and restricted payments.  Cynics will call this rationing by inconvenience.  Modern insurers are certainly practicing medicine in the sense that they are determining treatments or withholding them.  (Sometime they practice better than free-range doctors.)  All this micromanagement might trim medical expenditures, but it also increases overhead costs to both the insurer and the providers.  Where is the balance point?   If needed services are delayed, then the cost will be more than just in dollars.  I honestly do not know how much is really saved by managed care as it currently is practiced.  Perhaps not much at all.  It has never been shown to me that Passport (which provided good care) ever saved the state money.

What to do now?

I do not believe things will be sorted out quickly.  Not only are the systems all new to the state and providers, but also to patients who do not know what to expect.  An attempt to apply the full bore of managed care protocols that might have worked elsewhere to a new population was probably doomed to failure here, at least I think so.  What the state needs to do now is to signal the three new Medicaid companies to back off a little and apply their controls in a more gradual manner.  This will require that some money be allowed to flow into the system.  Don’t waste time trying to adjudicate bills from last November or you will never catch up.   The overbearing principal here is that sick people should be protected.  This will hurt the bottom lines of doctors, hospitals, pharmacies, insurance companies, and the state treasury.  This was never going to be easy or cheap. Real reforms are not going to me made by requiring long phone calls between doctor’s offices and drugstores to authorize prescriptions.  Effective reforms must be made in the entire medical marketplace, and not just in the market of the most vulnerable.  Bite the bullet and make a nationwide medical system that is a coherent whole, not one in which some benefit at the expense of others.   Any Medicaid problem will then melt away.  This will take more political courage and true professionalism than we have been able to manage up to now.  I am not optimistic.  In the meantime, do less harm.

Medicus quidem faciendum malum.

Peter Hasselbacher
Feb 24, 2012

How does UofL hospital compare to other hospitals?

Let’s look at some numbers.

The University of Louisville is going to try and make a case that it has unique requirements that will require additional non-patient revenue to fix. Specifically, they are asking for more state money, or alternatively, permission to partner with an outside business entity that is willing to give them more money. The claim will be made they are caring for a disproportionate share of nonpaying patients, and do not have enough profitable patients to subsidize the losses the way other hospitals do. This is a reasonable argument to make but it is an incomplete one. The University’s problem will not be fixed by money alone. There are a host of other issues that must be addressed simultaneously. I have begun to discuss these elsewhere.

There are 3502 acute care hospitals that participate in the Medicare program. Of these, 1047 are teaching hospitals, and 601 are large urban teaching hospitals like the University of Louisville Hospital. It would be easy for the University or its consultants to pick and choose hospitals to compare with that would bolster its case. Picking your own benchmarks is one way to make yourself look good, or in this case bad. Much of the University’s credibility will hinge on the choice of comparable institutions. Fortunately, there is an ocean of comparative data available that I believe helps put things in perspective and can provide a starting point for a broad-based study of our medical school and its principal teaching hospital. I will try to present such information on the Institute’s website. Such analysis often challenges popular wisdom.

For example, teaching hospitals get billions of dollars of special funding from Medicare (and Medicaid) solely because they have medical residents on their wards. These Direct and Indirect payments for Graduate Medical Education (interns and residents) increased substantially over the years as a result of effective lobbying. It was argued from the start that teaching hospitals deserve more money because they have extra expenses related to faculty salary, inefficiencies of care, and for other reasons that may or may not be relevant today. Federal analysts estimate that Medicare pays teaching hospitals twice as much for graduate medical education than the actual cost of those programs to the hospitals. Not to be denied, the teaching hospital lobby continues to argue that they are entitled to the extra money because of their disproportionate service to the poor. Is it in fact true that teaching hospitals take care of more of the poor than non-teaching hospitals? I was frankly surprised when my first attempt to find out showed that in fact, the proposition does not appear to be true. Continue reading “How does UofL hospital compare to other hospitals?”

Kentucky Medicaid is a Mess.

Slow-Payments or No-Payments for medical care.

A week ago I was pretty tough on a possibly hypothetical physician who was said at a Frankfort hearing to have abandoned two child patients because one of the three new Kentucky Medicaid Managed care vendors had not paid him for three months. What is not hypothetical is that the Medicaid system is now in shambles. There are now four independent Medicaid managed care systems in Kentucky plus original Medicaid itself to deal with. Each of these has its own bureaucracy and unique systems. Thats a lot of different hoops for physicians and other healthcare providers to jump through. I have no doubt all are pulling their hair out. By all accounts, all three new vendors are in the pay-slow, pay-low mode. Cynics will point out that this is an easy way for an insurer to make a profit. After all, even Kentucky government uses the gimmick of paying healthcare providers late as a way to balance the books and make it look like they have actually been doing their jobs.

It is easy to assume that the three new managed care companies are to blame. That does not easily explain why all three seem to have failed at the same time, or why they appear successful in other states in which they work. When I worked in Kentucky Medicaid in the 1990s during my first-ever sabbatical and later as a faculty fellow, it was clear to me that there were major inadequacies in the state’s Medicaid computer systems and their ability to transfer and analyze information. I hope things have improved since then. Remember that all information about eligible beneficiaries, hospitals, and other providers has to be transferred to the managed care companies and continually updated so they know who to pay and for what. The three vendors have been silent publicly, but I will bet a martini in your favorite Louisville bar that internally they are struggling to interface with the state’s system. When you consider that each hospital and doctor’s office may also have their own computer system, it is no surprise that Kentucky Medicaid is staggering under its own weight and complexity. I hope we can pull out of this death spiral of cost and confusion. I still expect the state and providers to hold patients harmless, but that cannot continue infinitely. What a mess! Continue reading “Kentucky Medicaid is a Mess.”