State may shift 130,000 Medicaid recipients to managed care

Oct. 31--Virginia officials are quietly working on sweeping change to the way care is delivered for tens of thousands of elderly and disabled Virginians.

It's an element of the intense political debate, still echoing in this year's election campaigning, over whether Virginia should expand Medicaid: the reforms that opponents said were needed before the state could consider using federal Affordable Care Act dollars to cover hundreds of thousands of low-income adults.

What state officials plan now is to move 130,000 Medicaid recipients living in nursing homes or receiving coverage for services they get at home into managed-care plans, beginning next year.

The idea is for commercial firms -- insurers or an insurance arm of hospitals or nursing homes -- to manage how those Virginians use Medicaid-funded long-term support services. Those services range from visits home health workers make to respite care to nursing home residence.

The switchover for the 130,000 is to come in the spring of 2017, and the state will begin soliciting proposals from managed-care companies next spring.

In a way, says Secretary of Health and Human Resources Bill Hazel, it is doubling down on a pilot program state officials launched last year.

That pilot program now covers 29,632 Virginians eligible for both Medicaid, the jointly funded federal and state coverage for the poor and disabled, and federal Medicare coverage.

Unlike that pilot program, the expansion in 2017 will not allow people to opt out of managed care.

Some 43 percent of those eligible for the pilot program have opted out, more than double state officials' expectation that about 20 percent would.

That has meant the savings the state hoped to see haven't materialized. State officials working on the reform have rolled back their original forecast for savings from $44 million over the two years ending June 30, 2016, to about $20 million, half of it state funds and half federal.

Still, the state is so committed to moving Medicaid recipients to managed care, a move officials and legislators expect will slow the rising cost to the state of health care, that it has opted not to take up an offer from federal officials to simply extend the pilot for a while.

The impact on the state budget from moving those 130,000 Virginians to managed care could be huge. About two-thirds of Virginia's $7 billion Medicaid bill covers elderly or disabled Virginians who receive care in nursing homes or the community. But those people account for only about one-third of all the people enrolled in Medicaid.

Most Medicaid recipients are children in low-income families, and their benefits already are administered by managed-care plans.

The move to bring in the one-third who are not in managed-care plans was supposed to be the final reform legislators wanted to see before considering Medicaid expansion.

"While we understand the external pressures that may be driving the rapid expansion, we feel that this schedule undercuts come key potential benefits of the demonstration," State Long-Term Care Ombudsman Joani Latimer wrote to the state Medicaid agency.

"It is concerning that significant expansion of the model is planned before meaningful results have had a chance to fully materialize," she added.

Pamela Doshier, administrator of Riverside Health Systems' The Orchard facility in Warsaw, wrote to the Medicaid agency that it is cumbersome to get managed-care plans to authorize services, while "payment is very, very slow, at best."

A key element of managed care is to decline to authorize continued services, with the result that several people had to be rehospitalized, Theric Brown, administrator of the Manassas Health and Rehabilitation Center, told the Medicaid agency.

While the politics of Medicaid expansion over the past two years are what largely drove the state promises for managed-care reforms, nobody's betting on a move to expand Medicaid when the winners in next Tuesday's election convene in January for the 2016 legislative session.

House Republicans, who hold two-thirds of the seats in that body and are likely to retain a large majority after Nov. 3, are adamantly opposed, as are almost all the members of the GOP's 21-19 majority in the state Senate, Senate Majority Leader Thomas K. "Tommy" Norment Jr., R-James City County, says.

None are likely to shift.

Norment's opponent, Hugo Reyes, like many Democratic candidates this year, argues that if Virginia opted to expand its Medicaid program by using funds from the federal Affordable Care Act, the state could get badly needed resources for mental health services and education.

Norment, like virtually all Republicans, said Medicaid costs are soaring and reform to slow them down is badly needed.

He's hoping reforms -- including ending the requirement that the state approve new medical facilities or expansions -- will ease the pressure of health-care expenses on the state budget.

"Competition does work," he says.

But the reforms legislators said they wanted as a precondition to considering Medicaid expansion focused instead on the mechanics of paying for and managing use of non-medical services.

And while the state is pushing, there are still big challenges to work out, though, health secretary Hazel said.

The biggest involves Medicare's rules on recipients' freedom to choose doctors and other medical services.

"You could change a dozen times a day," Hazel said.

Freedom to change that easily is hard to meld with a managed-care approach, where the idea is for patients to use providers within a limited network.

Before paying for services, managed-care plans review and authorize the care.

That approach can mean constraints on patients' choice about who they see, how often they go and what services they get -- a key tool for reining in health care costs that has become standard for people who buy insurance for themselves or get insurance through work.

To deal with the freedom-of-choice issue, the state will seek the same kind of exemption from federal Medicaid rules that it has used since 2005 to expand the number of pregnant women covered by Medicaid and to help low-income families pay for employer health coverage, Medicaid spokesman Craig Markva said.

It also will require managed-care companies seeking to cover long term care services to also qualify as Medicare managed-care plans. Those Medicare plans offer enhanced benefits in return for limiting patient choice.

The state expects the 130,000 people it will move to managed care will be able to choose from at least two plans, Markva said.

A review of the pilot program by the Kaiser Family Foundation noted that nearly two-thirds of the eligible recipients who use Medicaid to pay for non-medical services such as home health aides and respite care opted out of managed care, a far higher proportion than for those who use Medicaid only for medical needs.

Glitches in sharing information and some providers' lack of electronic billing systems were other problems, Kaiser said.

Switching from plan to plan and confusion about the need to re-enroll in Medicare's Part D coverage for prescription drugs were other issues, Kaiser said.

Medicaid spokesman Markva said fear of managed care, providers influencing people not to sign up, and the fact that some providers weren't in managed-care networks were other challenges that discouraged people from signing up under the pilot program.

Ress can be reached by telephone at 757-247-4535.

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