Vaya Health braces for impact of Medicaid Transformation

Sep. 4--As major changes to the administration of Medicaid loom right around the corner, Local Management Entities and Managed Care Organizations across the state are bracing for impact.

Medicaid Transformation is underway in North Carolina, as state legislators voted to move to a Managed Care model for Medicaid recipients starting this year.

Under a managed care model, the funds set aside to provide healthcare to Medicaid recipients will be parceled out to private insurance companies based on the number of recipients registered under their managed care plan. The current model instead reimburses healthcare providers on a fee-for-service basis, meaning the providers are compensated by LME/MCOs for each procedure they perform.

Transformation has far-reaching implications for all facets of the healthcare systems that serve the state, and LME/MCOs are no exception.

Rolled out statewide by 2013, LME/MCOs are responsible for managing the funds that cover specialty care for Medicaid recipients with intellectual and developmental disabilities, behavioral health conditions or substance use disorders. For those living in Western North Carolina, their LME/MCO is Vaya Health.

"Anyone who has Medicaid who has a need for care for any of those disability areas, the payment for that comes from us," said Brian Ingraham, Vaya's CEO. "We're a public insurance company. We have a provider network, we have contracts, we manage the benefits so individuals get a maximum benefit for the care they're seeking, given a fixed amount of money."

Vaya is also tasked with providing assistance to those who have no insurance or are underinsured and don't qualify for Medicaid, a population that is allocated an even smaller pool of funds from the state.

"That is one of the most difficult dynamics we face -- how do we provide assistance to many thousands of individuals with very little funding to do so," Ingraham said.

Change on the horizonWith Medicaid Transformation in place, many of the individuals served by Vaya Health will be transitioned to new plans, called "Standard Plans," that will manage their care for all their basic physical health needs as well as the specialty services provided by Vaya. These Standard Plans will be overseen by one of the new Prepaid Health Plans created by Medicaid Transformation.

Vaya managed the care for around 170,000 people in Western North Carolina throughout 2018. Of those clients, the Department of Health and Human Services projects only 18,000 will not eventually be transferred to Standard Plans. Those 18,000 remaining recipients will eventually be rolled into "Tailored Plans," which are intended to provide a more specialized level of care.

As the transition happens, the population served by Vaya will be cut dramatically at the outset before shrinking even further as the tailored plans are rolled out. Ingraham said there has been some disagreement at the state level about who should be included in those tailored plans.

"We have been very concerned about the eligibility criteria for the Standard Plans versus Tailored Plans," he said. "We provided the state with a lot of detailed information about individuals that would have been selected to be in the Standard Plan rather than the Tailored Plan, where we disagreed for clinical reasons."

Ingraham said he would like the state to err on the side of caution as the plans are rolled out, to avoid anyone falling through the cracks if they need specialized, individually tailored care.

"In general, my counsel has been that if we're in doubt about someone's needs we should put them in the tailored plan," he said. "We let them experience stability, and then move them to the standard plan if necessary. I would say the state has done more the reverse of that."

Vaya could conceivably become a provider for these tailored plans once they're developed, but in order to do so they will have to submit an application to the state to provide those new types of services. In addition to the specialty care they currently provide, Vaya would also be responsible for physical health care of their clients if they are accepted as a provider for the tailored plans.

An issue of funding

In addition to Ingraham's concerns about who will be enrolled in which program, there's also the matter of decreasing funding for the remaining participants in Vaya's services once the majority of them are moved over to other providers' Standard Plans.

In terms of financial support, LME/MCOs operate as other insurance companies do -- they receive funding for a large number of clients, and only some percentage of those clients use services that require the insurer to pay out. Certain portions of their client base use more services than others, but the clients that use fewer services or no services at all make up for the higher cost of individuals who access services often or who use expensive services.

"We have about 170,000 covered lives, which are individuals who have Medicaid who could have a claim paid by us or have their care managed," Ingraham said. "Of that 170,000, around 36,000 or so on an annual basis get something. That's just the way insurance works."

As many of Vaya's clients switch over to Standard Plans, the ones that remain will be clients that require specialized care through a Tailored Plan. Ingraham worried that the number of high-usage individuals will not decrease at the same rate as the overall pool of clients, which shifts the balance of funding they're able to allocate to each recipient.

"Now, with a smaller population of individuals but a much higher utilization rate per member, the math changes," he said. "We will no longer be paid for a lot of the folks who don't receive care."

Problems so far

Further complicating the matter, according to Ingraham, are the issues that have already sprung up with the early roll-out of the plan.

The Standard Plans will be implemented in a two-phase process, with four of the western counties served by Vaya going live with the new system on Nov. 1, followed by a Feb. 1 implementation for the rest of their coverage area, including Haywood County.

The issue, though, is that the state Department of Health and Human Services can't begin the Medicaid Transformation process without a finalized state budget, and the state budget has been gridlocked for months.

"The law that allows the department and the state to do all this has been passed, they just don't have the money to do it," Ingraham said.

If a budget isn't passed soon, all of these changes will be pushed back and the future of the LME/MCOs will remain in limbo for months.

"Nov. 1 probably becomes March, and then February, you fill in the blanks," Ingraham said. "They're probably just going to have to move everything four months."

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