Medicaid Overhaul Plan Hits A Road Block

Mar 15, 2013

It’s been three years since state lawmakers began touting managed care as the salvation of Medicaid.

“Medicaid managed care. That’s something that could save significant dollars and it’s something that’s improved the quality of services in other states,” GOP Senator Jeb Bradley told NHPR back in 2010.

It took some convincing, but New Hampshire eventually did approve managed care last summer: the $2.2 billion contract is the largest in state history.

But since then, implementation has gone off the rails, along with the proposed savings.

Hospitals Balk At Rate Negotiation

"To suggest that we negotiate a series of contracts that would pay us less is kind of a preposterous idea at this point," says Frank McDougall with Dartmouth Hitchcock.

"Why would we pursue an arrangement to pay ourselves even less? Doesn't make any sense."

His hospital, along with others around the state, are refusing to cooperate in the transition.

They happen to be in the middle of a lawsuit with the state at the moment concerning  the amount that hospitals get paid for treating Medicaid patients.

"Why would we pursue an arrangement to pay ourselves even less?" says McDougall. "Doesn’t make any sense."

Adequate Network Remains Out Of Reach

In case your eyes are glazing over, here’s the Cliff’s Notes version of managed care:

The state has hired three out-of-state companies, known as managed care organizations (MCOs), to effectively take over Medicaid. They get paid a fixed amount per person by the state to provide health care to New Hampshire’s 140,000 recipients.

Deb Fournier with the NH Fiscal Policy Institute says if the managed care organizations can’t get buy-in from the hospitals, they can’t create what’s called an adequate network of care.

"Without the providers, they can’t actually administer medical services to any of the members," says Fournier. "And that’s what they’ve been charged with doing."

Fournier says the contracts set out specific guidelines about how many doctors and other services need to be available in each region of the state.

Until adequacy is achieved, the project can’t launch.

Delays Leave Hole in State Budget

That’s a problem for lawmakers, who budgeted $15 million in savings for this fiscal year. Already 9 months behind schedule, that money is likely lost.

Republican Chuck Morse, the Senate’s top budget writer, says the clock is ticking.

"Those companies are not going to sit on the sidelines, that are trying to get managed care up in New Hampshire, for much longer." 

But Dawn Touzin, a lawyer with the Department of Health and Human Services, says the managed care companies can’t just throw up their hands and quit.

"If they can’t put together an adequate network, that means they are not meeting a substantial requirement of the contract, and that actually could lead to liquidated damages."

Translation: the state can sue if the companies can’t somehow sign up the hospitals.

None of the MCOs returned calls for this story, but Touzin says that more lawsuits aren’t the preferred outcome.

DHHS would much rather see managed care get out of the gate.

It’s already spent a million dollars on consultants, plus considerable resources getting its internal systems ready.

"Now, more than ever, we need their cooperation."

Governor Maggie Hassan is paying close attention to the issue. She’s been meeting with hospital executives in private to build bridges. She also made a much more public appeal during her budget address .

"Our providers must take a leadership role in Medicaid care management. Now, more than ever, we need their cooperation."

But with what seems to be an upper-hand in the managed care standoff, the hospitals will likely seek financial concessions before offering cooperation.