COMMONWEALTH OF PENNSYLVANIA HOUSE OF REPRESENTATIVES HEALTH COMMITTEE
ROOM 2 05 RYAN OFFICE BUILDING
TUESDAY, JUNE 21, 2011 9:30 A.M.
PUBLIC HEARING ON HOUSE BILL 1480 - THE HEALTHCHOICES ACT
BEFORE:
HONORABLE MATTHEW BAKER, CHAIRMAN HONORABLE JOHN MYERS, CHAIRMAN HONORABLE RYAN AUMENT HONORABLE KERRY BENNINGHOFF HONORABLE MARTIN CAUSER HONORABLE BRYAN CUTLER HONORABLE GARY DAY HONORABLE MAUREE GINGRICH HONORABLE JOHN LAWRENCE HONORABLE DAVID MALONEY HONORABLE KURT MASSER HONORABLE SCOTT PETRI HONORABLE MARCY TOEPEL HONORABLE TARAH TOOHIL HONORABLE KEVIN BOYLE HONORABLE VANESSA BROWN HONORABLE MARK COHEN HONORABLE PAMELA DELISSIO HONORABLE JOHN SABATINA HONORABLE KEN SMITH HONORABLE RONALD WATERS
SONYA A. HOFFMAN REPORTER - NOTARY PUBLIC I N D E X
NAME
MICHAEL ROSENSTEIN, Pennsylvania Coalition of Medical Assistance MCOs 5
PAULA BUSSARD, SENIOR VICE PRESIDENT, Policy and Regulatory Services The Hospital & Healthsystem Association of Pennsylvania 36
RONALD BUTLER, PRESIDENT and CEO Laurel Health System, Tioga County 41
KYLE FISHER Pennsylvania Health Law Project ...... 51 P R O C E E D I N G S
CHAIRMAN BAKER: Good morning, everyone.
The hour of 9:30 having arrived, the Health Committee
hearing will commence. I appreciate all the members
coming together this morning to discuss House Bill
1480, The HealthChoices Act legislation that's been proffered by Representative Peifer.
And this is a hearing. We've allowed an
hour, hour and a half, if necessary. I doubt if it will take that long, but we'll see. I will at this
time allow and welcome really Representative Peifer to
make some introductory remarks about the Bill and then we'll start the hearing. Welcome.
REPRESENTATIVE PEIFER: Thank you, Mr.
Chairman. It's an honor to be here today. I
appreciate you holding this hearing on the expansion
of the MCOs across the Commonwealth, as was something
in the 1977 plan for the expansion to the whole —
whole state.
And obviously, there's -- you know, Medicaid
is -- is the country's medical care for some of the
poorest and extremely disadvantaged people of our
country, and obviously for the citizens of
Pennsylvania. The issue really has to do with access to a quality healthcare, and, obviously, the cost
containment of this healthcare. I really think this
legislation stems from -- I want to get the proper
wordage -- the Federal Patient Protection and
Affordable Care Act of the Federal Government. Now,
we have enrollees, we have the Federal government, we
have State government, we have doctors, we have
hospitals, and we have quality care. And we really
need to bring all these entities, individuals,
governments together to try to find out the best
possible solution. And I realize that that's not easy
and it is complex, so I appreciate you holding this
hearing today.
I look forward to the number of people who
are going to testify, and there are many experts. And
I'd really like to listen to their concerns as far as
the proper way to go. The expansion, as far as
numbers, hundreds of thousands of people could be
included in those rolls, the Medicaid rolls here in
the Commonwealth, which directly affects us. So we've
got to try to find out the most -- the proper way from
a cost containment, and then, like I said, quality and
access of care way of providing the best service that
we can. So that's what we're here about today,
Mr. Chairman. And I appreciate you giving me the
opportunity to say a few words. Thank you.
CHAIRMAN BAKER: Thank you, Representative
Peifer. As members recall, we have had an
informational meeting previously on this issue and
this concept. Since then, we've received lots of
comments, questions, concerns from all around the
Commonwealth; from individual hospitals, from the
Hospital Associates of Pennsylvania, and the MCOs, both collectively and individually, that have come to
my office.
So I think it's appropriate we have a little
vetting process, informational process and follow up
to that informational meeting that we had earlier.
And at this time, I'd like to welcome
Michael Rosenstein for his testimony. He represents
the Coalition of Medical Assistance MCOs. Good to see
you, Michael; welcome.
MR. ROSENSTEIN: Thank you, Mr. Chairman.
Mr. Chairman, Members of the Health
Committee, Representative Peifer, I thank you all for
the privilege of appearing before you on behalf of the
Coalition of Medical Assistance Managed Care
Organizations. In speaking regarding this proposal to
expand HealthChoices in Pennsylvania, I represent the
Coalition, which consists of AmeriHealth, Mercy Health
Plan, Gateway Health Plan, HealthAmerica of
Pennsylvania, HealthPartners, Keystone Mercy Health
Plan, UnitedHealthcare of Pennsylvania and UPMC for
You.
I would like to present a brief background,
followed by a discussion of access, quality, special
needs and the cost effectiveness of the HealthChoices
program today; many of the items that Representative
Peifer, in his statement, alluded to.
Historically, this Legislature has had major
concerns regarding the cost, quality and access
healthcare for our citizens unable to afford that
care; primarily, the aged, the disabled and children.
The Medical Assistance program was created by Congress
and implemented at the State level to assure citizens
were not deprived of necessary healthcare services in
order to sustain and enhance their lives. The late
Governor Bob Casey, with the support of the General
Assembly, designed the HealthChoices Managed Care
Program. And it was former Governor Tom Ridge who began to phase implementation of the program.
This program of capitated managed care has consistently received the support of each of the four legislative caucuses, even during the past eight years when the executive created challenges for this delivery system, and we thank you. The mandatory managed care program by zones, the HealthChoices program, started in the southeast in 1997 and has been successfully phased into the southwest and the
Lehigh/Capital zones. The question before you is should this program be expanded to additional zones and Statewide?
Although, it is tempting for me to make the argument for statewide managed care exclusively based on the extraordinary cost savings this program has provided to the taxpayers of this Commonwealth, I prefer to brief you on a couple of additional reasons that are also compelling for the expansion of the
HealthChoices program.
First, impoverished citizens in need of health services have had extraordinary challenges in gaining access to the healthcare system. Some providers, due to low payments and delayed payments by the Department of Public Welfare, have had access problems and have been unable to get the care in some areas, or it has been extraordinarily difficult for them to gain access to healthcare. Managed care organizations provide full staffed provider relations
departments, and provide training and education to both providers and to recipients. This ongoing
process is not a once and gone. In many instances, we
pay higher rates than the fee for service system and
we always, always make timely payments.
We assist recipients and locate providers
and ease the access of gaining appointments when
necessary. Where barriers, due to culture, language,
or for whatever reasons, exist, we assure that
adequate healthcare services are provided. Our
emphasis often changes the incentives in the
healthcare system to promote preventative primary care
leading to healthier lifestyles, early intervention
and screenings.
In addition to access, our plans uniformly
adhere to high-quality standards. We use extensive quality measurements to gain feedback and implement
health-improvement strategies. Our plans are among
the highest ranked by the National Commission on
Quality Assurance, whose standards include on-site
reviews of clinical and administrative processes for
accreditation; HEDIS measurements for performance,
including but not limited to, immunization and
mammography screening rates. We do comprehensive surveys of recipients that are undertaken to assure consumer satisfaction in our competitive markets,
which is all of our markets.
Each of our managed care organizations have quality improvement plans and invest in areas such as
enhanced pediatric care, women's health, diabetes,
asthma, HIV, chronic obstructive pulmonary disease, as
well as congestive heart failure programs.
While talking about access and quality, it
is especially important that we spend a moment
focusing on those citizens with special needs. Case
managers are available to our clients. Our plans
invest in identification and screening for these
individuals to assure appropriate services are
provided. We analyze pharmaceutical and other claims
data so that we might coordinate care through our
integrated service structure and through case
management. In the most difficult services for the
most difficult clients, we assure the provision of
service is needed and the special needs population get
the benefit of those services.
Finally, I must talk about cost
effectiveness of the managed care system. As you know, we have competition within each of our regions,
which require that we provide quality, accountability, access and cost containment. The managed care
organization bears the full risk, thereby protecting
the Commonwealth and Her taxpayers. The predictable funding provided by a managed care has made difficult
-- a difficult task of balancing your State budget
considerably easier. I didn't say easy, but easier.
As many of the more senior members of this
Committee might recall, huge deficiencies in the
Medical Assistance budget used to be the norm. When
the programs lack stability, ends predictability.
Now, the MCO bears the risk, not the taxpayers.
Supplemental appropriations are solely the result of
the eligibility increases; not as it once was, the
increases in the volume of service or the cost of the
services provided.
The Lewin Group, a nationally recognized
health research organization found that taxpayers have
saved over $5 billion as a result of managed care in
the last 11 years; $5 billion in Pennsylvania. These
savings will grow to an additional $2.9 billion over
the next five years according to the Lewin
projections. In State dollars, the Lewin Group
estimated that the expansion to statewide managed care
would save Pennsylvania taxpayers an additional
$375 million over the next four years. These savings include fraud, waste and abuse
avoided as a result of the state-of-the-art detection
and prevention programs used by the managed care
organizations. According to CMS in a recent audit,
the error rate in the fee for service system is
4 percent. The error rate in managed care is .19
percent. I'm not justifying any fraud, abuse, waste.
However, you can see that for every dollar not
well-spent in the managed care system, $20 or more is
not well-spent in the fee for service system. The
difference converts to tens of millions of taxpayer
dollars lost without benefit to your constituents who
might be our subscribers.
In summary, as you know, the National
Healthcare Reforms, as Representative Peifer
indicated, are estimated to increase our existing 2.2
million Medical Assistance recipients by an additional
500,000 to 700,000 Pennsylvanians. For our existing
caseload ends for this expansion, Pennsylvania needs
the most accessible, high quality healthcare system
possible for those whose healthcare needs are to be
paid for by the taxpayers. We respectfully believe
that the healthcare system that protects taxpayers,
while assuring accessible high quality care is the
managed care system called HealthChoices in Pennsylvania.
Mr. Chairman, I again want to thank you and
the Committee for your willingness to allow me to
testify on behalf of the MCOs. And with your
permission, I will attempt to respond to whatever questions you or members of the Committee might have.
Thank you.
CHAIRMAN BAKER: Thank you very much,
Mr. Rosenstein. I appreciate your testimony, the good
work of the seven managed care organizations, their
mission, their role, their good work.
One of the issues, the most salient seminal
issues that I've been hearing about repeatedly,
particularly from the hospital community in this
Legislation is Section 7 of the legislation as it
relates to the payments to hospitals. I've heard that
that particular section really isn't needed, it should
be deleted, it should be not that specific in the
legislation. And, in fact, I think we were close to
an agreement with the legislation if that section were
to be deleted.
I would appreciate hearing your concerns,
comments about whether that section should be deleted
or not.
MR. ROSENSTEIN: Thank you very much, Mr. Chairman. I think that really is a question that
gets to the heart, I think, of the concerns expressed
about House Bill 1480.
I tried to frame my presentation on cost quality accessibility to healthcare. Section 7 -- and
please correct me if I'm wrong, Section 7, as I
understand it, is the section that says that managed
care organizations will use the Medical Assistance
rate as the default rate if a healthcare provider
chooses not to participate.
Now, what does that mean? That says that
under the current system, if a hospital provides
service, they will get the rate that the Department of
Public Welfare gives to them under their fee schedule.
Under Section 7, the managed care organizations will
not give -- will not give 10 cents less than that
hospital would receive today under the fee for service
system; not 10 cents less. It allows us to negotiate
a higher rate, but it establishes a floor of your fee
for service rate.
Now, why do we need that in the legislation?
Quite frankly you, I respectfully suggest, need that
in the legislation. We will continue to provide
access, we will continue to provide quality; but
absent Section 7, we cannot guarantee cost containment. We cannot give you the savings that you need to balance your budget. In order to build a network of providers, we need, particularly in rural areas, access to what might be the only facility in a region. And so we will guarantee them no less than they currently receive for fee for service, but we cannot allow them to hold us, and through us, you hostage. They could charge us their charges, which far exceed their cost of the delivery of service in a healthcare facility.
Now, I'm not going to get into a long discussion, unless, of course, you want me to, about the difference between hospital costs and hospital charges. But I think you know if we are compelled to contract with a facility and have no backup in terms of what the floor is going to be, we can be held hostage and we then must pass those costs on to the taxpayer.
So Section 7 is really a protection for you and for the taxpayers of Pennsylvania, while guaranteeing that no facility will receive less than the current fee for service system for those people that they serve. And that's a long answer, but I think that really cuts to the crux of it and I hope that's helpful. CHAIRMAN BAKER: Thank you very much, Mike.
Shifting to MCO Gateway, if I may.
MR. ROSENSTEIN: Yep.
CHAIRMAN BAKER: It's my understanding that
Gateway was providing services to a number of
counties, in excess of a dozen, at one point, and many
of those counties were rural; they pulled out. And
I'm a little concerned that if Gateway had to pull out
of a rural area, how do we know for sure that ruling
out statewide rural implementation of this, what is
embodied in this legislation is going to work?
MR. ROSENSTEIN: Yeah. I'm delighted you
asked that question because I think that that is an
issue that a number of people are concerned with, and
properly so. If we can't respond adequately, you have
an obligation to protect your constituents in rural
areas. So let me try to address that.
Managed care exists in rural areas
throughout Pennsylvania and throughout the nation,
perry, Adams, Armstrong, Butler, Fayette, Green -- I
can go on and on -- Lawrence, Washington and a whole
range of rural counties in Pennsylvania where we have
managed care; and it is succeeding, you are saving
money, we are providing access and quality. I can go
through, nationally, a whole range of states where they are rural areas of your neighboring New York, as well as states like Texas and Arizona and South
Carolina, and throughout this nation where there are rural areas where managed care is working.
So, one, I want to put to rest the fact that managed care cannot work in a rural area. Two, let me then address your specific question regarding Gateway.
They made a good business decision for Gateway, as they should. This system will only work if you deal with competent people who make good decisions. But that good decision for Gateway, in fact, proves the viability of the design of the HealthChoices program in Pennsylvania where you have a multiplicity of zones with multiple providers competing in each one of those zones.
And if one of the providers cannot compete successfully, what happened? Others filled the void and the residents are still receiving services, the providers are still being paid, and we still have a viable situation that works as it relates to access to care for every one of those constituents, who should be our primary concern.
We have provided access and quality and cost containment. And if one provider chooses not to participate because they made a business decision, there are others filling the void. That's the beauty
of the design of this system. That, in my mind, is an
example of how it should work. We're not guaranteeing
these managed care organizations a living; they've got
to earn it, and they've got to earn it in every zone
that they participate. And if they can't, they should
get out and others will fill the vacuum. That's what
happened, and I think that's a success story.
CHAIRMAN BAKER: So if this legislation were
implemented and signed into law and rolled out, and
there were similar circumstances experientially that
Gateway had, what would happen then to those areas?
MR. ROSENSTEIN: I think exactly what
happened in the Gateway circumstance; every provider
was paid; every recipient, every subscriber is
serviced. And the State continues to have a viable
system that, in fact, has saved you money while
delivering quality accessible services to your
constituents. That's what happened in that instance.
And quite frankly, that is what we believe would
happen in every instance in this Commonwealth.
CHAIRMAN BAKER: Last question and then I'll
open it up for the other members. Today I received a
letter from the Department of Public Welfare
concerning this legislation. And as you know, they could do this now if they wanted to roll out more
implementation, and they have concerns with the Bill.
And I'd just like to quote the Acting Deputy
Secretary:
"The Department supports the concept of
expanding the HealthChoices program; however, has
substantial concerns that the legislation does not
provide the Department with the necessary flexibility
to effectively manage its Medical Assistance program.
The department currently has the authority to expand
the HealthChoices program and is already conducting
analysis to support possible expansion."
And the letter does go on to explain itself.
But it seems to me that at this point in time, they're
not wildly enthusiastic about this legislation. They
have substantial concerns, in quoting the Deputy
Secretary. What -- and regrettably, DPW could not be
here to testify, but how would you try to persuade and
assuage those concerns?
MR. ROSENSTEIN: First, Mr. Chairman, I have
not seen that letter, so I'm at somewhat of a disadvantage, but let me try to respond. One -- and
you indicated it's a letter signed by the Deputy
Secretary. I've had a number of conversations with
the secretary who's indicated he is supportive of statewide managed care. And as I recall, he even, at
the latter part of your briefing on this issue, made
an appearance. Second, the fact that the bureaucracy
doesn't believe that the General Assembly ought to
have a role in the delivery of a system of healthcare
or in establishing the parameters for a system of
healthcare, does not surprise me, and quite frankly,
should not surprise you. The question is whether the
legislature believes they ought to have a role in
designing this major program and want to see it go forward or not.
I am told that the Secretary is supportive
of the concept of statewide managed care. If they
have specific concerns with respect to the provisions
of the bill, my guess is it is the fact that it is
very prescriptive. That is by design. That is an
intent for the Legislature to say, yes, we don't want
the bureaucracy stalling any longer, yes, we believe you do -- I believe anyway, they do have the power to
implement this. And we believe that the
bureaucracy -- and sometimes we have a change at the
top, but sometimes the policies take a very long time
to filter through.
And quite frankly, we think that the time is
right to begin to save the taxpayers money, particularly where we are providing a quality
accessible program to our subscribers who should be
our first concern. So again, you have me at a
disadvantage; I haven't seen the letter. But quite frankly, it does not surprise me.
CHAIRMAN BAKER: Thank you very much. Just
so everyone knows, this letter just came this morning,
so we're all just now getting this.
MR. ROSENSTEIN: No. No. I didn't think
you were blindsiding me in any way. I was trying
to -- I hope I was able to answer based on the fact
that I had never seen the letter.
CHAIRMAN BAKER: You have it now. Thank
you, Mr. Rosenstein. I'll recognize the members now.
The Chair recognizes the Gentleman, Mr. Petri.
REPRESENTATIVE PETRI: Michael, if I might
call you Michael.
MR. ROSENSTEIN: Hope so. Everyone else
does. And only friends; others call me far worse.
REPRESENTATIVE PETRI: One of the concerns I
have coming from Bucks County is whether we have a
system that is uniform throughout the State as far as
rates and the like. And one of the reasons I'm
supportive of the Bill is that effectively it would
create the same benefits and responsibilities that we have in the southeast, southwest, Lehigh Valley with
regard to the rest of the State.
And I was wondering if you could comment on
that in light of DPW's letter. If we allow the -- in
your opinion, if we allow the administration to set
the parameters, are we likely to have a unified
system, or are we likely to have piecemeals where
every region is treated somehow differently?
MR. ROSENSTEIN: Thank you for that question. And perhaps -- and if I had a chance to
review and analyze the letter more carefully, I could
give a better response.
My sense is, again, in the conversations
that I've had with the Secretary, I believe they are
very supportive. And -- and so -- and I thank you for
your comments. I think the people in Bucks County,
the southeast and each of the regions where managed
care currently exists would similarly testify that
this is a system that works for the benefit of their
subscribers.
And so the one part of your statement that I
really want to reaffirm is that people throughout
Pennsylvania should have that same benefit. And the
taxpayers of Pennsylvania should not benefit
exclusively off the backs of those where managed care exists, but, in fact, should have the benefit of an
entire State system that is saving you tax money.
And, again -- and I tried to in my presentation, very early on, spend more time talking
about the quality and access and special needs issues
because I think they're every bit as important for the
subscriber. But the fact is the subscribers in rural
and non-HealthChoices areas ought to get the benefit
of access and ought to get the special needs work that
we do on behalf of our subscribers and they ought to
get the quality that we get. And all Pennsylvania
then ought to share in the benefit of the cost
containment.
So to that extent, I'm not -- I'm not really
worried about this Administration moving forward; it
is the fact that I think they need, perhaps, the prodding hand of a General Assembly that says, yes,
this is the right thing to do, it works for most of
our constituents now, and we'd like it to work for all
of Pennsylvania.
REPRESENTATIVE PETRI: One quick follow-up.
Under the existing system for those areas that -- that
are under this program, do they all have similar
provisions to Section 7, or the same provisions?
MR. ROSENSTEIN: They do not; and they don't for a very good reason. Remember what I said, we need
that to assure you that we can build networks. And we
don't have a problem building networks in Bucks
County. If one hospital chooses not to participate,
we can use other hospitals. If Children's Hospital in
Philadelphia chooses not to participate, we can use
St. Christopher's or Temple's Children's Hospital. We
have competitive forces so the taxpayers cannot be
held hostage in your area.
But in a rural area where there might be
only one provider or two, the taxpayers are then -¬
you think we're held hostage, but we are really your
agent. And so if we're held hostage, you are held
hostage. And in that instance, we absolutely need the
default rate. And remember what I said that default
is, it's exactly what they're receiving now; no less.
Remember what I said, not 10 cents less. But we need
that default rate to build the network.
Now, I think that becomes a negotiating
issue, and you can only negotiate above that rate
quite frankly. But we need the default rate to assure
that we can give you the savings.
CHAIRMAN BAKER: Chair, thank you,
Gentleman. The Chair recognizes Mr. Morris.
REPRESENTATIVE MORRIS: Thank you, Mr. Chairman. Michael, I'm curious, in your testimony
you state that your -- that the caseload under the
National Health Care Reform is estimated to increase
between 500,000 and 700,000 individuals. I'm curious
as to where you come -- come up with that number. And just in my estimation, that seems like a low estimate.
MR. ROSENSTEIN: Yeah. We actually tried to
be very conservative in all of our numbers, including,
by the way, our cost savings. And so rather than come
here before you -- and, sir, you and I haven't met,
but in my prior life I spent a fair amount of time
working with numbers in this General Assembly, and I
always try to give conservative estimates that I could
always justify.
So we did a conservative analysis. And
quite frankly, we thought the most conservative number
was 500,000. And when the Governor testified before a
Congressional Committee that Congressman Pitts hosted,
he used the number 700,000. So I used our low
estimate and the Governor's estimate because that's
the range that I had seen and we had worked with. But
if it is even higher, then it is a more compelling
case for you to use statewide managed care. But we
tried to give a conservative range of what the
enhanced exposure to the Commonwealth for increased subscribers might be.
CHAIRMAN BAKER: Chair. Thank you,
Gentleman.
Just so everyone knows, there are many
competing committees, Judiciary Committee and other
committee meetings transpiring, so you'll be seeing
members coming and going. We fully understand that.
The Chair recognizes General Lady, Ms.
Gingrich.
REPRESENTATIVE GINGRICH: Thank you, Mr.
Chairman. And I'm going to be one of those folks that
has to leave in a couple minutes because I'm going to
Appropriation, thus, the question I'm going to ask
you: I'm most interested in and at the moment focused
on what you disclosed to us as your error rate through
the CMS reporting system as a pretty admirable one,
.195, when CMS, itself, is looking at a 4 percent.
And, of course, we've heard reports of a great deal
more than that.
Specifically, since that's where I'm headed,
into budget, and those discussions about how we're
going to deal with the shortfall and how we're going
to cover the great needs we have under the Welfare
budget; how do you account specifically? Is it part
of the uniformity of your program? I hear you say your grid is cost quality accessibility; focused on
the cost. Why is your error rate so much lower than
probably most; if you can tell me that?
MR. ROSENSTEIN: Not only can I tell you
that, but if I can, share some written material with
you because I was hoping, quite frankly, that the
question would be asked.
For those who don't know, Representative
Gingrich and I have not talked, but I do thank you
very much for the question. We take our role very
seriously, but quite frankly beyond that, if our error
rate is high, it costs us a substantial amount of
money. Now, the bulk of errors come about as a direct
result of the verification of eligibility.
We, managed care organizations, have
nothing, zero, to do with that determination. That is
exclusively done by the Department of Public Welfare,
and they give us lists of potential subscribers. And
if an individual is on that list and is part of our
organization, we must, we are compelled, to serve the
needs of that individual. And if we know that
individual is now working, as an example, we can
notify the Department and say Mr. Jones is not
eligible based on the fact that he is working, we know
him to be working, his circumstance has changed. And the fact is, it doesn't matter; we were compelled to serve Mr. Jones if he's on that list.
And three months later, the Department of
Public Welfare says, oh, we're not paying you for
Mr. Jones because he's not eligible, and it's up to us to then go back to the provider. And almost never can we collect after the fact because they delivered the service, and so we lose money.
We made a conscious decision, each of our plans individually, that they are losing too much money based on errors, based on waste, call it fraud, if you will. I'm going to call it abuse; I don't know whether it's fraud or not. That's a legal term beyond me. I'm going to call it -- certainly going to call it waste; I'm certainly going to call it abuse; I'm certainly going to call it serving individuals who should not be on the rolls appropriately.
And so we do prospective work, both with subscribers to clean up the rolls where we can. And spend a tremendous amount of money trying to with providers and cut through provider fraud. And I know many of those folks are our friends, but the fact is most of the savings are not with subscribers, but they are with providers. And we have an obligation, and we work with providers to make sure that only services that are eligible and needed are provided so that, indeed, we can cut back.
What I gave you by way of a handout is a piece we prepared just to give some idea of what we do in terms of the specific programs we run. Each of our plans are different. Remember what I said, this is a competitive business. And as a result, you get the best -- the benefit of best practices throughout the
Commonwealth.
And so those are some of the programs we run to specifically bring that number down from that
4 percent to .19 percent. Remember what I said, we're never satisfied with any; but .19 is not a bad record, and we're proud of it. That doesn't mean we're not going to continue and look for other ways to -- to curb costs in a way that does not affect our subscribers who need and deserve the services we provide.
REPRESENTATIVE GINGRICH: Thank you, Mike, and I agree with you. And if you have a formula that serves you well for looking at the provider's side of abuse or whatever we want to call it, and that can go to fraud, well, we'd love to know that as well. So thank you for the efforts you're making.
MR. ROSENSTEIN: Thank you. CHAIRMAN BAKER: Chair thanks the Lady.
We're already running behind on our agenda, so I
apologize if -- if we have to shorten up some of the questions. I'll recognize Representative Smith and
then Representative DeLissio, and then we have to move
on if we're going to try to get all the rest of the -¬
the people. Yes, thank you, Representative Smith.
REPRESENTATIVE SMITH: Thank you,
Mr. Chairman, and thank you Mr. Rosenstein for your
testimony today. Very quickly, several months ago we
saw the end of Adult Basic in Pennsylvania. And that
took tens of thousands of hardworking Pennsylvanians
and put them out adrift with respect to their
healthcare.
How does managed care, or does managed care
affect these people? And once again, with respect to
access to care, quality of care, tell me how this
affects those people.
MR. ROSENSTEIN: Yeah. That's a very good question and I thank you for it. Several or our
managed care organizations -- let me do that a little
bit differently.
For several of our companies, managed care
is one part of their list of programs that they run.
Several of our companies ran Adult Care programs when they existed and so were able to provide the services
for those citizens who were eligible for the program.
It is a separate line of business and not comingled.
Why? Because Medicaid managed care is required to be
limited to just those who are Medical Assistance
eligible. And the Adult Basic category are
individuals who do not meet the eligibility level.
They may have slightly higher earnings; they may have
slightly higher assets, but they don't qualify for the
Federal Medical Assistance program. So our MCOs
cannot -- with that particular product, dealing with
MCO managed care, cannot service that clientele.
So if that clientele became Medical
Assistance eligible -- and I understand after the fact
they started to look at the eligibility rolls, and
those that were Medical Assistance eligible we could
pick up if they were in our zones as part of our
service to Medical Assistance managed care. We have
picked up some; I could not begin to tell you how
many.
REPRESENTATIVE SMITH: Thank you.
CHAIRMAN BAKER: The Chair thanks the
Gentleman and recognizes Representative DeLissio.
REPRESENTATIVE DELISSIO: Thank you,
Mr. Chairman. I know we're all just seeing this letter for the first time. I was here for a hearing
that the Chairman convened on MCOs a few months ago,
and we went over that within the last Administration,
there was an RFP put out to roll out these
HealthChoices in the northwest, northeast, the places
where they were missing, correct?
MR. ROSENSTEIN: Yes, ma'am.
REPRESENTATIVE DELISSIO: So in this letter
from this Acting Deputy Secretary, it says the
Department currently has the authority to expand. So
that would be clear, unless something got rescinded
from one administration to the last, so they do appear
to have the authority since that RFP was out there
previously.
Do you have any guess -- and I know you've
seen this for the first time -- where they're saying
that they don't think this legislation gives them the
necessary flexibility to manage its Medical Assistance
program, can you even guess at what the Department
might be referring to with that sentence?
MR. ROSENSTEIN: It is only a guess, but let
me try to stab at it. I've not read the letter. It
was just handed to me and I was interacting.
REPRESENTATIVE DELISSIO: Last paragraph,
first page. MR. ROSENSTEIN: If I had to guess, one, we
are using the very same zones that they used in the past. Remember, sometimes bureaucracies don't like to
have Legislatures directing them to do things, even if
they're the same things that they were going to do.
REPRESENTATIVE DELISSIO: Okay.
MR. ROSENSTEIN: But we didn't tamper with
zones, but we are prescriptive. We have the same
northeast zone, the same northwest zone, the same
balance of the State as they proposed originally. If
they choose to move Tioga County out of a rural area
and move it to Philadelphia, I can't begin to help
you. But if they want to reanalyze the zones, we
don't have a problem with that. But it, quite frankly, is part of the problem we often have, and you
often have, with bureaucracies that don't move
aggressively as sometimes the General Assembly would like them to move.
Second issue might be the prescriptive time frame. We have put them on a tight time frame to
aggressively get this implemented. And quite frankly,
it was our view -- maybe erroneously, but it was our
view that you had a fiscal crisis this year. And you
needed to save money, which meant the Department of
Public Welfare, if there was a way to save money without adversely affecting constituents, that's what
you would want them to do. And if that means that the
bureaucracy has to move a little more aggressively
than they're accustomed to doing, I think that's an
appropriate thing for the General Assembly to tell
them to do.
Now, it's possible that you don't want to
tell them to do that. But our view was if you've got
a financial crisis now, you could raise taxes, and
people tell us you don't want to do that -- I don't
know if you do or don't, but I'm told you don't
collectively. You can eliminate services to people
who need those services, and we don't recommend that.
Or you can reform the system and save money through
reforms.
We think Mr. Peifer's Bill does that and
respectfully it's the reason we advocate for it. And
again, I cannot speak for the Department of Public
Welfare, but I can only give you my assessment.
REPRESENTATIVE DELISSIO: Thank you.
CHAIRMAN BAKER: Chair thanks the Lady.
Chair, lastly, recognizes Chairman Myers for a question and then we need to move on. Thank you.
CHAIRMAN MYERS: Thank you, Mr. Chairman,
and I certainly do agree, looking at the time. I've been very quiet and -- on purpose, and
I'm probably going to be quiet through most of this
because I get a sense that everything that needs to be
said is not being said. And I believe that the
various camps have reasons why they don't want to
expose certain levels of information, because all the
answers I'm hearing are like, yes, button up; yeah, I like you, but I really don't like that guy, you know.
There's a subtle level of discussion that's going on that at least I'm not privy to. And I said
this yesterday with some woman, I said, I don't want
to bring politics into this, even though everything we
do is political, but it reminds me of some campaigns I
went through and you was wondering, well, why did that guy give that guy that contribution. And they said,
well, I don't know, you know, I don't control what he
does. Well, I thought he was on my side, you know.
No, man, well, he is on your side. But why are you
giving the opposition $15,000; I don't want you to
talk to him about that. And it seems to be that kind
of dynamic going on.
You know, I mean, I like the hospitals, I
like y'all. And y'all don't seem to have y'all thing
together with regards to like it being a story that
y'all collectively have wrapped your arms around. This letter from DPW, bam, just showed up out of the
air. Yesterday, I thought they was down. You know, I
don't know who was in the discussion last night, you
know. And I don't know if they let you know who was
in the dicussion last night, but a letter came out of
that discussion.
So I think having these hearings is a good
thing, and we can collect more information and then
maybe -- at least me, I can get a sense of like who's
on first and who's on second.
MR. ROSENSTEIN: I know that's not a formidable question, but I do want to say thank you
because we have the same concerns. And I should have
acknowledged when you did come in, Chairman; thank you for being here. Thank you.
CHAIRMAN BAKER: Chair thanks the Members for their good questions, and Mr. Rosenstein, Michael, for your due diligence of nearly an hour. We
appreciate your testimony and your answers. Thank you
very much.
MR. ROSENSTEIN: Thank you, Mr. Chairman.
CHAIRMAN BAKER: The next testifier will be
Paula Bussard, Senior Vice President, Policy and
Regulatory Services, The Hospital & Healthsystem
Association of Pennsylvania. Joining her is Ron Butler of the Laurel Healthcare System, President/CEO,
located in Tioga County, of which I represent.
Welcome, and thank you. You may proceed.
MS. BUSSARD: Thank you, Mr. Chair.
As stated, I am Paula Bussard, Senior Vice
President for Policy and Regulatory Services at the
Hospital & Healthsystem Association of Pennsylvania.
And as you know, HAP represents and advocates for the
nearly 250 acute and specialty-care hospitals, but
most importantly for the patients that they serve. I
will be presenting the views of the broad hospital
community, and Ron Butler will make some remarks on
Medical Assistance managed care from the perspective
of a rural health system.
My written testimony is before you, and I'm
only going to highlight some of the statements in
there. The hospitals in Pennsylvania have long
supported Medicaid managed care. In fact, the
original capitation program began under the Thornburgh
Years in the City of Philadelphia.
We view managed care as an ability to
improve and continuity of care, quality of care and
access to physicians services for the Medical
Assistance population. Designed appropriately and
implemented properly, it allows a focus on preventative care, improved continuity for chronically ill individuals; an integration of care. It promotes individual recipient responsibility for their healthcare choices. And, as has been reported earlier, it helps the State to control Medicaid program costs.
As noted by our Chair, House Bill 1480 would require the Department of Public Welfare to expand
HealthChoices. As you may know, the -- currently,
70 percent of Medical Assistance recipients are in
HealthChoices in southwest, southeast, south central and Lehigh Valley area. Under those HealthChoices programs, MCOs contract with healthcare providers.
Successful managed care programs recognize that the
MCO and its provider network need to work together to insure that the right care is delivered at the right time and in the right setting.
The essential idea and why the hospitals have supported Medicaid managed care is that there is the focus on primary and preventive care, thereby reducing unnecessary emergency room use and inappropriate hospitalizations as compared to a traditional fee for service program. Effective managed care organizations establish their networks, they employ education strategies, provide incentives to both recipients and providers. They review care to insure that it's appropriate and in the right setting.
MCOs use an array of provider contracting strategies so that they're aligning their goals and the providers' goals to do what's in the best interest of the recipient and to do it in a cost effective manner. Thereby, MCOs reimburse contracted providers using fee schedules, per diem, per case and/or prospected payment systems such as are used in
Medicare and the traditional fee for service Medicaid program.
They also use a lot of other strategies to improve the effectiveness. MCOs use medical hones that link an individual with chronic conditions with a primary care practitioner who is working collaboratively with the plan and the recipient to address such conditions as diabetes, congestive heart failure or asthma where when you're not properly managed might result in hospitalizations.
They also provide quality incentive payments to providers, such as improving vaccination rates for children or reducing healthcare associated infections in healthcare settings. And they use an array of review strategies to assure that care is medically necessary and provided appropriately and timely. And so if the care should have been provided in an
outpatient setting, they're not paying for an
inpatient stay. They use precertification, concurrent
review, and many of the MCOs in where the more
concentrated population areas are, often deploy
discharge planning staff within a hospital so that
they are working collaboratively to assure a smooth
transition to home or another care setting.
As a result of this ability to use all of
these contracting techniques, hospitals and doctors
under HealthChoices have had the opportunity to
negotiate contract terms, including rates, that
reimburse on a per-case or per-visit basis, a better
rate than traditional Medical Assistance fee for
service. The idea is there's less utilization, but a
better payment for that utilization. And this has
been done, as has been reported, without increasing
overall Medical Assistance costs to the Commonwealth,
because the providers in the plans are working
collaboratively to reduce this unnecessary and
inappropriate use.
As exists now, the Department of Public
Welfare operates the HealthChoices program under a
Federal waiver. And that waiver is required because
recipients are restricted in their choice of plans, and may be restricted in their choice of providers given the plan's provider network. There was Federal protections, consumer protections, provider network advocacy, special needs. And the Federal government requirements do establish a default rate so that in the event that a noncontracting provider has to treat and enrollee in an emergency situation, that enrollee has access. And in that situation, the provider is paid the traditional fee for service rate.
Healthcare providers freely negotiate contracts with managed care plans in the commercial sector, in the Medicare sector and in the existing
Medicaid HealthChoices. This includes rate and a lot of other contract terms regarding review, prior authorization, obligations, or other incentives.
Therefore, we see no reason that Section 7 should be included in House Bill 1480 because it would interfere with the ability of healthcare providers, in this case, hospitals, to fairly and freely negotiate contracts. In actuality, by establishing a floor, you may also be establishing incentive. For while a hospital may not be paid 10 cents less, it might also not receive one cent more. And as such, this provision really conflicts with the intent of a more competitive marketplace where providers and MCOs can collaborate and negotiate.
The hospital community cannot support House
Bill 1480 with the inclusion of Section 7. We are supportive of expanding HealthChoices statewide. The
HealthChoices program has worked effectively in the
Commonwealth for more than a decade. And in all of the existing regions, southwest, south central, Lehigh and southeast, there are very rural communities, and
HealthChoices has worked effectively and saved the
Commonwealth funds and has not required establishing the provision in Section 7.
I would also note, just before Ron — I turn to Ron to let him provide a few points, that in the recent Pennsylvania Healthcare Cost Containment
Council Report, on the financial status of the State's hospitals, one in four Pennsylvania hospitals have a negative margin. And even with the enactment last year of Medical Assistance Modernization, which improved payments under the fee for service program to hospitals, on average your hospitals are still only receiving 89 cents per a dollar cost of care. And so the ability to freely negotiate rates under managed care is very important to the hospital community.
At this time, I would like Ron to provide a brief perspective from a rural healthcare system. MR. BUTLER: Thanks, Paula. And thank you,
Mr. Chairman, for the opportunity to speak with you
this morning.
Tioga County is a rural county of nearly
40,000 people spread over 1,100 square miles in north
central Pennsylvania. Laurel Health System is the
primary provider of healthcare services in Tioga
County as a nonprofit, community controlled integrated
health and human services delivery system. And like many rural community hospitals and health systems,
we're the largest employer in our community and have a
significant economic impact on our community.
Our system includes Soldiers & Sailors
Memorial Hospital; the only hospital in Tioga County,
and six Federally-qualified health centers, which are
distributed through Tioga County so that we have a
primary care physician within about 20 minutes of any
residence in our community. And this is an important
access issue.
Our FQHCs provide services on a sliding-fee
scale, and the hospital has a charity care policy so
that we provide both primary care and acute care to
every resident of our community regardless of the
ability to pay. Under the current system, no resident
of our community is denied access to healthcare services. The MA fee for service reimbursement rate,
as Paula said, covers a significantly less amount than
it costs us to provide services to the over 6,000
Medical Assistance beneficiaries in Tioga County.
This fiscal year, Medical Assistance
reimbursement accounts for 19.6 percent of our
hospital's net revenue. And Tioga County, routinely,
has one of the highest rates of all counties in
Pennsylvania for uncompensated care. Because we
provide a disproportionate share of Medical
Assistance -- of services to Medical Assistance
patients, Solders & Sailors Memorial Hospital qualifies for some supplemental payments to help ease
the burden of providing care to a disproportionate
share of Medical Assistance and indigent patients.
These supplemental payments for
uncompensated care and disproportionate share amount
to a few hundred thousand dollars for our hospital and
help us to sustain services for all the residents of
our community. So including Section 7 in this
legislation would not pay us 10 cents less than under
the current fee for service system, but would pay us
several hundred thousand dollars less than we're paid
under the current reimbursement system.
The MA fee for service default rate would create a ceiling for us instead of a floor. It would
strip any negotiating position that we may have to
obtain reasonable reimbursement rights from the managed care organizations. It would eliminate
consideration for the disproportionately high rate of
Medical Assistance beneficiaries who we serve in our
community. It would eliminate any consideration for
incentives for quality care standards. And it would
reduce the MA payments, again, by hundreds of
thousands of dollars annually for our hospital,
thereby threatening our ability to sustain services to
all the residents of our community.
While we support expanding Medical
Assistance managed care to rural Pennsylvania,
including this section of the Bill strongly favors the
MCOs at the expense of the rural community hospitals,
and it would eliminate any opportunity that we would
have for meaningful negotiations of reimbursement
rates.
Thank you, Mr. Chairman.
MS. BUSSARD: So in summary, we do believe
that managed care can be expanded through the State in
a way that assures the efficiencies, improves quality
and access for recipients, but also that fairly pays
for health services and affords public accountability. We believe Pennsylvania's rural communities and our most vulnerable citizens deserve no less.
We would urge the Committee to consider
amending House Bill 1480 by deleting Section 7. The
HealthChoices program has worked effectively in the
Commonwealth. It has not, to date, required this
provision.
We appreciate the opportunity to present our
views, and we'll be happy to answer any of your questions.
CHAIRMAN BAKER: Thank you very much for
your enlighting testimony. I know in many rural
counties, particularly Tioga County, and perhaps
others, there's just one hospital for the whole
county. So, in essence, it's -- it's the safety net
hospital. And if that hospital should fall, it would
create quite a gap in care for its residents. So it's
really a significant impact and probably one of the
largest employers in any rural county.
So given the fact that one in four of
these -- of your hospitals are already operating in
the red, as your testimony indicated, and given the
fact that this could actually add harm to some
hospitals, I'm very, very concerned about its full
import and impact to rural areas. Thank you very, very much. I'd be interested in knowing what other hospitals similarly to Tioga County would be impacted with a negative number should this be passed with this section in its -- in the legislation. I really appreciate your testimony.
Members have any questions? Representative
Day.
REPRESENTATIVE DAY: Thank you,
Mr. Chairman. So by your testimony today, Section 7, which to me looks like it establishes a minimum; is that what you would say it does?
MS. BUSSARD: It establishes a floor, but that's for all services provided. Managed care -- the managed care plan can contract or not contract with providers. And they do, if they don't find you meet their quality or their other provisions. But what that section says for the providers, who also should have a choice in contracting or not if they feel a plan is not in the best interest of their patients, says regardless of that underlying concept, you have to take care of patients and receive this rate.
Managed care also comes with additional costs that the fee for service program doesn't have.
So you're getting a fee for service rate, but would be subject to a lot of the review or prior authorization
or all of that that the fee for service program might
not have, and so it pays you, in essence, a lower
rate. There's no incentive when you have that
foreplan to contract at a more favorable rate.
REPRESENTATIVE DAY: Thank you. In rural
Pennsylvania, many times the providers that are
seeking, you know, the ability to negotiate with the
managed care provider are the only provider in the
area, giving them an unlevel playing field. They're
the only ones to be able to go to; the only provider.
So I'm looking at this as maybe a piece of
legislation that levels that playing field a little
bit, and maybe makes a statement and says -- and says,
you know, if you want to do business in Pennsylvania
that there's a floor. Which leads to my question:
You also negotiate to receive payments from other
private sector insurance companies; is that correct?
MS. BUSSARD: Yes.
REPRESENTATIVE DAY: Are they generally
paying more or less than this program?
MS. BUSSARD: Well, the commercial sector
pays better than Medicaid. And the Medicare program,
while not paying full costs, pays a bit better than
the Medicaid program. What I want to note, Representative, all of
the other HealthChoices regions have counties in which
there is only one provider. And in all of those
regions, there are multiple health plans who have
secured contracts. And so it hasn't -- it hasn't
necessitated this provision in serving Fayette or
Green or Perry or Lebanon, where there are areas
that -- or Adams County where there's one hospital.
The providers and the plans have worked it
out in the best interest of patients, because you
still want to serve your population. And if nearly 20
percent or 25 percent, or in some rural counties, 30
to 35 percent of your patients are Medical Assistance,
you're going to negotiate with health plans because
that's your population.
This just gives more of an edge to the plan.
And it is our small rural hospitals that are
struggling the most financially, so I would just also
add that point.
REPRESENTATIVE DAY: And my last comment,
Mr. Chairman, I appreciate the indulgence, I know
we're trying to keep on schedule here, you know, I
look at it as these areas -- if these rates were kept
lower than you wanted by a Bill like this, where this
plan was deciding what the reimbursement was going to be and you have less control, or maybe almost no
control, over what those payments are, if that would
cause a hospital to go away or go under, then that
community is not sustaining the healthcare services on
its own.
So, you know, I find that in many ways that
the overall provisioning of healthcare services in a
community like that is being subsidized quite a bit,
either from private-sector payers, the insurance,
or -- and you could argue that this makes them pay
more. Also, it -- you could argue that if they want a
hospital in their county, they better pay more for
that. We're representing this plan. We make
decisions for the entire Commonwealth, so you
understand why a Bill like this comes out.
Thank you for your time. And I really
appreciate that you're as engaged as you are in this
issue. I like to consider legislation with as much
industry input as possible. Thank you, Mr. Chair.
CHAIRMAN BAKER: Chair thanks the Gentleman.
Just one more comment or question. Given the lack of
certitude with respect to the budget in terms of the
hospitals receiving disproportionate share funding and
uncompensated care funding on top of this particular
legislation, those rural hospitals that you referred to earlier could be even more at a particular risk.
Is that an accurate statement?
MS. BUSSARD: It is absolutely accurate.
And as you know, I've worked for the Hospital
Association over a number of decades and have seen a lot of smaller rural hospitals close. We have also seen smaller rural hospitals have to make difficult choices between providing obstetrical services or providing inpatient psychiatric services because of the burden of underpayment.
There is really, only so far, commercial, employer-based groups are willing to subsidize underfunding. And as the budget proposals are being debated, yes, uncompensated care monies are vulnerable, the additional payments for obstetrics or critical access, which our 13 smallest hospitals are at risk. And those payments are -- even after those payments, our State's most small hospitals are still very financially vulnerable. So you make a good point, Representative Baker.
CHAIRMAN BAKER: And part of the problem that leads up to that equation is your census, correct? The number of people that are on MA, the number of people that continues to climb expedientially it seems. And also people continue to climb on Medicare, as well as your underinsured and
uninsured. There are a lot of factors involved in
contributing to that particular, perplexing difficulty
that you have; am I not correct?
MS. BUSSARD: You are absolutely correct.
And I think you know that over the recession, one of
the areas where we've seen, obviously, what happens
when people lose jobs and lose the job that had health
insurance, we've seen the reliance in rural
communities on Medical Assistance grow at a fast -¬
much faster rate than the urban areas. And in some
communities, more than half of births are now being
paid for by Medicaid.
So it's in rural communities that are
struggling hard with the recession. Medical
Assistance still is a very important program; an
important lifeblood for rural hospitals, as well.
CHAIRMAN BAKER: Again, thank you very much
for your testimony. We have one more person, unless
Members have a question -- quick question, I think we
can get it in right before session starts at 11:00.
Thank you very much. Our last testifier will be Kyle
Fisher. Kyle Fisher represents the Pennsylvania
Health Law Project. Welcome, Kyle. You may proceed
when you're ready. MR. FISHER: I'll try and keep this brief
with an eye on the time. Again, my name is Kyle
Fisher. I'm a staff attorney with the Pennsylvania
Health Law Project.
The Pennsylvania Health Law Project is a
statewide organization that provides free legal
services and advocacy to Pennsylvanians who rely on
publicly funded health insurance like Medicaid. Our
statewide helpline receives more than 2,000 calls a
year from individuals who are either uninsured, or
whose health insurance companies are not providing a
medically necessary service. While working with
individuals on their concrete problems, we also engage
in statewide health policy advocacy to maximize health
coverage and access to care.
Speaking in that capacity, we want to
highlight three areas of concern with House Bill 1480,
all of which pertain to access to care. First, we're
concerned that risk-based managed care simply does not
work well in Pennsylvania's rural areas. The managed
care plans already have the ability to operate in the
State's rural areas and the majority have chosen not
to.
And since the statistics haven't been
discussed yet this morning, I want to provide you context. We have 25 counties that have mandatory
managed care right now. Another 25 counties have
voluntary managed care, plus what's called ACCESS
Plus, the State's primary care case management system.
So they're already in a form of managed care, but it's
not capitation based, it's not risk based. 17
counties have ACCESS Plus alone and there's no managed
care, and that's because the managed care
organizations, the MCOs, have chosen not to open
there.
The MCOs that do operate in the voluntary
counties, which are overwhelmingly rural, struggle to
attract members and the providers they need to serve
those members. And the Gateway experience that the
Chairman discussed earlier illustrates this well. And
last year -- in September of last year, Gateway
withdrew from 17 of the 19 voluntary counties in which
it was operating citing venue losses for three
straight years. Gateway's withdrawal affected over
14,000 MA consumers, many of whom were forced to find
new doctors. We fear a repeat of this; new managed
care plans coming in, discovering they can't make a
profit and pulling out leaving consumers in the lurch.
Given the choice, consumers -- and, again,
much of the discussion today has focused on what's in the best interest of Medicaid consumers. Given the
choice, they've overwhelmingly chose an ACCESS Plus,
the State's fee for service and primary care case
management system. The few MCOs that operate in the
rural voluntary counties typically enroll less than
10 percent of the counties' consumers, and that's
because the MCOs in rural areas can't attract doctors
and struggle to provide adequate provider networks.
And that's what a lot of underlying discussion around
Section 7 concerns.
I mean, unless you alter the playing field,
the managed care plans are going to struggle to
negotiate and provide contracts with the larger
hospital systems, as well as smaller providers that
may not be associated with the hospital system. Let
me add that the poor fit of managed care in rural
areas isn't limited to Medicaid here. In our Medicare
advocacy, again, Medicare primarily provides services
for the elderly and the severely disabled, very few
Medicare managed care plans, called Medicare Advantage
Plans, operate in the State's rural counties. And
many of those that have tried to have later withdrawn,
which goes back to the issue, or our fear, of MCOs
moving into the rural counties, discovering they can't
make a profit out of it and pulling out. So expanding mandatory managed care, in the short, is going to disrupt care for approximately
300,000 consumers, without, in the long term, guaranteeing adequate access to care. Our concern around access to care is only heightened by the fact that it's now routine for Medicaid, managed care organizations, and hospital systems to part ways.
And, again, we're talking about three zones where we already have Medicaid managed care.
To give you an example, next month the
Health Partners Plan will terminate its contract with the Mercy Health System in the southeast, forcing
6,600 consumers in the southeast zone to either change their doctor or keep their doctor and change their managed care plan. The type of adversarial business negotiations that lead to ruptures like this and subsequent disruptions in care for consumers does not occur on Medicaid's fee for service side where a provider either accepts a Medicaid fee schedule or doesn't.
And I should add that no one thinks the
Medicaid fee schedule is too high. Pennsylvania pays among the lowest in the country for its Medicaid rates.
Attracting enough doctors into the Medicaid system is already a problem, especially in the rural
areas. Adding this type of rate negotiation and
hospital system MCO rupture that we see in
HealthChoices now is likely only going to make the
provider's shortage problem worse.
A second concern here is a separate
dimension to the provider network problem. For many
types of providers the current HealthChoices rules
require only a choice of two providers per zone. In
small zones, that's not a problem. In zones the size
of those being proposed -- and I should note the
central zone stretches from the State's northern
border to its southern -- having two providers of a
specialist type per zone would mean that consumers
would likely face very long travel times.
And to give you an example of that: If a
plan's two in-network cardiologists are located near
the southern border, a consumer in Tioga or Bradford
County would have to travel nearly four hours to see
his heart doctor. I mean, even a travel time that's
two hours would likely present an insurmountable
barrier to care. And that's especially the case for
consumers depended on MATP, the Medical Assistance
Transportation Program. Because it's a county-based
system, traveling between counties in MATP poses real challenges.
In contrast, consumers on fee for service
now can see any provider who's enrolled in a MA
program. And that even includes providers, perhaps
using the Tioga example again, who may be located in
New York. As long as that provider is willing to take
the Medicaid rate, the consumer can travel to New
York, the consumer can travel to the northeast,
Wilkes-Barre, Scranton. That wouldn't be the case
under mandatory managed care because the consumer
would be limited to those doctors who are in, for
example, the AmeriHealth, Mercer Health network.
Our third danger, our third concern, I will
move quickly, is that mandatory managed care -- or
risk-based managed care runs the risk of inappropriate
care denials. And as an egregious and a known
example, the number of current managed care plans are
inappropriately denying shift nursing and home health
aides for children on the basis of the child's
diagnosis, and specifically on the basis of having a
behavioral health diagnosis like autism.
And I should add that this wasn't a case of
conflicting medical opinion. I mean, utilization
review normally means you have a plan doctor, who's
looking at what your doctor has prescribed and saying I don't think it's needed, I differ, we have a
difference in clinical opinions. This wasn't that
situation. This was the plan doctor saying, oh, you
have autism, we're not going to cover the service.
That was an inappropriate basis, and the Department of
Public Welfare agreed that was an inappropriate basis
for denial.
Given that, the DPW put four managed care
plans in what it calls corrective action. And one of
those managed care plans had to overturn denials and
approve services for 92 children. All right; that
means 92 children were wrongly denied shift nursing or
home health aide services. Going without needed care,
obviously poses a problem for sick children. And to
the extent that it makes those sick children sicker,
it increases healthcare expenditures.
A related concern is the ability of the
State to maintain control over the managed care plans
its contracting. As the MCOs consume an ever larger
part of the State Medicaid budget, it's increasingly
difficult for DPW to exercise effective oversight over
them, especially where one plan becomes dominant in a
zone like Keystone Mercy is in the southeast.
This was illustrated in the corrective
action context I just described. The plan that had to overturn denials for 92 children was put in corrective action in December of 2009. That plan and three others is still in corrective action today. That a plan has been in corrective action for nearly a year and a half, 18 months, raises serious accountability concerns.
And the last brief point I want to make is unlike with fees for service utilization review where any savings realized go to the State Treasury, any savings realized from an MCO doctor denying care or reviewing care, goes to MCO profit. It's an obvious financial incentive and it's inherent in a risk-based managed care, as opposed to the managed care you have now in rurals with ACCESS Plus, because you have managed care there, but the incentives are to increase health outcomes, to increase preventative and primary care, not to deny care, period.
Given that incentive, which almost certainly leads to inappropriate denials of care, the State has to retain the authority and the actually ability to prevent those abuses.
Thank you, again, for the opportunity. I'm happy to take any questions.
CHAIRMAN BAKER: Thank you very much for your testimony. We only have two or three minutes before we must adjourn to attend session. Very good testimony. Thank you for that information that we have not heard before.
With respect to the bill and Section 7, payments to hospitals, notwithstanding that section, let's say for instance that was deleted from the bill, would you still have the same concerns about this legislation moving forward?
MR. FISHER: The concerns over adequate networks so that a plan having enough doctors for members to have a choice would only intensify because that would mean -- I mean, that section likely increases the ability of the plans to contract with hospitals and outpatient providers, which sort of alleviates that extent the network is adding to it; the concern about consumers having access to doctors.
So that concern would be even hightened if
Section 7 is removed. And there's still the concern about inappropriate denials of care, and that's affected by Section 7 one way or the other. The basic incentive in risk-based managed care is to deny care, and that's what the plans do; it's an extent that leads to cost savings. But you can get the same cost savings through the State doing utilization review, like it does now. And the ACCESS Plus vendor right now is -- I think ACCESS Plus is in all the remaining counties, other than HealthChoices, providing health coaches, providing disease management, working with providers to make sure people, the consumers, are getting the preventative and primary care they need.
CHAIRMAN BAKER: We do -- do have, I'm sure, additional questions concerning other issues such as
RFPs and so on and its impact and implications, but we must be on the floor within a minute, apparently.
So I will adjourn the Health Committee and thank everyone for their testimony. And if you would be kind enough to proffer your testimony for us, we'd appreciate it. Thank you very much. Thanks all to the members.