Texas is giving private vendors an unusual amount of the day-to-day responsibility for moving the majority of its 1.9 million Medicaid recipients into managed care over the next four years—and ensuring that they are treated well.
While state officials stress that they will retain decision-making authority, Texas is negotiating contracts for a wide range of services, including quality monitoring.
The firm selected for the two-year quality monitoring contract will resolve consumer grievances, ensure that all plans provide adequate access to medical specialists and prepare annual reports assessing "how each plan is faring compared to itself across time and to other health plans."
The contract also requires external review of medical records, formerly performed by a peer review organization, and medical audits of each health plan.
"We wanted to get an entity to track and trend data we are getting from the plans," said Trish O’Day, director of quality/health services for the Texas Department of Health’s Bureau of Medicaid Managed Care. "We need experts to manipulate large data sets." Possible other uses of the data range from HMO report cards to answering queries from legislators, she said.
Outside reviewers
Choosing outside reviewers for HMO quality assurance is increasing because it helps ensure objectivity, which in turn "improves your credibility when you go back to the public," said Matt Barry, health insurance specialist with the U.S. Health Care Financing Administration. However, Mr. Barry said he did not think most states would be willing to give up as much control over their operations as Texas has done.
The other areas contracted out include enrollment; a network administrator to help negotiate and oversee contracts with medical providers; and a managed care support contractor.
As of Oct. 1, the state had finalized one contract. MAXIMUS Inc. won the 27-month, $29 million contract for developing common systems for handling enrollment, operating a "call center" staffed by client service representatives, providing education and outreach services and developing enrollment materials, including videos and posters.
Claims processing for the ongoing fee-for-service program, now administered by the National Heritage Insurance Co., will continue to be handled by an outside vendor, although the winner of the new contract has not yet been announced.
The state withdrew its original request for proposals for the managed care support contract, but plans to reissue it, a spokeswoman said.
The support contractor will provide the state with "technical assistance" in evaluating proposals from managed care groups seeking state business. These tasks range from undertaking background checks of HMO applicants to conducting "readiness reviews" of new health plans, according to the bids.
As of Sept. 1, about 269,000 patients were enrolled in the program the state calls STAR. Another 275,000 Medicaid beneficiaries, including Supplemental Security Income (SSI) recipients, are expected to enroll in the Houston area by Nov. 1. The inclusion of the SSI recipients in this area is part of a pilot program the state calls STAR+PLUS.
STAR+PLUS "will allow older and disabled clients to choose to get all their health care through a single plan. This is especially important for people who need long-term care for chronic conditions such as heart disease," said Cathy Rossberg, the Texas Department of Health’s associate commissioner for Medicaid in a May news release announcing the expansion. "They can benefit from the coordination of services provided by managed care."
Some consultants believe other states will privatize some oversight duties in managed care. Michael Bailit, a former deputy assistant commissioner of the Massachusetts Division of Medical Assistance, said many states lack "enough people with the expertise" to manage HMO contractors. "The only way HMOs will perform on quality is if the purchaser requires them to," said Mr. Bailit, now a consultant.
Lisa Chimento, a senior manager with the Lewin Group in Fairfax, Va., predicted that budgetary pressures will lead states to turn more quality assurance duties over to outside groups, most likely existing peer review organizations.
"The states need a mechanism to watch (HMO performance) and it’s likely that they will contract this out more and more. If they can’t make it they have to buy it," she said.
The MedStat Group, based in Ann Arbor, has agreements with peer review organizations in Wyoming, Connecticut and New Jersey to help them keep tabs on encounter data and utilization, such as hospital and emergency room visits, specialist care and pharmacy use per recipient. Marjorie Bryen, a director in the MedStat states division, said "aggressive states" realize they "need to get a better handle on quality of care to the clients."
HCFA’s Matt Barry said he did not think most states would be willing to give up as much control over their operations
"Medicaid managed care still has some real opportunities to improve nationwide," Mr. Bryen said. Most states use such data less to punish poor performing plans than to set expectations. But a lot of states will become more selective and use such data to "try to weed down their group of contractors," she said.
All agree that states face growing pressure to improve HMO oversight. In a review of programs in Arizona, Wisconsin, Pennsylvania and Tennessee, General Accounting Office auditors in May found that existing state controls "did not necessarily ensure that beneficiaries are receiving the care they need."
"According to some experts, many states are struggling to maintain the staff needed to establish and oversee their (managed care) programs, since frequent turnover of staff with managed care expertise is common," GAO auditors added.
—Fred Schulte
Mr. Schulte is a 1997 Alicia Patterson Foundation fellow studying the shift of Medicaid and Medicare to managed care.
Contact Ms. O’Day at 512-338-6559, Ms. Rossberg at 512-424-6517 or Ms.
Chimento at 703-218-5556.
Texas gives vendors critical role in states move to managed care
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