Medicaid’s ‘inconsistent’ payments force hospital to stop treating children

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Children’s Hospital of Alabama

Children’s Hospital of Alabama says it cut off Mississippi Medicaid patients because the agency’s two coordinated care companies, United Healthcare and Magnolia Health, were not consistently reimbursing the hospital for tests, doctor visits and other procedures.

Nearly 300 Mississippi children on Medicaid went to nationally ranked Children’s Hospital in Birmingham for treatment last year, according to the Division of Medicaid.

Adam Kelley, Children’s Hospital of Alabama

Adam Kelley, communications manager at Children’s Hospital, said that Magnolia and United frequently delayed reimbursements and often outright refused to reimburse services for one patient that had previously been covered by another, similar patient. Bills, he said, were going unpaid.

“The thing I would say is that it’s very difficult to understand the requirements. Some patients are covered and others are not. Some services are covered, others are private pay,” Kelley said.

Magnolia did not respond to a request for comment. A representative from United said any claims about inconsistent payments are untrue.

“We’ve paid them consistently, as we would any out-of-network provider,” said Jocelyn Parker of United Healthcare.

Children’s Hospital stopped seeing children covered by Mississippi Medicaid on March 1, but they did not notify Medicaid of their decision, according to Erin Barham of Mississippi’s Division of Medicaid. Instead, the agency learned only last week after a beneficiary’s parent called the agency to complain that the hospital had dropped her child’s coverage.

Erin Barham, Mississippi Division of Medicaid

“It would be fair to say we were awfully surprised,” Barham said.

Kelley said Children’s held off on notifying the agency because the hospital was focused on working with its staff to transition the Mississippi Medicaid patients to providers in-state. He said most treatments would be available in the state.

“Our communication has been to our own staff, our own medical staff, to begin working with the patient families to begin to provide a transition of care. So to us that process has just begun. The intention has been for it to be efficient and give these families the very best care in their home state. So for some that might be easy, and for others that might be more challenging,” Kelley said.

Although Kelley said Children’s Hospital’s dispute was mainly with the managed care companies, he said the hospital decided to end its relationship with all Mississippi Medicaid beneficiaries.

Mississippi’s Medicaid beneficiaries fall into one of two categories. Approximately one-third of beneficiaries are covered under regular Medicaid and the Children’s Health Insurance Program, both of which act as an insurance company, directly reimbursing providers.

But two-thirds of beneficiaries fall under the umbrella of Medicaid’s coordinated care division and its two companies: United Healthcare and Magnolia Health.

Mississippi Medicaid began its coordinated care program in 2011 with just 54,000 patients. Since then it has grown ten-fold, with 557,000 enrolled as of 2016. A report commissioned by the agency in 2016 estimated that coordinated care had saved Mississippi’s Division of Medicaid $210 million over five years.

Coordinated care works on the premise of “cost prevention” rather than “savings,” going by the idea that if providers and insurers are proactive enough in their patients’ lives, they can keep them healthy and prevent costly illnesses, such as diabetes, and procedures, such as trips to the emergency room.

But many providers argue that the reality of coordinated care is often different. Patients still need expensive procedures, but managed care companies choose not to pay for them. And the savings, some providers say, come from their own pockets.

Forrest Health System

Evan Dillard, president and CEO, Forrest General Hospital

“It’s a constant fight,” said Evan Dillard, CEO of Forrest General Hospital in Hattiesburg, on getting reimbursements from Medicaid’s managed care companies.

Although Medicaid said the Children’s decision was abrupt, Kelly said the hospital had been in conversations about reimbursement rates with Mississippi Medicaid for 18 months.

But Medicaid, itself, does not negotiate rates, according to Barham. “You’re either in or you’re out,” she said.

Managed care companies under Medicaid, however, can negotiate reimbursement rates. Kelley said one issue with reimbursements was that Children’s had been designated an out-of-network provider by United and Magnolia, which meant that the hospital did not have a contract with either company.

“Children’s is not an in-network provider for Mississippi, and any company that moves to a managed care network should be responsible for ensuring a provider network is in place to address the needs of its citizens,” Kelley said. “Given the small number of what we treat here, it is very difficult for us to understand the Mississippi Medicaid requirements (that keep Children’s out of network).”

Children’s is the first hospital in recent memory to abruptly sever ties with all of Mississippi Medicaid. But United Healthcare has had trouble negotiating contracts with Mississippi hospitals over the last few years.

Two years ago, Forrest General sent a contract termination letter to United, which hospital CEO Dillard said was due to non-payment. Dillard said the renegotiation turned into a “nasty situation,” but ultimately United and Forrest General were able to renegotiate new rates without interrupting services or coverage.

Then this fall, North Mississippi Medical Center in Tupelo took out a full-page advertisement in a local newspaper accusing the insurance giant of not reimbursing the hospital for services. In December, North Mississippi announced that the hospital had agreed to renegotiate its contract with United.

Although Mississippi has its own children’s hospital, Batson in Jackson, many Mississippians have long sought care outside of the state for a number of reasons, including proximity to and variety of services. Le Bonheur Children’s Hospital in Memphis also treats Mississippi Medicaid patients.