House bends Medicaid rules to accommodate hospital provider plan

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After a tumultuous year, Mississippi’s powerful hospital lobby won a small victory this week when a House committee passed a bill requiring Medicaid to make room for a provider-sponsored insurance plan in its controversial managed care program.

Currently, there is only one insurance company backed by health care providers in the state, Mississippi True, which is made up of 60 hospitals and has the support of the state’s Hospital Association. As a result, this requirement would bypass Medicaid’s bidding process to award an estimated $300 million contract to Mississippi True, a move that effectively bends the agency rules to accommodate one company, say several legislators, including the bill’s sponsor.

“Here’s what we know. There was a bid process. Three (companies) were awarded contracts. There were several other companies in front of this provider-sponsored health plan, so they weren’t even a close fourth,” said Rep. Jason White, R-West, who sponsored the legislation.

Gabriel Austin, Mississippi Today

Rep. Jason White, R-West

“Now, I’m not here to come down on a provider-sponsored program. I’m for it, and that’s why I tried to include them.”

The carve-out for Mississippi True is part of the House’s Medicaid technical bill, which reauthorizes the rules governing the state’s Medicaid program. The bill would require the agency to establish a three-year pilot program for a provider-sponsored plan, giving between five and 10 percent of Mississippi’s 500,000 managed care beneficiaries to the new company.

The provision is widely seen as an attempt to remedy what some legislators have called a bungled procurement process. This summer, the Division of Medicaid awarded new managed care contracts to United Healthcare, Magnolia Health and Molina Healthcare. When Mississippi True was excluded, several lawmakers cried foul, arguing the evaluation process was biased.

Rep. Becky Currie, R-Brookhaven

“I believe the (bidding) process was flawed,” said Rep. Becky Currie, R-Brookhaven. “I want to give hospitals what they need to crawl out of this hole.”

For years, lawmakers have struggled to get a handle on the size of Medicaid’s budget, which currently tops $6 billion in state and federal funds. Managed care, which the agency implemented in 2011, is an attempt to contain costs. Under managed care, Medicaid pays insurance companies a flat fee per beneficiary, giving these companies an incentive to keep patients well  — and minimize the services they use.

But the hospitals have long been at odds with the managed care companies, arguing that managed care’s reimbursement rates are so low they often don’t cover the costs of caring for these patients. A provider-sponsored plan, in which the hospitals would manage the care of their own patients, is an attempt for hospitals to take control of these complaints— and get a piece of the lucrative managed care pie. Mississippi Medicaid spends $3 billion a year on its managed care programs.

One reason for the widespread legislative support for Mississippi True is the company itself has a wide reach. Unlike the three managed care companies that won contracts, all of which are based out of state, Mississippi True is a partnership of 60 hospitals across the state, meaning the vast majority of legislators have a member hospital in their districts.

In fact, many of these lawmakers say the current carve-out doesn’t bend the rules far enough to make Mississippi True successful. Currie offered an amendment that would raise the cap on the size of Mississippi True’s program from 10 percent of the managed care population to 20 percent. Currie pointed out that Medicaid had guaranteed no less than 20 percent of its managed care population to each of the other three companies.

“As a business model and as common sense, I don’t think (Mississippi True) will be able to survive with just that. And since the other companies are allowed 20 percent, I’d like them to be allowed 20 percent as well,” Currie said.

Rogelio V. Solis, AP

Rep. Steve Holland, D-Plantersville

When that amendment failed, Rep. Steve Holland, D-Plantersville, suggested raising the cap to 15 percent. That amendment failed as well. But their concerns were echoed by Chuck Reece, chairman of the board of Mississippi True, who told Mississippi Today that anything under 20 percent “won’t work.”

As legislators debated expanding the population of the pilot program, White, the bill’s sponsor, appeared visibly uncomfortable, shifting in his seat and shaking his head. He told committee members that any attempt to increase the size of the pilot program would be a “poison pill” to the measure, given that this carve-out has already sidestepped the bidding process legally required of the other companies.

“If it’s 20 percent, then it’s not a pilot program. We are mandating and picking a winner and saying, ‘You didn’t get the bid, but we’re going to put you in with the other three that did get the bid,'” White said.

“If you vote for this amendment, you’re also voting to reward hundreds of millions of dollars in a no-bid contract to one provider and one provider only, subject to what? There are no performance requirements. It is a mandate that they receive this bid.”

White’s argument didn’t sway Holland or Currie. Both said they planned to bring up the same amendments when the bill makes its way to the House floor.

“That’s going to be the big contrention on the floor of the house, I can say that,” Holland said Wednesday.

In a conversation with Mississippi Today after the committee meeting, White said that the carve-out, as currently written, qualifies as a pilot program because the population can’t exceed 10 percent and because the program is limited to three years. The managed care companies also have three-year contracts, with an optional extension of two years.

And for the managed care companies and their supporters, any attempt to bend the rules for one a competitors is unfair.

“Personally, I would rather throw out that procurement and rebid the contract than for the state to award a non competitive contract to any entity. And that’s not just in health care, but across the board,” said Aaron Sisk, CEO of Magnolia Health, one of the state’s three managed care plans.

“I’m not opposed to a provider-sponsored health plan or to competing with one. I would just ask though that it be a fair competition.”

Others worry that mandating Mississippi True receive part of the managed care pie, without going through the procurement process, could set a bad legislative precedent.

“You could say that this approach to that carve out undermines the contracting process in Mississippi because it sends a message to vendors and others that if you don’t get what you want through the normal contracting process, then you can get what you want through the lobbying process,” said Jameson Taylor of the Mississippi Center for Public Policy.