Division of Medicaid offices in Jackson

Disagreements between two formidable interest groups are driving conversations on a crucial Medicaid bill this session. And their conflicting points of view could unravel lawmakers’ efforts to run an organization responsible for insuring 700,000 Mississippians.

At issue is the Medicaid technical bill, which lays out how the agency spends its $6 billion annual budget. Nearly half of that — or $3 billion — goes to the companies that insure Medicaid beneficiaries. And the powerful Mississippi Hospital Association, which for years has butted heads with these insurers, wants in.

For the past two months the Mississippi House of Representatives has largely aligned itself with the hospitals, passing versions of a tech bill that would make room in the managed care program for Mississippi True, a new provider-run insurance company that has the backing of the Hospital Association. Last summer, Mississippi True vied for and lost out on one of the three lucrative managed care contracts given by the Division of Medicaid, and several lawmakers believe it deserves another shot.

But the three Medicaid insurers who received those contracts in June, Magnolia Health, United Healthcare and Molina Healthcare, have pushed back, arguing that it sets a bad precedent for lawmakers to involve themselves in internal agency business just because they don’t like an outcome. The Senate has largely sided with the insurers, passing versions of a tech bill that make no mention of a provider-run health insurance plan.

Earlier this month, the Senate killed the House’s bill. The House responded by keeping the Senate bill alive, but replacing its text with the House bill the Senate had just killed.

This weekend, the House and Senate will begin final negotiations on the bill. If neither side can reach a compromise over the weekend, something leaders in both houses admit is a possibility, the bill will die. State law then allows the governor, rather than the Legislature, to assume control of the Division of Medicaid.

Sen. Brice Wiggins, R-Pascagoula

“That is not something the Senate wants to see, and I know the House doesn’t either,” said Senate Medicaid Chairman Brice Wiggins, R-Pascagoula. “But this is conference weekend. Anything can happen.”

During conference weekend, legislative leaders meet to hammer out the budget and work out differences between House and Senate versions of bills before the Legislature adjourns for the 2018 session.

Senators and House members say letting the bill die is a last resort. But the fact that the possibility is even on the table — and being publicly discussed — shows just how strong the pull from hospitals and managed care lobbies is.

“It’s not the kind of program you play any kind of political game with. I don’t care what party you’re in. Medicaid is not a toy,” said Rep. Steve Holland, D-Plantersville. “Medicaid is an insurance company that provides health care for a quarter of the citizens of Mississippi.”

The roots of discord

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 these Medicaid insurers, arguing that they delay their reimbursements to providers and sometimes refuse to pay altogether. A provider-sponsored plan, in which the hospitals would manage the care of their own patients, was an attempt for hospitals to take control of these complaints and get a piece of the lucrative managed care pie.

But it didn’t work out that way.

Immediately after Mississippi True lost its bid for a Medicaid contract, the Hospital Association and several lawmakers cried foul. They argued that Medicaid’s bidding process was slanted to favor the three for-profit companies that ultimately received contracts — a question that has hung over the agency since and contributed to the resignation of its former executive director in December.

Rep. Jason White, R-West

“I think typically we don’t get in the business of picking winners and losers, but we would all be in denial if we didn’t admit there were lots of questions raised about the last (bid) and the managed care contracts that were granted,” said Rep. Jason White, R-West, who wrote the House legislation. “And there is a desire to do something about it.”

That something has shifted in different versions of the House legislation. In January, the House Medicaid committee approved a version of the tech bill that would carve out between five and 10 percent of the managed care beneficiaries and give them to Mississippi True, so the insurer could start a pilot program.

But neither side liked this. Mississippi True argued the population was too small for the program to work, while some lawmakers said it was the Legislature’s way of giving a no-bid contract to a company it liked. By the time the bill hit the House floor, the carve-out was gone, replaced by a mandate that the agency throw out the results of last summer’s bid and rebid all three managed care contracts.

That too has met resistance, even from lawmakers who have questions about last summer’s procurement.

“It is completely within Mississippi True’s right and certainly not unexpected for them to ask the Legislature to look at this issue,” Wiggins said. “I support the Hospital Association. But this issue (of a rebid) has always been an uphill battle in the Senate. There was a process, and Mississippi True finished six out of seven groups (who bid). And they did not win.”

Competing interests

Few interest groups in the state enjoy the widespread legislative support that the Hospital Association has, and this is because the group itself has a wide reach. Unlike the three managed care companies that won contracts, all of which have parent companies 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.

“These hospitals are the life-blood of our state. They are the economic engines that drive our state, and they need our support,” Holland said in January.

House leaders have been open that these community ties are part of the reason that discussion of a rebid or carve out has resonated so strongly with members of the House.

“I’m trying to do something for them to give them a chance,” White said, defending the carve out in the January House committee meeting.

The managed care lobby might not have the wide reach of the hospital association, but it has something just as important to legislators — deep pockets. In 2015, an election year, Centene, which owns Magnolia Health, donated almost $360,000 to Mississippi lawmakers in campaign contributions. In 2017, Centene contributed over $125,000 to lawmakers.

The Hospital Association has its own political action committee, and in 2017 it gave $30,000 to elected officials in Mississippi.

But this is likely far from the full picture. Unlike Centene, which is easy to trace because its donations usually fall under the umbrella of its PAC, its LLC or Magnolia, the wide reach of the Hospital Association makes a similar analysis difficult. In addition to the 60 hospitals that make up Mississippi True, these hospitals each have CEOs, administrators and doctors whose individual donations can influence state and local leaders.

The Division of Medicaid has so far maintained a neutral position on the two bills, saying it has faith the Legislature will do what is necessary to keep agency costs down.

Drew Snyder, interim director of the Division of Medicaid

“Our team has been working with legislative leaders to gauge the potential impact of the many individual amendments included in the multiple iterations of the Medicaid technical amendments bill,” said interim executive director Drew Snyder.

“I am hopeful for a resolution that will give the Division of Medicaid the freedom to provide quality care for our most vulnerable while operating within the limits of our appropriation.”

The outcome

Although both Wiggins and White remain adamant that they will maintain the position of their respective houses going into conference weekend, White has, at least in the past, acknowledged that the House position is a precarious one.

In the House Medicaid Committee meeting in January, as legislators debated expanding the population of the Mississippi True 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.

In a conversation with Mississippi Today on Wednesday, Wiggins said he was open to compromise. But he didn’t elaborate on where that compromise might be, saying that “the Senate position is what the Senate bill is, which didn’t have that (Mississippi True) language in it. That’s what it is. And you can bet that’s going to be controversial.”

When asked about the odds of compromise, White pointed out that the version of the Medicaid tech bill ordering the agency to rebid the contracts received strong bipartisan support, with more than 100 representatives voting in favor of it.

But he has also said that the House and Senate have so far had “several good conversations.”

“The House position is very strong on Mississippi True, and I’ve got a duty to hold that position,” White said. “But nobody has drawn lines in the sand. Both chambers want there to be a Medicaid tech bill this session.

“I’ve been to many bill signings where each side started off saying, I’m not going to do this and this and this. And then we all ended up in the governor’s office for the bill signing,” White said.

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Larrison Campbell is a Greenville native who reports on politics with an emphasis on public health. She received a bachelor’s from Wesleyan University and a master’s from Columbia University's Graduate School of Journalism.Larrison is a 2018 National Press Foundation fellow in public health, a 2019 Blue Cross Blue Shield Foundation of Massachusetts fellow in health care reporting and a 2019 Center for Health Journalism National Fellow.