CT Health Notes Blog

The audit of large rate increases granted to the HUSKY HMOs last year has been released. Accounting firm Milliman found that the state overpaid the HMOs between $41 and 39 million. The Governor has already incorporated over $50 million in savings from re-negotiating HMO rates based on this report in her latest budget proposal. The audit also raised concerns about the soundness of rate setting practices and assumptions including trend adjustments, data re-basing, guarding against double-counting, and incomplete documentation. The report summary includes concerns about lack of transparency and accountability; the entire $4 billion Medical budget is included in only one line item. Advocates argue that the $50 million in savings can be used to avert cuts to HUSKY families including copays, dental care, medical interpretation, medical necessity, and elimination of coverage for immigrants. The funding could also be used to improve health care in CT by covering smoking cessation in HUSKY, improving primary care rates, providing incentives for quality care, or removing the onerous requirement that Charter Oak Health Plan applicants be uninsured for six months or pay one third of their incomes on insurance.
For press reports, click here, here and here.
Ellen Andrews

Legislative leaders and Comptroller Nancy Wyman announced today that the Comptroller’s office will conduct an audit of DSS to eliminate waste and over-budgeting. Specific concerns include difficulties tracking expenses, over $100 million in DSS carry-forward requests, turmoil in the HUSKY program, start up costs of the Charter Oak Health Plan, and funds appropriated for programs that are not implemented or partially implemented such as delays in securing disease management, PCCM and medical interpreting services. The Appropriations and Finance Committees will hold a joint fiscal accountability meeting on November 18th.
Ellen Andrews

Until recently most companies have just taken an employee’s word that the people they list for coverage under their family benefits are eligible. However, as health costs rise and margins drop more employers are checking, according to the Wall Street Journal. Almost three in four large US companies intend to conduct “dependent eligibility audits” this year, looking for divorced ex-spouses, older children who are not full time students, boyfriends and girlfriends listed on workers’ benefits. One large retail company’s audit revealed that 12.6% of dependents were not eligible and their coverage was dropped, saving the company $25 million in the first year beyond the cost of the audit.
Ellen Andrews

Yesterday’s organizational meeting of the SustiNet Patient-Centered Medical Home Advisory Committee was very encouraging. There is a lot of energy across stakeholder groups, especially among providers and payers. We are soliciting input on who/what groups to consult for input and what issues to consider. Suggestions include business coalitions, NCQA, medical homes from other states, consumer and provider groups. Issues raised include integrating primary care with behavioral health, the role of chiropractic care, primary care shortages, health IT, the costs of implementation, and savings to the health care system. It was also noted that while policymakers are learning about the medical home model, most providers still need to understand it.

Unfortunately, the meeting of the Medicaid Managed Care Council’s PCCM Subcommittee that followed did not go as well. DSS has refused to remove the irrelevant and intimidating Freedom of Information clause in PCCM provider contracts. As one provider in the room put it – the first time a provider gets a request or a subpoena, that will be the end of the program. It is important to note that providers participating in HMOs are not required to sign similar contract language. DSS also continues to refuse to devote any resources to marketing PCCM, despite the overwhelming marketing allowed by the HMOs, paid for out of tax dollars. DSS estimated that the HMOs were spending 1% of the cap rates on marketing, which is roughly $7 million/year. Marketing activities by HMOs, approved by DSS, and paid for out of tax dollars, include free ice cream and haircuts to sign up with an HMO, a banner behind an airplane at a community festival, gifts, radio and billboard advertising, and raffles for school uniforms and supplies. DSS noted that when they talk to providers about signing up for PCCM, they also encourage them to sign up for the HUSKY HMOs and Charter Oak. It is unclear whether providers understand that they can sign up for just PCCM or if they believe they have to also sign contracts with the HMOs. DSS also announced that they will hire Mercer to conduct an evaluation of PCCM to be done by July. However, they acknowledged that the very small enrollment in the program so far makes it nearly impossible to make valid statements about how well the program is doing in providing care, reducing costs, or improving quality. Mercer was the DSS contractor that approved the 24% HMO rate increases for the HUSKY HMOs, which were called into question by the Comptroller’s independent audit, and derives a great deal of their business from managed care plans, in CT and nationally.
In the meantime, advocates are working without any tax dollars to market PCCM to both providers and consumers in New Haven and Hartford in anticipation of the program’s roll out there January 1st. We have an army of volunteers and energetic students mailing and calling providers, practice managers, community organizations and consumers. We are holding two forums open to anyone interested, and eligible to join, the program. By far the largest obstacle we are encountering is skepticism about DSS’s commitment to the program and a strong distrust of the state. If you are considering PCCM, for more information click here.
Ellen Andrews

An interesting story by Arielle Levin Becker at the CT Mirror asks whether Charter Oak will survive after Governor Rell leaves office. The best thing about Charter Oak is that people with pre-existing conditions are not excluded from coverage; under national health reform, that exclusion will be prohibited in all health insurance in 2014. It is also unclear whether some of Charter Oak’s limits in coverage that consumer advocates have criticized will be allowed in any coverage plan. There is also a question about the sustainability of funding. Currently, there are concerns that Charter Oak’s monthly $307 premiums are sufficient to sustain the costs of care for patients attracted to a safety net plan. As Charter Oak is now linked to HUSKY, insurers can spread the costs over a much larger pool. (An audit by the Comptroller’s Office found that the plans are overpaid in their HUSKY rates). If HUSKY converts to a non-risk model as is called for in the budget, in which plans are paid only an administrative fee and the state pays all medical bills, Charter Oak’s premiums will have to reflect just the higher risk of those consumers alone. Given the looming $3 billion deficit next year, it is unlikely that the state will subsidize the program. In the article, all the candidates for Governor expressed doubt about Charter Oak’s future.
Ellen Andrews

Saturday HB-6600, AAC the Establishment of the SustiNet Plan, passed the Senate on a vote of 23 to 12. The bill passed as it did in the House, without further ammendment. The Health Care Partnership bill, HB-6582, which self-insures the state employee plan and allows municipalities, small businesses and non-profits to participate in the plan, also passed Saturday. Both bills passed the House last Wednesday and now move to the Governor’s desk.

The CT Health Policy Project has published an analysis of the Governor’s latest budget proposal and its impact on health care. Her proposal includes a reduction of just over $50 million in each year to the HUSKY HMO capitation rates based on an audit of those rates by the Office of State Comptroller.
Ellen Andrews

CT’s progress toward health reform moved up slightly to 28.8% this month, from 28.4% last month. Medicaid accounted for most of the progress including addressing audit issues that serve as a barrier to provider participation and the health neighborhood pilot for dual eligibles that is carefully protecting consumers from underservice in a collaborative and constructive process. Progress was limited by inadequate outreach resources for the upcoming AccessHealthCT open enrollment season and SIM’s decision to use admittedly inappropriate Medicare ACO quality standards for everyone simply to better position the state to receive the SIM grant amounting to about $6 million/year for five years . The CT health reform progress meter is part of the CT Health Reform Dashboard.

Governor Rell’s latest budget proposal includes cuts to health care programs including $50 million in FY 2010 and $52m in FY 2011 (6%) cuts to HMO capitation rates in HUSKY resulting from an audit of those rates by the Office of State Comptroller ($19m and $23m net savings to the state after accounting for the enhanced federal matching rate). She agrees to self-insurance for the state employee plan, but not until March, 2011. Consumers in the Charter Oak Health Plan would have to pay higher premiums under her proposal, varying from an additional $18.94/month for those under 150% of the federal poverty level (FPL) to $5.73/month for those between 235 and 300% of FPL. The FPL is currently $10,830 for a single person. She would also impose monthly premiums of $25/child up to $30 max/family on HUSKY Part B children between 185% and 235% of FPL. She also increases copays on all HUSKY Part B children. She agrees with the Appropriations Committee proposal to establish Special Needs Plans for consumers eligible for both Medicare and Medicaid (although she doesn’t believe this will save as much as Approp.s does). She assumes increased savings due to Medicaid fraud investigation. Her proposal also includes reducing Medicaid provider rates by 1%, hiring a company to manage services for the Aged, Blind and Disabled in Medicaid, implementing the SAGA waiver, requiring prior authorization for some dental care, eliminate eyeglass coverage for adults in Medicaid, a reduction in DSH funding to hospitals to cover the uninsured and Medicaid underpayments (net savings of $1m in each budget year), eliminates HUSKY outreach, and 10% cuts to Healthy Start programs. Her proposal also includes increased cost sharing for consumers the CT Home Care Program, reductions in nursing home administrative costs, and fewer homes will get rate increases. She also proposes cuts in non-entitlement block grant programs including elderly health screenings, teen pregnancy prevention, and support for community action agencies. To ensure CT receives the enhanced federal stimulus money, she adds back funding for HUSKY self-declaration of income and adult premiums. Her budget also cuts funding to community health centers, the needle exchange program, community services for people with AIDS, and the nursing and primary care loan repayment program. Overall her budget cuts $667m in FY 10 and $787m in FY 11. She is proposing these cuts in order to avoid tax increases.
Ellen Andrews

Friday’s Medicaid Managed Care Council meeting was very frustrating. Upon questioning, DSS made clear that they will not be recovering the $50 million in overpayments to the HUSKY HMOs that were identified by independent auditors commissioned by the Comptroller, proposed by the Governor to cut for the current state budget and agreed to by the General Assembly. To be exact, they stated that they are “in negotiations” but in response to questions they stated that they are concerned that the HMOs might choose to leave the program and echoed the perennial, tired complaint that the HMOs aren’t making enough money. They claimed that the Milliman audit was based on earlier financial information. (Leaving aside the issue that DSS refused to share more recent financial information with the auditors.) They had no answer when reminded that the HMOs have always whined that they don’t make enough money on this program, including the years that Milliman used in their analysis. They also raised the threat that any cut to the HMOs will result in reduced services to consumers. Why the HMOs can’t manage on rates comparable to what other states are paying, and why DSS wouldn’t enforce their contracts was not addressed. Apparently, re-bidding the program is too hard, which led to the point that if DSS is not willing to lose any of the HMOs, it can’t be much of a negotiation. They also conveniently forgot that the advocates and the General Assembly have given them an alternative, a bargaining chip (not to mention a better option for consumers based on patient-centered medical homes) in PCCM which DSS has been unable and/or unwilling to implement.
Although it was on the agenda, PCCM wasn’t discussed at the meeting, again.
Ellen Andrews

An analysis by the CT Health I-Team of DPH hospital adverse event reports finds that the number of errors has risen steadily over the last five years. The same investigation finds that DPH investigations of serious medical errors in hospitals have been rare and the numbers are dropping. Of 17 patients who reportedly died or were seriously injured during surgery in 2010, DPH investigated only six. For the first time, hospitals are named individually in DPH’s report. Hospitals with the highest rates of reported errors were New Milford, St. Raphael’s, Sharon, Johnson Memorial and Backus, in that order. It is important to note that the data is based on self-reporting; DPH does not audit hospitals’ error reports (or lack of reports). A national study found that voluntary reporting systems miss 90% of errors.
Ellen Andrews

Today’s Medicaid Managed Care Council meeting touched on some new issues and revisited some old ones. There was a strong exchange on the Charter Oak annual $100,000 and lifetime $1 million limits. Sen. Prague talked about a patient who called her office needing treatment for cancer that exceeded the annual cap. He was eventually able to continue his care, but is facing very large bills. She asked if the department is considering allowing people to tap into their lifetime caps when they have reached the annual limit. DSS stated that they are considering several options to address this concern including her idea of accessing the lifetime cap, but most of the options might include an increase in premiums. The conversation then turned to balancing affordable premiums with some relief for people reaching the coverage limits. Options include excluding specialty drugs from the calculation of the cap, links to the state’s high risk pool, reinsurance and placing a lien on the patient’s house. DSS reported that to date, only one person had exceeded the annual cap, but four others had received letters advising them that they had incurred expenses over $50,000. In the letter, DSS urges patients to contact them to see if they are eligible for other programs or resources to pay their bills.
The revenue and expense reports for 2008 generated a great deal of comment. CHN made a profit of $1.6 million; the other HMOs reported losing money. Overall the state paid $207.30 per member per month, including dental and pharmacy costs until they were carved out. DSS defended CHN’s profits at about 2.7% saying that is to be expected. DSS also believes that the program cost more per member during the months the plans were not at risk (the PIHP model) than under capitation, but did not provide numbers to support that assertion. There was a great deal of discussion of the Comptroller’s audit and the $50 million cut from HUSKY HMO rates in the budget that just passed. DSS stated that it is their expectation/goal to recoup that savings from the plans’ rates in the upcoming negotiations, although they do not agree with the Comptroller’s report. However after further discussion, Rep. Villano stated his concern that DSS did not plan to re-bid the contracts and about their “reluctance” to aggressively pursue those savings. DSS noted that they are no longer hiring outside auditors for rate-setting, but are performing those functions in-house and are restructuring their encounter data management system and should have better information on which to base the rates in the future.
DSS also described the prior authorization process for medications, but never got to the update on PCCM.
The PCCM subcommittee meets next week on Wednesday the 16th at 10am in the LOB.
Ellen Andrews

In her budget proposal released yesterday, the Governor proposed shifting the current HUSKY HMOs away from capitation back to a non-risk arrangement. For a few months in early 2008, the Governor ordered a similar switch from capitation to an Administrative Services Organization (ASO)-model, in which the HMOs administered the program for DSS but passed all the medical bills onto the state. There is evidence that the state saved money under that non-risk arrangement. At the time, the HMOs were paid $18.18 per member per month (pmpm) for those services; a back of the envelope calculation suggests that the state expects to pay about $15 pmpm this time. Under PCCM, a new alternative to HUSKY HMOs, providers are paid only $7.50 pmpm for services that include care coordination. The 2008 switch resulted from advocacy efforts for transparency and accountability in the program. This year’s switch is prompted by cost pressures. An audit by the Comptroller last year found that HUSKY was overpaying the HMOs by $50 million/year. The Governor estimates that switching HUSKY to an ASO model will save the state $29 million next year.
Unfortunately, the Governor’s proposal also includes copays on Medicaid services, eliminating coverage for non-prescription drugs, vision services for adults, cuts to subsidies and increased premiums in the Charter Oak Health Plan, increased premiums and copays in HUSKY Part B, vision and transportation cuts to SAGA, and cuts HUSKY outreach. Those cuts total $53 million. None of these cuts is necessary; we have thirteen ways to save money in CT’s state budget that improve health.
Ellen Andrews

Yesterday the Senate passed a Democratic budget spending $35.5 billion over the next two years. The fiscal year ends next Tuesday. The Democratic budget saves health coverage for legal immigrants, the current definition of medical necessity for Medicaid, and increases cigarette taxes by 75 cents per pack to $2.75. The budget also takes $50 million from HUSKY HMO rates, based on an audit by the Comptroller’s Office finding that the HMOs are overpaid by 5 to6%; that cut was also included in the Governor’s latest budget proposal. Five Democratic Senators and all the Republicans voted against the bill. The House will vote on the bill today. The Governor has signaled that she will veto it.
Ellen Andrews

Rising unemployment, and consequent rising uninsurance, reduced United Health Group’s lucrative commercial enrollment by almost a million people compared to last year. Despite that, United posted rising profits for the third straight quarter. Raising premiums and a 12.5% increase in taxpayer-funded Medicare and Medicaid enrollment contributed to the profits. United Health Care (Americhoice) is one of three HMOs in CT’s Medicaid managed care program. An independent audit by the Comptroller’s Office last year found that CT is overpaying the HUSKY HMOs by $50 million annually. Also last year, CT’s insurance dept. approved a controversial, first-of-its-kind proposal by United to purchase HealthNet’s consumer information on CT residents.
Ellen Andrews

Tuesday the Human Services Committee heard HB-5297, An Act Concerning Statewide Expansion of the Primary Care Case Management Pilot Program. The bill would, as the title says, expand PCCM statewide as of October 1st and delay the planned evaluation of the program until next year. Advocates have raised concerns about DSS’ plans to evaluate the program prematurely, worried that it could incorrectly label the program a “failure” and serve as an excuse to shut it down. PCCM has only 322 members; legislation requires at least 1,000. DSS plans to hire Mercer for the evaluation; Mercer receives much of its revenue from HMOs.
At the hearing, legislators peppered the commissioner with questions about why DSS has not been supportive of PCCM especially marketing restrictions such as requiring providers to print their own brochures or restricting providers from talking to their patients about PCCM but allowed to answer questions if asked. Legislators noted that they have heard very positive feedback from PCCM providers and were concerned that physicians in parts of the state beyond DSS’ current four towns who want to join the program (a remarkable and wonderful thing) are being told that they can’t participate. Legislators were particularly interested in what happened to $5 million appropriated in the last two years to support PCCM. DSS answered that they used the money to cover their deficit, which includes the $50 million overpayments to the HMOs uncovered by the Comptroller’s audit.
Ellen Andrews