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The big disconnect

News that Tufts Health Plan could lose its chance to continue as an MCO for Medicaid members because it was two minutes late in handing in its paper application may have a much bigger import: marking the endpoint of the Reinvention of Medicaid

Photo by Richard Asinof/File photo

Six years ago, Elizabeth Roberts, then Secretary of the R.I. Executive Office of Health and Human Services, announces a $129 million investment at the State House in November of 2016 to spur the establishment of accountable entities as part of the Reinvention of Medicaid, which also included adding Tufts Health Plan as a third MCO.

By Richard Asinof
Posted 3/28/22
In an election year, the dominant role that low Medicaid reimbursement rates play in hindering the delivery of health care in Rhode Island has yet to emerge as a political football, which is surprising, given that more than one-third of all Rhode Island residents are Medicaid members.
When will discussion of small businesses in Rhode Island include nonprofit community agencies that under gird the state’s economy? How will the departure of Secretary Womazetta Jones impact the re-procurement process for MCOs? Will there be any analysis of the apparent conflict of interest posed by Optum, a for-profit wholly owned subsidiary of UnitedHealth, being deployed by both Neighborhood Health Plan of RI and UnitedHealthcare, to manage patients’ benefits? Will the lack of investment in behavioral health care infrastructure trigger a walkout at the Governor’s Council on Behavioral Health, similar to what happened with the recovery community’s walkout with the Governor’s Task Force on Overdose Prevention and Intervention in September of 2021?
The release of the latest analysis by the Rhode Island Health Care Cost Trends Steering Committee, slated for Tuesday, March 29, looking at the numbers for 2020, offers what could be called a big snapshot of an anomaly – where health care costs appeared to fall across the board, driven by the dramatic decrease in utilization caused by the COVID pandemic.
Even with the overall decline in health costs, the leading driver for increases in health care costs across all indicators were prescription drugs – a further warning sign that just as arresting people and putting them in jail did not solve the illicit drug problem in the U.S., prescription drugs do not offer a panacea for underlying health care conditions.
A big disconnect exists between how elected officials talk about the current health care delivery system and how voters experience it in their everyday lives – in terms of access, costs, wait times, and health outcomes.


PROVIDENCE – One of the “big” health care news items reported last week by WPRI was that Tufts Health Plan may miss out on the opportunity to be chosen as one of the private health insurance companies selected by the state of Rhode Island as part of the re-procurement of the lucrative Medicaid managed care contract, worth some $7 billion over five years – because they were apparently two minutes late in delivering the paper application to the R.I. Department of Administration offices on Friday, Jan. 28.

But the news coverage may have missed the underlying import of the story – how the denial of Tufts Health Care’s participation into the privatization market for Medicaid coverage in Rhode Island could mark an end point of the Reinvention of Medicaid, an initiative launched by former Gov. Gina Raimondo in 2015.

The recruitment of Tufts Health Plan in 2016 by the Raimondo administration as a third MCO was part of the strategic policy shift to value-based payments, seeking to move away from fee-for-service, establishing “accountable entities,” financed by an investment the Centers for Medicare and Medicaid Services of $129.7 million. [See links to ConvergenceRI stories, “A peek behind the curtain at Reinventing Medicaid 2.0,” and “Calculating the success, or failure, of reinvention of Medicaid.”]

Currently, Tufts Health Plan is one of three MCOs – private health insurance companies known as managed care organizations – that “manage” the health care delivery for some 85 percent of the roughly “300,000” [emphasis added] Rhode Islanders who are Medicaid members. Tufts Health Plan is a division of Point32Health, a new corporate entity created by the consolidation of Tufts Health Plan and Harvard Pilgrim Health Care in June of 2021.

[Editor’s Note: That 300,000 figure, cited by the WPRI story, appears to be taken from 2020 data. The actual number of Rhode Islanders receiving Medicaid in February of 2022 was much higher – 352,000, or about 18 percent higher – according to State Senator Lou Di Palma. Membership in Medicaid had always been a fluctuating number, given the monthly churn through which folks were deemed eligible or eliminated, because of income eligibility. Ever since the federal government declared a COVID emergency in 2020, it has prevented states from eliminating people on the Medicaid roles for the past two years. Once that emergency decree is lifted, the state will begin to “cleanse” the Medicaid roles in Rhode Island, a task that will befall HealthSource RI and create an enormous amount of disruption.]

Translated, Medicaid is providing health insurance coverage to more than one-third of all Rhode Islanders in 2022. In a world where public health has been transformed into “behavioral economics” by high-priced consultants such as Boston Consulting Group and McKinsey & Company, Medicaid has emerged as the waterline for how to measure economic prosperity in the state. In the words of Billie Holiday, “Them that’s got shall get/Them that’s not shall lose/But God bless the child that’s got [her] own.”

According to the WPRI story, based on the apparently out-of date numbers, Tufts Health Plan serves about 17,000 Medicaid members, the smallest share compared to Neighborhood Health Plan of Rhode Island, which serves about 174,000 Medicaid members, and UnitedHealthcare, which serves about 97,000 Medicaid members. The enrollment numbers may have changed, but the percentages for the relative share of the market appear to representative.

The story by WPRI focused on the potential loss of income facing Tufts Health Insurance by being a mere two minutes late. If disqualified from being accepted as a bidder, Tufts Health Plan could lose out on approximately $400 million in business over five years.

If the disqualification of Tufts Health Plan survives potential legal challenges, it could benefit the other health insurance plans contending to be chosen by the state in the re-procurement process as MCOs – including the two current MCOs, UnitedHealthcare, Neighborhood Health Plan of Rhode Island, and two new applicants seeking entry into the lucrative market – Blue Cross and Blue Shield of Rhode Island, and Molina Healthcare of Rhode Island, Inc. [a division of Molina Healthcare, whose corporate offices are in Long Beach, Calif.].

Call it a game of corporate insurance musical chairs. When the music stops, how many slots will be open – three, four, or five? Given the relative small share that Tufts Health Plan had captured in the last six years of the managed Medicaid population, they were at risk – even before the late application – of losing out in the re-procurement lottery. Even if Tufts is disqualified, it will continue to manage the medical delivery for its Medicaid clients until July 1, 2023.

The re-procurement process to choose the next MCOs for Medicaid has been managed by R.I. Executive Office of Health and Human Services Secretary Womazetta Jones. With her imminent departure on May 1, the question is: How will her departure affect the re-procurement process?

The problem with the re-procurement – and with choosing the private health insurers to manage the Medicaid “managed care” population – is that it is a zero-sum game: Any new entries into the MCO marketplace must seek to take market share away from the two existing and dominant MCOs, reducing the population served by UnitedHealthcare and Neighborhood Health Plan of RI, cutting their revenues. What is the answer to the biblical legal question: Whose ox gets gored?

Everything is connected to Medicaid
Efforts to “control” Rhode Island’s state budget spending on Medicaid – including both federal and state sources of funds – are at the root of most of the problems with health care delivery in the state.

•  Low-reimbursement rates from Medicaid to providers [set by MCOs, not the state] have gutted the state’s safety net for Rhode Island’s most vulnerable citizens, causing programs such as Early Intervention to shut down, because agencies did not have enough providers. Many of the rates have not been increased in a decade. Those disparities have been made more “visible” by the COVID pandemic in how they disproportionately have affected disadvantaged neighborhoods and communities of color.

[Editor’s Note: Approximately $2.6 million in emergency Early Intervention funds, authorized by R.I. General Assembly on the first day of its 2022 session, took nearly three months to be distributed to agencies, apparently held up by Gov. Dan McKee’s legal team that sought to disperse the funds over 15 months, according to sources. A flare-up of bad publicity for the Governor over how the funds were being held up apparently resulted in their release last week. But these funds are a short-term fix, which does not address the need for a long-term strategy – the need to raise Medicaid rates. There were no such rate increases included as part of the Governor’s proposed FY 2023 budget.]

• The ongoing scandal at Eleanor Slater Hospital has been driven by problems with Medicaid funding – and the apparent inability to bill the federal insurance program for care of patients at the hospital since 2019, because of problems related to patient mix – too many of the roughly 188 patients living at the hospital have “psychiatric” diagnoses. The cost per patient has been estimated to be $760,000 per year, according to a new analysis by the R.I. Public Expenditure Council.

• The breakdown of mental health and behavioral health services in the state, tied to the inability of community agencies to hire and retain staff because of low wages tied to the low reimbursement rates from Medicaid, has led the R.I. General Assembly to introduce legislation to become involved in rate-setting. [See link below to ConvergenceRI story, “Rate-setting becomes a legislative priority.”]

The new legislation, however, will not take effect until the FY 2024 budget cycle. Translated, the FY 2023 state budget may not provide any relief for community agencies.

As three leading community agency executives told ConvergenceRI last week, the biggest problem with the low rates of reimbursement for Medicaid providers, which has decimated the safety net for Rhode Island’s most vulnerable residents, is that the blame rests squarely on the inability of the state to regulate how the MCOs conduct business.

The R.I. Medicaid office may have the legal authority to exercise control over how the MCOs set their reimbursement rates, but it has failed to do so, according to agency executives. Worse, the executives said, the McKee administration has demonstrated what they described as a “less than zero” interest in serving the needs of the most needy during an election year.

• Although the creation of accountable entities was mandated under the Reinvention of Medicaid law enacted in 2015, in the last six years, no such accountable entity was ever established for skilled nursing facilities that provide long-term services and supports under Medicaid. That category represents a sizeable chunk of Medicaid spending, and any efforts to reduce spending.

Low reimbursement rates for Medicaid funding for nursing homes have been at the center of budget disputes for much of the last decade. The low rates, in turn, have made it difficult for nursing homes to pay competitive wages to attract and retain their workforce. New staffing requirements mandated by the R.I. General Assembly, coupled with the low reimbursement rates [along with the long-term financial problems from the snafu created by UHIP over delays in certifying Medicaid eligibility] have put many nursing homes in a cash-flow crunch, particularly those dependent on Medicaid reimbursements for their patients.

• Women & Infants Hospital, where four out of five births occur in Rhode Island, faces an uncertain financial future, in large part because of the high percentage of Medicaid patients in its payer mix.

“Obstetrics is an expensive, expensive endeavor. Most leading hospitals will tell you that they do not make a margin on their obstetrical service line, and quite frankly, that is 90 percent of what we do,” Shannon Sullivan, president and COO of Women & Infants hospital told ConvergenceRI in a recent interview. [See link below to ConvergenceRI story, “A capital campaign that will touch four out of five families in RI.”]

“So, Medicaid rates certainly need to be higher,” Sullivan continued. “If Rhode Island continues to want to have a world-class obstetrical institution that has 80 NICU beds and delivers 80 percent of the babies born in the state, we really need to look at raising the Medicaid rates to make sure that they support that care.”

Sullivan tied the problem to payer mix. “The payer mix at Women & Infants has become skewed much more toward Medicaid and Medicare over the last decade. As a result, our reimbursements have drastically decreased. We have the same [number of] patients that we took care of five years ago, the same volume, but we get paid a lot less for now.”

Translated, low Medicaid rates do not support the provision of high quality care for the starting point for Rhode Island families.

What we don’t talk about when we talk about health
How big a disconnect is the failure to talk about low Medicaid reimbursement rates when health care in Rhode Island is talked about? The answer may come at the upcoming Providence Business News 2022 Spring Health Care Summit, scheduled for Wednesday morning, April 6, showcasing the reasons why there is a lack of conversation about low Medicaid rates.

The panelists include: Dr. Timothy Babineau, Lifespan’s president and CEO; Dr. James Fanale, Care New England’s president and CEO: Dr. Matt Collins, chief medical office at Blue Cross and Blue Shield of RI; Dr. Claire Levesque, chief medical office for commercial products at Tufts Health Plan; Dr. Christopher Ottiano, medical director at Neighborhood Health Plan of Rhode Island; Dr. Robert MacArthur, chief medical officer at Commonwealth Care Alliance; and Lindsay Lang, executive director, HealthSource RI. [Tufts Health Plan, Blue Cross and Blue Shield of RI, Neighborhood Health Plan of RI, and Commonwealth Care Alliance are all “partner sponsors” of the event.]

Who will ask the question about Medicaid rates? And, who will answer it? Stay tuned

A revolt is brewing
A letter was sent on March 17 by Richard Leclerc, the acting chair of the Governor’s Council on Behavioral Health, to Gov. Dan McKee, asking that the Governor invest $255 million in the behavioral health system “to make it whole again, as it once was,” charging that the system has been “underfunded” for far too many years. The $255 million figure comes from the R.I Foundation recommendations on how to invest the $1.1 billion in American Rescue Plan Act funding. The current figure of $42 million investment in the Governor’s proposed budget, according to Leclerc’s letter, is inadequate. ‘Much more is needed,” the letter says.


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