Category Archives: Medicaid/Medicare

State explores privatizing care for aged and disabled

Source: Warren Vieth, Moore American, October 28, 2015

…the Oklahoma Health Care Authority is exploring cost-saving options that could lead to partial privatization of the state’s $2.4 billion Medicaid program for aged, blind and disabled people.  The state tried that once before, and it didn’t work out. Costs escalated, companies dropped out, and the state pulled the plug. Supporters of the new effort predicted it might turn out better because of improvements in managed-care practices. Even if it does, however, advocates of the aged, blind and disabled said a new managed-care program could be highly disruptive for thousands of impaired Oklahomans who might be forced to switch doctors and adapt to new care regimens. … The 178,025 aged, blind and disabled Oklahomans who received health services in fiscal year 2014 accounted for 16 percent of Medicaid membership, but 47 percent of spending. … The current initiative was launched after the Legislature passed Mulready’s House Bill 1566 earlier this year. The bill directed the authority to request proposals from independent vendors who could coordinate health care for aged, blind or disabled people currently enrolled in SoonerCare, the state’s version of Medicaid. The bill was backed by three influential health care groups: Blue Cross Blue Shield of Oklahoma, the Oklahoma Hospital Association and the Oklahoma Association of Heath Care Providers, which represents for-profit nursing homes. …


Worries Build As State Moves To Privatize Care For The Aged, Blind And Disabled
Source: Oklahoma Watch & Warren Vieth, KGOU, September 28, 2015

Even if it does, however, advocates of the aged, blind and disabled said a new managed-care program could be highly disruptive for thousands of impaired Oklahomans who might be forced to switch doctors and adapt to new care regimens. … The 178,025 aged, blind and disabled Oklahomans who received health services in fiscal year 2014 accounted for 16 percent of Medicaid membership, but 47 percent of spending. The state pays about a third of the cost. The federal government pays the rest.

OHCA looking into privatized, coordinated care
Source: Sally Asher, Enid News, September 24, 2015

Oklahoma Health Care Authority held a stakeholder meeting in Enid Wednesday night to gather thoughts, opinions and information on privatizing health care for aged, blind or disabled Medicaid consumers.  In the most recent session, the Legislature passed House Bill 1566, which directs OHCA to explore care coordination models for those individuals. Currently, the state contracts with providers through OHCA for their care, but under the new program, OCHA would work with third-party care providers. … Cohen said some things will not change with privatized care: eligibility for Medicaid and Medicare programs and services covered by those programs will stay the same. Some things that could change include an increase in care availability, service providers, the way payments are made and who authorizes such services.

MAXIMUS Awarded $23.5 Million Customer Relationship Management Contract for Oklahoma’s SoonerCare and Insure Oklahoma Programs
Source: BusinessWire, September 27, 2012

MAXIMUS (NYS: MMS) , a leading provider of government services worldwide, announced that it has signed a new contract with the Oklahoma Health Care Authority (OHCA) to operate a Customer Relationship Management (CRM) solution for the SoonerCare and Insure Oklahoma programs. The one-year contract includes five one-year renewal periods, for a total contract value of $23.5 million if all renewal periods are exercised. The contract was awarded on September 17, 2012 and the first contract term ends on June 30, 2013.

SoonerCare, the state’s Medicaid program, provides medical benefits to qualified individuals who have inadequate or no health insurance coverage. Insure Oklahoma provides employers with premium subsidies to help buy private market health insurance for low- to moderate-income employees. The program’s individual plan provides health benefits to employees whose workplace does not offer health insurance.

The Nonprofit Hospital Tax Exemption

Source: Seth Stein, Health Affairs, Vol. 34, no. 9, September 2015 (Subscription Required)

The $62.4 billion that Sara Rosenbaum and coauthors (Jul 2015) report private tax-exempt hospitals spent in 2011 on community benefits is a grossly inflated figure that overstates the amount of uncompensated care furnished by hospitals. … Hospitals appear to be frozen in purgatory between charity institutions (which they were designed to be) and large profit-seeking corporations. Most hospitals operate on very small margins, and nonprofit status can be a great help in allowing them to balance their budgets and continue providing care to their communities …


Tax-Exempt Hospitals: The Authors Reply
Source: Sara Rosenbaum and Maureen Byrnes, Health Affairs, Vol. 34 no. 9, September 2015 (Subscription Required)

As we noted in our article (Jul 2015), in 2011 the $62.4 billion figure for hospitals’ community benefit spending was reported by the Internal Revenue Service (IRS) in a report to Congress contained in a letter to the chairman of the House Budget Committee dated January 28, 2015. The IRS did not explain the methodology it used to verify this hospital-reported figure. Nonetheless, because the amount was contained in an official transmittal to Congress by the IRS, we believe that it was important to use this figure instead of previous estimates prepared by private researchers. As we explained in the article, the considerably higher amount reported by the IRS, compared to estimates in earlier research, might have been the result of the agency’s decision to include all reported community benefit expenditures by hospital organizations, whether individual facilities or parts of multifacility organizations.

Community Health Centers And Medicaid At 50: An Enduring Relationship Essential For Health System Transformation
Source: Peter Shin, Jessica Sharac, and Sara Rosenbaum, Health Affairs, Vol. 34 no. 7, July 2015

Abstract: Community health centers reach their fiftieth anniversary in 2015, along with Medicaid. Health policy makers have understood the programs’ symbiotic connection from the earliest days of their implementation. Medicaid’s expansion and growth have made the modern community health center program possible, while health centers represent one of the principal sources of primary care for the nation’s Medicaid population. With their shared mission and high level of interdependence, Medicaid and community health centers are essential for continued health system transformation in medically underserved communities nationwide—for example, by implementing delivery system reforms aimed at increasing clinical integration and improving efficiencies and by becoming medical homes for high-risk patients. Achieving this transformation will depend on the ability of community health centers and Medicaid to understand and respond to the challenges that each faces, while fully deploying the strengths that each has to offer.

Read full report.

Contracting government functions has snags

Source: Edward Lotterman, Bismarck Tribune, August 30, 2015

…. A tempest in the local teapot of my home state of Minnesota over contracting out Medicaid administration illustrates that clearly. HMOs have administered a large fraction of the caseload for Medicaid and for Minnesota’s own program for people with low incomes but above the Medicaid cut-off levels. Now a new, more competitive bidding process has caused one such HMO to be cut out of the business entirely for 2016. The upshot is a political and legal morass that illustrates the inherent challenges when a government contracts with the private sector to provide public goods like military hardware or transportation infrastructure in addition to health care administration. …

Missouri House committee examines new Medicaid system

Source: Brittany Ruess, News Tribune, August 26, 2015

An increase in the Missouri’s Medicaid caseload had legislators questioning representatives from the department of social services in a Tuesday hearing. … The department’s new enrollment system, the Missouri Eligibility Determination Enrollment System (MEDES), started Jan. 1, 2015, processing Medicaid applications under new standards, Kinkade said. MEDES was not fully developed when made public, though. EngagePoint, a Florida firm, was awarded a $148 million bid in 2013 to modify Curam, an IBM software, to meet the department’s Medicaid application needs. As MEDES rolled out this year, EngagePoint was still developing the system, which created inefficiencies, Kinkade said. … This slowed down the application process, creating a backlog. In April, he said the amount of pending applications was approximately 55,000 — more than double the average rate for the time of year at 23,000 pending applications. … Approximately 300 positions in the social services department have been eliminated since 2013, Kinkade said, as a result of increased implementation of new technologies for MEDES.

Medicaid, private health coverage less likely for the poor under Scott Walker’s plan

Source: David Wahlberg and Molly Beck, Wisconsin State Journal, August 20, 2015

Gov. Scott Walker’s health care plan could help Americans buy cheaper insurance and give states more power to manage Medicaid, but poorer people might be less able to afford private coverage and less likely to qualify for Medicaid, which might offer fewer benefits, health care experts said Wednesday. … But while Walker’s proposed tax credit amounts are comparable to those in the Affordable Care Act overall, they wouldn’t help lower-income people as much and could make insurance less affordable for them, said Larry Levitt, a senior vice president at the Kaiser Family Foundation.

No resolution on Medicaid privatization effort; Decision will wait for new governor

Source: Marsha Shuler, The New Orleans Advocate, August 6, 2015

The administration already has contracted with private managers to handle the medical and behavioral health components of the state’s $8 billion Medicaid program. The long-term care portion would have been the third and final installment of Gov. Bobby Jindal’s privatization of the government insurance program for the poor. Under privatized “managed care,” the idea is to provide needed services to people at the right time and in the most appropriate and generally less expensive setting. The state’s powerful nursing home industry sought to exempt itself. Advocates for the elderly and disabled wanted them included, hoping that dollars would be shifted to more home- and community-based services where there are long waiting lists. The industry’s objections had stalled release of a request for proposal that would seek a private company to manage care for some 72,000 people who are getting their care in either institutional or home-based settings.

As Medicare and Medicaid Turn 50, Use of Private Health Plans Surges

Source: Robert Pear, New York Times, JULY 29, 2015

…. More than 30 percent of the 55 million Medicare beneficiaries and well over half of the 66 million Medicaid beneficiaries are now in private health plans run by insurance companies like the UnitedHealth Group, Humana, Anthem and Centene. Enrollment has soared as the government, in an effort to control costs and improve care, pays private insurers to provide and coordinate medical services for more and more beneficiaries. Although the programs remain highly popular with patients, skeptics question whether the use of private plans will save the government money in the long run and worry that the plans may skimp on care. But both programs served as foundations for the 2010 Affordable Care Act, which, like the newer versions of Medicare and Medicaid, uses a combination of government money and private insurance to provide coverage.

Red-State Health Reform: Threading the Political Needle

Source: Robert B. Leflar, University of Arkansas Research Paper No. 15-5, April 17, 2015

from the abstract:
Spurred by the Supreme Court’s decision in NFIB v. Sebelius, health reform federalism is flourishing as states experiment with various means of implementing the Affordable Care Act. Implementation has been slow, however, in most states with political environments hostile to “Obamacare,” even though those states have much to gain. Among the red states, Arkansas stands out as an exception.

This essay relates the story of two of Arkansas’s innovative health reform initiatives: the “private option” for Medicaid expansion, extending private health insurance to the state’s lower income residents, and the Arkansas Payment Improvement Initiative, re-orienting provider incentives away from wasteful fee-for-service payment structures toward a more cost-effective value-based structure. Early results are promising: the “private option” has resulted in the highest percentage increase in insurance coverage of any state, and preliminary tracking results from the Arkansas Payment Improvement Initiative show cost savings and quality improvements across several categories of health care interventions. The essay explains how the two initiatives work, and describes the delicate political process by which the state’s political and health policy leaders – encompassing Democrats and Republicans, Medicaid officials and private insurers, hospitals and physicians’ groups – collaborated to take advantage of opportunities for state-based innovation.
Five keys in the Arkansas private option debate
Source: David Ramsey, Arkansas Times, January 21, 2015

Well, here we go again. The legislature is once again ready to debate the private option – the state’s unique version of Medicaid expansion, which uses funds available via the Affordable Care Act to purchase private health insurance for low-income Arkansans. Gov. Asa Hutchinson will take a long-awaited position on the policy in a speech at UAMS tomorrow morning. Then it will be up to the legislature. Health insurance for more than 200,000 Arkansans is at stake. Here are some keys to remember as the debate unfolds tomorrow and in the coming weeks.

Arkansas’ model Medicaid experiment in jeopardy
Source: Andrew DeMillo, Associated Press, December 17, 2014

Arkansas became the first Southern state to expand its Medicaid program in a way that many Republicans found acceptable. The state bought private insurance for low-income people instead of adding them to the rolls of the Medicaid system, which GOP lawmakers considered bloated and inefficient. Now Arkansas could be on the brink of another distinction: becoming the first to abandon its Medicaid expansion after giving coverage to thousands of people. A wave of newly elected Republican lawmakers who ran on vows to fight so-called “Obamacare” — including the state’s “private option” Medicaid expansion — has raised doubts about the future of a leading model for conservative states to gradually adapt to the federal health care law. Arkansas’ incoming Republican governor, Asa Hutchinson, is remaining mum on the plan’s fate….

Medicaid Demonstrations: HHS’s Approval Process for Arkansas’s Medicaid Expansion Waiver Raises Cost Concerns
Source: U.S. Government Accountability Office (GAO), GAO-14-689R, September 8, 2014

From the summary:
In approving Arkansas’s Medicaid Section 1115 demonstration, the Department of Health and Human Services (HHS) gave the state the authority to test whether providing premium assistance to purchase private coverage offered on the health insurance exchange will improve access to care for individuals newly eligible for Medicaid as a result of the Patient Protection and Affordable Care Act (PPACA).

In approving the demonstration, HHS did not ensure that the demonstration would be budget- neutral—that is, that the federal government would spend no more under the state’s demonstration than it would have spent without the demonstration. Specifically, HHS approved a spending limit for the demonstration that was based, in part, on hypothetical costs—significantly higher payment amounts the state assumed it would have to make to providers if it expanded coverage under the traditional Medicaid program—without requesting any data from the state to support the state’s assumptions. GAO estimated that, by including these costs, the 3-year, nearly $4.0 billion spending limit that HHS approved for the state’s demonstration was approximately $778 million more than what the spending limit would have been if it was based on the state’s actual payment rates for services under the traditional Medicaid program.

Furthermore, HHS gave Arkansas the flexibility to adjust the spending limit if actual costs under the demonstration proved higher than expected, and HHS officials told us that the Department granted the same flexibility to 11 other states implementing demonstrations that affect services for newly eligible beneficiaries. Finally, HHS, in effect, waived its cost-effectiveness requirement that providing premium assistance to purchase individual coverage prove comparable to the cost of providing direct coverage under the state’s Medicaid plan, further increasing the risk that the demonstration would not be budget-neutral.

As of June 2014, HHS has approved one additional state’s—Iowa’s—demonstration to use premium assistance to purchase exchange coverage. Iowa’s demonstration is more limited in scope in that it covers a portion of the expansion population, those with incomes of 101 percent to 133 percent of the federal poverty level. As with its approval of the Arkansas demonstration, HHS gave Iowa the flexibility to adjust its spending limit and waived the cost-effectiveness requirement. According to HHS officials, three other states as of June 2014 had indicated an interest in implementing a similar approach.

In commenting on a draft of this report, HHS disagreed with GAO’s findings that HHS’s approval process did not ensure that the Arkansas demonstration will be budget-neutral. GAO maintains the validity of these findings.

GAO: Arkansas Medicaid Plan Not Revenue-Neutral
Source: Kelly P. Kissel, Associated Press, September 9, 2014

Arkansas’ Medicaid expansion plan, in which the state uses federal dollars to buy private health insurance for its poorer residents, will cost taxpayers an extra $778 million over the next three years rather than being “revenue-neutral” to the federal budget, according to a government report released Monday. The plan’s supporters disputed the findings. According to the U.S. General Accountability Office, the U.S. Department of Health and Human Services didn’t ensure that Arkansas’ “private option” Medicaid plan wouldn’t cost the federal government additional money. It said DHHS-imposed spending limits of $4 billion were about $778 million more than what would have been expected under the traditional fee-for-service Medicaid program….

Arkansas: A Leading Laboratory for Health Care Payment and Delivery System Reform
Source: Deborah Bachrach, Lammot du Pont, and Mindy Lipson, Commonwealth Fund, Issue Brief, Commonwealth Fund pub. 1766 Vol. 20, August 2014

From the overview:
As states’ Medicaid programs continue to evolve from traditional fee-for-service to value-based health care delivery, there is growing recognition that systemwide multipayer approaches provide the market power needed to address the triple aim of improved patient care, improved health of populations, and reduced costs. Federal initiatives, such as the State Innovation Model grant program, make significant funds available for states seeking to transform their health care systems. In crafting their reform strategies, states can learn from early innovators. This issue brief focuses on one such state: Arkansas. Insights and lessons from the Arkansas Health Care Payment Improvement Initiative (AHCPII) suggest that progress is best gained through an inclusive, deliberative process facilitated by committed leadership, a shared agreement on root problems and opportunities for improvement, and a strategy grounded in the state’s particular health care landscape.

‘Private Option’ for Medicaid Expansion Would Cut Some Benefits
Source: Christine Vestal,, March 27, 2014

When Arkansas won federal approval to use Medicaid expansion dollars to help low-income people purchase private health insurance, officials on both sides of the aisle applauded the compromise ….. Now, as more states craft their own versions of what is known as the “private option” – and Arkansas seeks revisions to its original plan – advocates are increasingly concerned that the private market approach to Medicaid expansion could erode the effectiveness of the Medicaid program.

‘Private Option’ Bill Fails in Arkansas House, 70-27
Source: Andrew DeMillo, Associated Press, February 18, 2014

The Arkansas House failed Tuesday to renew the state’s compromise Medicaid expansion plan, leaving in limbo the future of a program heralded as a model for Republican-leaning states to implement the federal health overhaul. The House voted 70-27 to reauthorize funding for the “private option,” falling five votes shy of the 75 needed in the 100-member chamber to continue the program. Under the private option, Arkansas is using federal Medicaid funds to purchase private insurance for thousands of low-income residents. The program was approved last year as an alternative to expanding Medicaid’s enrollment under the federal health law. ….

In Arkansas, ‘Private Option’ Medicaid Plan Could Be Derailed
Source: Abby Goodnough, New York Times, February 10, 2014

Last year, the Republicans who control this state’s Legislature devised a politically palatable way to expand Medicaid under President Obama’s health care law. They won permission to use federal expansion funds to buy private insurance for as many as 250,000 poor people instead of adding them to traditional Medicaid, which conservatives disparage as a broken entitlement program. But just as the idea is catching fire in other states with Republican or divided leadership — Iowa has adopted a version of the plan, and New Hampshire, Pennsylvania, Utah and other states are exploring similar avenues — Arkansas may abruptly reverse course, potentially leaving the 83,000 people who have signed up so far without insurance as soon as July 1.

Ark. House passes ‘private-option’ Medicaid funds
Source: Associated Press, April 16, 2013

The Arkansas House on Tuesday approved a plan to use federal Medicaid funds to buy private insurance for low-income residents, with many Republicans saying the approach is the best way to maintain some control over provisions of a new federal healthcare law they still oppose. The private-option plan was presented to legislators in two parts, with one part including language authorizing the plan and a second part setting up the funding. The funding element finally won its needed three-fourths vote in the House, though it still needs to be approved by the same margin in the Senate.

Arkansas wants to privatize its Medicaid Expansion: Is this the start of a trend?
Source: Robert I. Field,, Field Clinic blog, April 7, 2013

..The Beebe plan would have the state pay for private policies for residents with incomes below 138% of the federal poverty level. They would purchase the policies on the new insurance exchanges that will operate under Obamacare starting next January 1. This would avoid the need to expand the existing Medicaid program directly….

Editorial: Using Medicaid Dollars for Private Insurance
Source: Editorial, New York Times, March 31, 2013

The Obama administration and Republican officials in several states are exploring ways to redirect federal money intended to expand Medicaid, the main public insurance program for the poor, and use it instead to buy private health insurance for Medicaid recipients. The approach could have important benefits for beneficiaries and for the future of health care reform. But the idea also carries big risks. Federal officials will need to enforce strict conditions before agreeing to any redirection of Medicaid dollars that were originally intended to enlarge the Medicaid rolls.

So you want to privatize Medicaid? Has HHS got a guide for you
By Sarah Kliff, Washington Post, March 29, 2013

States have lots of questions about whether they can use Medicaid expansion dollars to buy private insurance coverage, the so-called Arkansas option. Now, they have a few more answers. The Centers for Medicare and Medicaid Services on Friday issued a Q&A to address some of the questions posed by states. It’s not comprehensive—it includes three questions that span two pages—but it has a few new details that might help states make up their minds….

Privatizing the Medicaid expansion: ‘Every state will be eying this.’
Source: Sarah Kliff, Washington Post, March 8, 2013

Arkansas has turned heads with its plan to expand Medicaid using the private insurance market. The idea — which is still preliminary — would be to use Medicaid dollars to buy private insurance coverage for the expansion population. For health policy experts, this has raised a huge number of questions: Will private plans guarantee the same benefits that Medicaid does? How will states pay for the private insurance, which generally costs more than the public program? And does HHS even have the legal authority to do this? George Washington University’s Sara Rosenbaum, an expert on Medicaid policy, recently dove into the regulations to answer these questions. She wrote an excellent policy primer here and, on Thursday, we had a lengthy conversation about it. What follows is a transcript of that discussion, lightly edited for clarity and length.

Private Medicaid Plans Get Push
Source: Ana Campoy, Louise Radnofsky, Wall Street Journal, March 11, 2013
(subscription required)

A pair of states are proposing to use new Medicaid funding to help the poor buy private health insurance, a new twist in how to implement the 2010 federal health-care law that is winning support from some Republicans. Arkansas Gov. Mike Beebe, a Democrat, wants U.S. health regulators to let the state use federal dollars intended to expand eligibility for the Medicaid program to instead buy private insurance policies for low-income people. Ohio Republican Gov. John Kasich is pushing for a similar deal. The new option could appeal to conservatives, who argue that the private sector could provide care more efficiently than the government-run Medicaid program. It would also meet the Obama administration’s goal of coaxing into the expansion several states that have signaled they would pass on it, citing problems with Medicaid and concerns about increased government spending….

Medicaid Expansion Is Rejected in Florida

Source: Lizette Alvarez, New York Times, March 11, 2013

Rebuffing Gov. Rick Scott’s support of Medicaid expansion, a Florida Senate committee on Monday rejected the idea, all but ending the possibility that the state would add more poor people to Medicaid rolls. But the Senate panel debating the expansion proposed a compromise: to accept the federal money but use it to put low-income people into private insurance plans. Accepting the money would please the governor and a number of Floridians, while steering people away from Medicaid, which many lawmakers and residents view as troubled. … It is unclear whether the Obama administration would accept such a proposal. Several states, including Arkansas, Indiana and Ohio, are exploring using private insurers to enroll uninsured patients. …

Audit: Feds overpaid for half of patients in UnitedHealth Medicare Advantage plan – Giant insurer disputed 2012 findings in secret legal proceeding

Source: Fred Schulte, Center for Public Integrity, June 17, 2015

Federal officials spent years locked in a secret legal battle with UnitedHealth Group, the nation’s biggest Medicare Advantage insurer, after a government audit detected widespread overbilling at one of the company’s health plans, newly released records show. The audit, completed in 2012, found that Medicare had paid too much for nearly half of a sample of patients enrolled at PacifiCare of Washington State, a subsidiary of UnitedHealth Group. The heavily redacted audit was part of a cache of documents recently released to the Center for Public Integrity through a court order in a Freedom of Information Act lawsuit. ….

Auditor: N.C. health agency wasted $1.7M on Medicaid payroll

Source: Richard Craver, Winston-Salem Journal, May 13, 2015

A State Auditor’s Office report released today found evidence of at least $1.67 million in “wasted” wages and compensation involving the use of temporary employees by the state’s Medicaid information technology unit. The audit covers the Office of Medicaid Management Information Systems Services, which handled the July 2013 launch of the controversial NCTracks claims-processing system that serves 97,000 enrolled providers. Auditors said the unit’s director “abused her authority through the hiring process,” including citing examples of nepotism involving her daughter and ex-husband and his wife. …. A January 2013 audit listed among its concerns “insufficient monitoring of administrative services” contracted by the N.C. Division of Medical Assistance that represented at that time $120 million of the division’s $257 million in administrative expenditures for fiscal 2011-12. Much of DHHS’ current Medicaid work has been outsourced to Alvarez & Marsal, an out-of-state vendor operating with a controversial no-bid contract that recently doubled to $6.8 million. DHHS spent $118 million on contracted personal services in fiscal 2013-14, compared with $160.9 million in fiscal 2012-13.