Medicaid Roadblocks

HMOs Save Money But Create Problems

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  Cover Story — October 2013  

 Tex Med. 2013;109(10):14-21.  

By Amy Lynn Sorrel
Associate Editor   

The 2012 rollout of Medicaid managed care into rural areas and South Texas has been a rough ride for many physicians. And their patients, too.

Even after Athens family physician Douglas Curran, MD, finally found an orthopedic surgeon willing to treat a young Medicaid patient with a growth plate fracture, administrative hassles held up that child's care. During the few days it took the specialist to get preauthorization from the HMO, the child's growth plate already began to close and surgery would have been risky. All the doctors can do now is wait for other opportunities to prevent future complications.

The HMO networks "are consistently inadequate in our experience, especially in pediatric subspecialties. And some patients you just can't see quickly enough without affecting their long-term outcomes significantly," said Dr. Curran, a member of the Texas Medical Association Board of Trustees. 

East Texas, part of the 2012 rollout, is new to managed care, and the goal, as he sees it, "doesn't seem to be to provide care. It seems to be to make it impossible to provide care. It delays care, and it delays the opportunity for care, and it's ultimately going to cost more money down the road."

Nevertheless, state lawmakers are committed to using it to reduce costs in a growing program that consumes a quarter of the state budget. Earlier this year, the legislature further expanded the model statewide and made it available to new groups of patients. 

Meanwhile, TMA, building on its success in the legislative session, continues to advocate protections for physicians and patients in the shift to managed care that is supposed to save the state millions of dollars and improve health care delivery in the long run. TMA expected the 2013 legislature would push through another round of legislation building on the expansions it authorized in 2011; thus, the association neither opposed nor supported the effort. Meanwhile, TMA-backed Senate Bill 1150 will deliver important protections.

Some physicians are not convinced of the state's promises that Texas Medicaid is better off under managed care. They report ongoing payment and preauthorization delays and an overall lack of communication by Medicaid HMOs, as well as concerns over network adequacy and lax state enforcement. That's on top of already low physician payment and participation rates in Medicaid. Other physicians say the move has begun to generate some efficiency in care delivery, and some health plans are making strides in partnering with doctors to incentivize change.

TMA leaders say more work is needed to boost access to care in an HMO model that managed 82 percent of the state's Medicaid patients in 2012, with only a quarter of the state's physicians fully participating in managed care. (See "TMA Survey Details Physician Unhappiness.") Only 32 percent take all Medicaid patients, where in managed care or fee-for-service.

Physicians understand managed care has the advantage of providing state budget certainty in the Medicaid program, and some plans have learned from past mistakes, says John Holcomb, MD, chair of TMA's Select Committee on Medicaid, CHIP, and the Uninsured. Texas began using Medicaid managed care in urban areas in 1993. 

With the last expansion into rural Texas and the Lower Rio Grande Valley, however, "there's still a lot of frustration, and we are now down to a few doctors who are committed to the Medicaid patients they already have and who may be in areas, especially rural areas, where you can't not see Medicaid patients because that is the most common insurance available," said Dr. Holcomb, also cochair of TMA's Physicians Medicaid Congress. "It's hard to know yet if we are better off because it takes two or three years to make up a lot of the rollout costs, and plans have to be here for the long haul. And I don't think we can identify poor-quality care as a result of any of this. But the anecdotes are real and have certainly led to delays and lost opportunities for care."

Such shortfalls, he adds, are also concerning in light of the 2013 legislature's decision to expand Medicaid managed care to cover what he described as "highly vulnerable populations," namely children and adults with intellectual and developmental disabilities. Done right, however, some doctors say these and other Medicaid patients could benefit from managed care. 


More Expansion

Senate Bill 7 by Sen. Jane Nelson (R-Flower Mound) and Rep. Richard Raymond (D-Laredo) aims to save money in Medicaid by expanding Medicaid HMOs to people with long-term care needs, in particular, those with intellectual and developmental disabilities and nursing home residents. STAR+PLUS HMOs, which cover the elderly and people with physical disabilities, will provide services to the new populations. The program will phase in by 2021. 

SB 7 establishes a new HMO model, called STAR Kids, for children with disabilities. Participating managed care plans must demonstrate experience in the care of these children. Because some already do, that program begins sooner — Sept. 1, 2014. 

To further promote coordination of care for these populations, Senate Bill 58 by Senator Nelson and Rep. John Zerwas, MD (R-Simonton), integrates behavioral and physical health services into Medicaid managed care.

The two bills direct the Texas Health and Human Services Commission (HHSC) to establish several advisory committees to seek input from physicians and providers, people with disabilities, patient advocates, and other interested parties on systemic issues in the Medicaid HMO model and on how best to incorporate the new populations and services.

SB 7 also completes the STAR+PLUS rollout to remaining counties not covered by the model. The 2011 legislature expanded the STAR managed care model for acute care services statewide and included pharmacy, dental, and inpatient hospital services. The new areas included 200 rural counties formerly under the Primary Care Case Management (PCCM) model and in South Texas, previously exempted from managed care. STAR+PLUS was expanded to the El Paso, Hidalgo, and Lubbock areas.

HHSC estimates the 2011 expansions will save the state $263.3 million in the 2012-13 biennium. Managed care and other cost-containment strategies helped cut Medicaid costs by approximately 5 percent during those years. Officials expect that trajectory to continue. Under SB 7, the Legislative Budget Board predicts $6 million in cost savings through the 2014-15 biennium. 

Senator Nelson says the move was necessary. "Overall, the data shows that we are providing more efficient care, reducing fraud, and putting the program on a more sustainable cost trajectory. The old Medicaid was going in the wrong direction, not only in terms of its cost, but also in terms of its poor record of achieving healthy outcomes for patients. Moving forward, there needs to be continued focus in ensuring that we are delivering services in the most efficient, most effective manner." 


Physicians say the road forward is littered with roadblocks, something state officials acknowledge but say the state is on its way to repairing. 

Dr. Holcomb, a pulmonologist in San Antonio, says some HMOs bolstered their primary care networks since Medicaid managed care landed in large urban areas, and they "have held together fairly well." 

When it comes to specialty care, however, network adequacy appears elusive in some areas. 

Dr. Holcomb also runs a pulmonary clinic in Gonzales, part of the rural expansion. When he used one HMO's website to refer a patient to a specialist listed 75 miles away in Victoria, he found the physician was retired and his office closed. 

Physicians also report poor communication by health plans, in addition to other administrative barriers. With roughly 20 Medicaid HMOs in the state, physicians typically deal with a handful of plans.

Harlingen pediatrician Stanley Fisch, MD, says access to specialty care is not as much of a problem in South Texas largely because physicians there have no choice but to see Medicaid patients, who make up a majority of the patient population in the Rio Grande Valley. Still, even though the state acknowledges the need for more doctors in the program, the credentialing process gets increasingly more difficult. His practice just hired a new doctor; enrolling her in four HMOs "took a huge amount of time," delaying the practice's ability to see more patients. 

Only one of those HMOs, Driscoll Children's Health Plan, regularly visits Dr. Fisch's office and responds quickly to his concerns. Another plan's medical director finally showed up on his doorstep as this article was written. "Medicine is a personal business, and we deal with our patients on a personal basis. It would be nice to deal with these [HMOs] on a personal basis."

Dr. Fisch added he is pleased the state decided to retain one statewide drug formulary under the Medicaid HMO model instead of using multiple HMO formularies, but the plans' differing interpretations of what the formulary covers still confuses physicians and patients. With little to no outreach by HMOs, he frequently learns about a plan's denial of a particular drug variation when patients cannot get what they need at the pharmacy. 

Nor do patients get much help with enrollment, Dr. Curran says. Many think they've signed up when they haven't, and the system is "fairly complex and obstructionist and not user-friendly. And we are dealing with a population that needs user-friendly material, not more roadblocks."

Health plans' slow-pay, no-pay tactics also pose a significant roadblock for already cash-strapped medical practices, as well as for patients, he added. 

Simply paying practices more quickly would go a long way, says Dr. Curran, who testified in support of legislation that would have required HMOs to pay error-free Medicaid claims within 15 days. The bill did not pass. Currently, Medicaid HMOs have 30 days to pay clean claims. Because many already pay within 15 days, TMA recommended that be the industry standard. Quicker payment, "even though the payment is still totally inadequate, helps practices with cash-flow" so they can keep their doors open to Medicaid patients, Dr. Curran said. 

When one health plan stopped paying for the ventilator Dr. Holcomb's patient was using, he turned to TMA to hunt down the plan's medical director because the company's website did not clearly list the information. When that same health plan turned around and asked Dr. Holcomb if he would participate in the HMO, his response was straightforward: "I had a bad experience." 

For those and other reasons, Dr. Holcomb still chooses not to participate in Medicaid managed care and remains a fee-for-service Medicaid physician. In the early months of the 2012 rollout to rural and South Texas, some of his patients, unbeknownst to them, were reassigned to other HMO networks without consideration for where they already received care. For Dr. Holcomb, that meant fighting months-worth of claims denials because neither he nor his patients realized he was suddenly out of network.   

Beefed-up Oversight

Those and other experiences leave physicians questioning the state's oversight of the Medicaid managed care expansions, and the 83rd Legislature responded to TMA's call for better protections. (See "2013 Legislative Session Yields Medicaid Wins.")

One of those victories, Senate Bill 1150, requires HHSC to put in its contracts with Medicaid HMOs a so-called "provider protection plan" to ensure efficiency in enrollment, claims processing, and payment. The law took effect Sept. 1, and HHSC must implement it no later than Sept. 1, 2014. The provider protection plan must provide for:   

  • Prompt and proper payment;
  • Prompt and accurate adjudication of claims through education on proper submission of clean claims and appeals, acceptance of uniform forms through an electronic portal, and establishment of standards for claims payments; 
  • Adequate and clearly defined physician and provider network standards that ensure patient choice;
  • Prompt credentialing processes;
  • Uniform efficiency standards and requirements for submitting and tracking preauthorization requests, and 
  • Measurement of HMOs' provider retention rates.  

Bill author Sen. Chuy Hinojosa (D-McAllen) says the bill helps address what he agrees is an increasing amount of red tape keeping many physicians from participating in the Medicaid managed care program. 

"There has been constant miscommunication and misunderstanding [between Medicaid HMOs and physicians]. Providers many times had to submit claims without really knowing what the rules were, and we tried to change that with SB 1150," he said. "We tried to set up a system that's more efficient, that is clear in terms of the rules and guidance for both sides of the equation: the managed care organizations and health care providers. Once those rules are defined and put into the terms of the contract, you can enforce those provisions through HHSC and, if necessary, through litigation."

Senator Nelson added that SB 7 also prohibits HMOs from reducing agreed-upon provider payments across the board without prior approval from HHSC. The provision came largely in response to a sudden decision by Molina Healthcare of Texas in 2012 to cut its payment rates to home health care workers, causing many patients and providers to move to other plans. The cut did not impact physician rates, but nevertheless raised concerns within the local medical community. Molina said it reinstated payment rates for those workers as of July, and "continue(s) to work with our providers to resolve any remaining issues regarding payment or coordination of care."

Senators Nelson and Hinojosa acknowledge that the shift to managed care in rural and South Texas brought big change and big challenges. But overall, they consider it successful in that HHSC quickly addressed complaints and issues along the way to avoid care disruptions, and managed care companies generally responded with improvements. 

Senator Hinojosa said "there are still some unanswered questions that need a closer look and analysis," including the impact of low payment rates on Medicaid participation and access to care, and long-term program costs. "But for the foreseeable future, this is the model we have to work with, and we are trying to make it work." 

HHSC Deputy Chief Commissioner Chris Traylor said 2012's expansion was "extraordinarily challenging because services were not traditionally delivered in a managed care model in those areas. So there has been a time of adaptation for providers, managed care organizations, and the agency." While the state sees signs of cost containment in a number of areas, "I don't think the program has matured yet to a level where a full assessment could be completed and done on the efficacy of managed care."

But the agency has intervened to overcome some of those challenges. "We take very seriously our role as the oversight agency," Mr. Traylor said, adding that the commission specifically asked the legislature for the payment rate protections in SB 7. 

If an HMO does not timely respond to complaints or pay physicians on time, for example, the agency assesses fines and sanctions to bring the companies into compliance, doing so on almost a quarterly basis since the last rollout. That includes a $2.9 million fine against Molina — the largest fine the agency has levied thus far against a health plan — for an inadequate network and for not resolving client complaints fast enough. 

In the first year, health plans in South Texas improved by increasing their networks, according to state officials. HHSC receives fewer complaints from patients, and the HMOs paid most claims within the required 30-day period and within 14 days on average. 

As for network adequacy, Mr. Traylor says the agency enforces Texas Department of Insurance standards at minimum and conducts a "readiness review" before any rollout, barring insufficient HMO networks from going live. 

But the issue of having enough specialists available is not unique to Medicaid managed care or to Texas, as the state in general faces physician shortages. "We will continue to be challenged with that," he said, adding the state is taking steps to incentivize better Medicaid participation and reforms through the Medicaid 1115 Transformation Waiver program (See "Medicaid Makeover," Texas Medicine, March 2013, pages 12-18.). 

The commission already holds health plans to high standards, "but it's an area where we're always looking to improve," Mr. Traylor said, referring to the new provider protection plan under SB 1150. "We are dealing with a client base for whom health care services are essential, and we want to make sure as a state that the rollout goes as smoothly as possible and providers continue to participate in the program. At the end of the day, the goal for the state, the managed care organizations, and providers is and should be serving people enrolled in the Medicaid program."   

Making Progress

Meanwhile, some physicians and HMOs point to signs of early successes in reducing utilization, improving care coordination, and financially incentivizing physicians for bettering quality of care in some of the expansion areas. 

Before Medicaid managed care landed in South Texas, Dr. Fisch says, the PCCM model was not effective in terms of overseeing utilization for certain services. HMOs, on the other hand, have done a better job, which may save the state money. 

"In the past, it was hard to say no to parents who wanted their kids to have physical therapy because their toes pointed inward or occupational therapy to learn social skills when there was no scientific evidence to support it. Now, HMOs are saying no when there is no medical necessity, which helps take the onus off us [physicians]."

Dr. Fisch also sees an advantage in expanding Medicaid managed care to include adults and children with more complex needs not necessarily covered by traditional fee-for-service Medicaid plans. 

STAR Kids, for example, would allow HMOs to work with doctors on a fee schedule that recognizes the extra time and effort required to treat children with intellectual and developmental disabilities. "And if that's the case, then the program is definitely moving in the right direction." 

The same goes for the incentive payment program that Driscoll initiated to financially reward practices like his for quality improvements. So far, that HMO is the only one he works with to do so, although the managed care expansion legislation envisions that all Medicaid HMOs will eventually incorporate quality-based payment initiatives.

Mary Dale Peterson, MD, Driscoll's president and chief executive officer, says that besides rewarding physicians for their hard work, the key to the improvements she has seen under managed care is "establishing relationships and meeting frequently with your network of doctors." She is a member of TMA's select Medicaid committee.

That relationship-building is effective, she says. In Hidalgo County, most physicians keep their clinics open after hours — one of Driscoll's financial incentive drivers — which helped reduce emergency department visits and hospital admissions by 50 percent and 30 percent, respectively. In Nueces County, the plan's partnerships with the obstetric community and outreach to pregnant women helped lower pre-term birth rates in Driscoll's Medicaid population. 

Care coordination offered through managed care is a big factor in those improvements, as is the HMO's ability to share with physicians what Dr. Peterson described as big-picture data on patient utilization. Physicians don't typically get that seeing patients one visit at a time in traditional fee-for-service plans. 

"Some of the things the state struggled with on overutilization we've been able to ameliorate, and we are building on our strengths. So [Medicaid managed care] can work, and it is working," Dr. Peterson said.

She added that health plans seek administrative simplification, too. Billing systems are just as complicated for HMOs as they are for physicians. Encouraging the use of electronic portals for claims submissions saves both physicians and health plans time and money.

"It costs health plans money to deal with appeals, just like it costs doctors."

UnitedHealthcare Community Plan of Texas has done similar outreach in South Texas and is preparing to roll out a quality incentive payment program for primary care physicians, Chief Executive Officer Norine Yukon says. Its case management program helped practices foster improvements and efficiencies in care that were not feasible in fee-for-service, she says. 

Ms. Yukon acknowledges some "hiccups" in the early days of the rollout that resulted in payment delays for physicians as the company underwent a system change at the same time it took on South Texas. "But I think we have gotten over a vast majority of those things, and we are pretty stable at this point," she said. United also worked with TMA to address physician complaints directly, she says.

Plans report quarterly on their performance, and "the reality is if a metric is 98 percent and we are at 97.8 percent, we will get fined. So provider protections are very much already on the books, and HHSC is diligent in its oversight of us," Ms. Yukon said. Still, United is attuned to the concerns raised during the legislative session and is open to changes to help make physicians' lives easier. 

In fact, lawmakers established advisory workgroups partially with that goal in mind. 

Among them, SB 7 revived a statewide Medicaid Managed Care Advisory Committee to address systemic HMO issues affecting patients and physicians — a key workgroup that TMA leaders look to as another advocacy vehicle for how to better the program and establish some best practices. The committee will address a range of issues, including program design and benefits; systemic concerns from consumers, physicians, and providers; efficiency and quality of services; contract requirements; network adequacy; and trends in claims processing. 

SB 7 also reauthorizes and expands the work of the 2011 Quality-Based Payment Advisory Committee, on which TMA already serves, to help develop quality metrics for Medicaid HMOs to use in novel payment initiatives. 

SB 7 and SB 58 collectively set up several other workgroups:   

  • The STAR Kids Advisory Committee will guide HHSC in developing the new HMO model for children with disabilities.
  • The Intellectual and Developmental Disability System Redesign Advisory Committee will provide input to HHSC and the Department of Aging and Disability Services on the new HMO model for adults with intellectual and developmental disabilities. 
  • The STAR+PLUS Quality Council will guide HHSC on how to improve quality, patient-centered care in the STAR+PLUS HMO model for patients with physical disabilities and for seniors.
  • The Behavioral Health Integration Advisory Committee will address the integration of physical and mental health care services into Medicaid managed care.  

TMA nominated physicians to serve on all of these committees. At press time, HHSC had not yet named the committee members. 


Amy Lynn Sorrel can be reached by telephone at (800) 880-1300, ext. 1392, or (512) 370-1392; by fax at (512) 370-1629; or by email.


 TMA Survey Details Physician Unhappiness  

The state appears fixated on expanding the Medicaid managed care model to save money and improve health care delivery in the program. But physician participation and satisfaction remains nearly rock bottom as many report a host of ongoing barriers within Medicaid HMOs. Besides better payment, most physicians say that reducing administrative burdens would be the first improvement they would make, according to TMA's 2012 Physician Survey. 

Other findings show that a little more than a quarter of physicians (27 percent) treat Medicaid HMO patients in network, whether through STAR+PLUS, which primarily covers the elderly and adults with disabilities, or STAR, which primarily covers pregnant women and children. 

Among physicians who treat Medicaid STAR HMO patients, 24 percent plan to terminate one or more of their existing contracts. They cite inadequate payments (77 percent), administrative burdens (75 percent), payment problems (58 percent), and quality-of-care concerns (54 percent). Since March 1, 2012, 48 percent of physicians in a STAR HMO report their practice experienced specific cases in which the quality of patient care was adversely affected by the operating policies or utilization controls.

Among physicians participating in the STAR+PLUS HMOs, 28 percent plan to terminate one or more of their existing contracts in the next year primarily because of inadequate payments (88 percent), administrative burdens (80 percent), payment problems (70 percent) and quality-of-care concerns (64 percent).

Since March 1, 2012, half of physicians participating in a STAR+PLUS HMO said they experienced specific instances where operating policies or utilization controls adversely affected the quality of patient care. 

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 2013 Legislative Session Yields Medicaid Wins

While there's more work ahead, TMA's hard work during the 2013 legislative session yielded several wins to bring relief for physicians in the Medicaid program. Among those victories:   

  • Senate Bill 1150 by Sen. Chuy Hinojosa (D-McAllen) and Rep. Bobby Guerra (D-Mission) requires the Health and Human Services Commission to incorporate a "provider protection plan" in its contracts with Medicaid managed care organizations.
  • Senate Bill 1803 by Sen. Joan Huffman (R-Houston) and Rep. Lois Kolkhorst (R-Brenham) improves transparency during Medicaid fraud investigations by defining a "credible allegation of fraud" and providing timelines and procedures for payment holds and appeals. (See "Fighting for Fairness," September 2013 Texas Medicine, pages 35-38.)
  • Senate Bill 644 by Senator Huffman and Rep. John Zerwas, MD (R-Simonton), requires the Texas Department of Insurance (TDI) to appoint a stakeholder workgroup to design a standard prescription drug preauthorization form applicable across all payers, including Medicaid and the Children's Health Insurance Program.
  • Senate Bill 1216 by Sen. Kevin Eltife (R-Tyler) and Rep. Sarah Davis (R-Houston) requires TDI to appoint a stakeholder workgroup to design a standard preauthorization form for health care services, also applicable to Medicaid and all other payers. 


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