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Archives for January 2011

State Managed Care Plan Leaves More Questions Than Answers

In an effort to control sky rocketing costs and severe budget problems, the Georgia Department of Community Health (“DCH”) has proposed drastically reforming the state’s current Medicaid system by adopting a mandatory managed care format for specific categories of Medicaid recipients. DCH estimates that if the current system remains unchanged, as of FY 2005, the Medicaid budget will require 43 percent of Georgia government’s new revenue. That number will grow to 50 percent by FY 2008. Though details about the new system are sketchy, here is what is known.

The DCH managed care strategy involves segmenting the state into six (6) regions and contracting with care management organizations (“CMOs”) to provide and manage all services provided to the Medicaid recipients enrolled in each region. Five of the regions will have two CMOs per region while the sixth region, which includes Atlanta, will have three to five CMOs. Specific cost savings will be achieved through effective utilization management of Medicaid recipients’ health needs and through lower administrative costs rather than through cutting reimbursement to enrolled providers. In addition, DCH envisions that holding the CMOs contractually accountable for recipient access to quality health care will lower overall utilization of services.

DCH’s last foray into managed care was the less than successful Georgia Better Healthcare (“GBHC”) system. One of the problems with GBHC was that enrollment in the program was optional. Under the new CMO system, Medicaid recipients will be required to enroll in a CMO in their region. Initially, mandatory CMO enrollment will only extend to Low Income and Right From The Start categories of Medicaid eligibility. It is unclear whether DCH plans on rolling out its managed care initiative to other categories of eligibility in the future. It is important to note that CMOs will not have responsibility for long term services like Intermediate Care Facilities for the Mentally Retarded, nursing home and hospice services, and Home and Community based waiver services programs

Another problem that plagued DCH during the GBHC era was the inability to determine when a recipient was actually enrolled in GBHC as under that system, a recipient was free to switch coverage every thirty (30) days. This made it difficult for providers to determine whether they were providing services to an appropriate individual which, at times, resulted in denial of payment for the provider’s services. Under the proposed CMO system, a recipient will select a CMO in his or her region and will have ninety (90) days to change to a different CMO without cause. Once the ninety (90) day period has passed, the recipient will be “locked in” to his or her chosen CMO for a period of one (1) year, thus, hopefully eliminating enrollment uncertainty for providers.

The CMO procurement will be a competitive process and, as such, details concerning the Request For Proposal (“RFP”) have been closely guarded by DCH. What is known is that each CMO will have to be licensed by the Georgia Department of Insurance as a risk bearing entity and will, therefore, be subject to the State’s net worth and solvency standards as well as statutory requirements for timely payment of a “clean claim.” Additionally, DCH has emphasized the importance of the CMOs having sufficient infrastructure to support all of the State’s modernization initiatives. For example, the CMOs should have in place the basis for telemedicine and electronic prescribing. Another requirement will likely be substantial member education initiatives in addition to the standard disease and case management functions. Finally, in light of DCH’s revitalization of its Program Integrity section, CMO’s will likely be required to submit monthly fraud and abuse reports to the Department.

There is also some certainty as to what the appeal processes will look like as there are several federal regulations and state statutes that require DCH to offer, at a minimum, specific avenues of appeal. An initial proposition, federal regulations mandate that CMO’s be required to offer an internal grievance process, after which the aggrieved provider will likely have the option to request an administrative review of the issue directly from DCH, as is the current practice. If the provider still wishes to appeal, it has a right to an administrative hearing conducted by the Office of State Administrative Hearings. Finally the administrative hearing decision can be appealed to Superior Court. Though the addition of a grievance process to the existing DCH appeals process seems like an additional administrative hoop for the provider to jump through, resolving disputes prior to the administrative hearing is in the best interest of the provider and the grievance system provides an additional avenue for resolution.

As Georgia’s healthcare community waits for DCH to release the RFP there are several important questions left unanswered. Foremost among these questions is how the CMOs will make a profit while still lowering costs for the state. Despite reassurances from DCH, providers fear that reimbursement rates may be cut. Also unclear is what the CMOs will use a basis for reimbursement. For hospital groups, will CMO’s be free to choose between DRG and per diem reimbursement methodologies or will DCH mandate a uniform statewide practice? Whatever the answer, it is incumbent on the healthcare community and its advocates to make sure that the RFP has sufficient detail to address these types of concerns.

This article is presented for educational and informational purposes only and is not intended to constitute legal advice.

About the Author

Deepak (“D.J.”) Jeyaram is the founder of Jeyaram & Associates, a full service health law firm. He represents a wide variety of healthcare providers including hospitals, nursing homes and physician group practices. He focuses his practice on healthcare regulatory matters, primarily in administrative appeals and Medicare and Medicaid reimbursement, and aids clients in negotiating and business and contractual relationships between healthcare providers. Jeyaram received his bachelor’s degree from Boston University, cum laude, and his law degree from Emory University.