ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Wednesday, May 1, 1996 TAG: 9605010054
SECTION: VIRGINIA PAGE: C-1 EDITION: METRO
DATELINE: NORFOLK
SOURCE: The Washington Post
ABUSES AND CONFUSION accompanied the state's first effort to bring managed care to the health program for the poor.
The first complaints surfaced a year ago. People had been promised hair-care products, free diapers, even chicken dinners if they would sign up. Others had been solicited by door-to-door sales people who, motivated by the prospect of cash bounties, often falsely promised that patients could stay with their longtime doctors.
In a scene recalling the land rush of a bygone era, five insurance companies raced to register Medicaid recipients in Virginia's Tidewater area in managed-care health plans. It was the first stage of a massive state undertaking to transform Medicaid - and save tens of millions of dollars annually - by putting private insurers in charge of health care for poor and disabled Virginians.
But hopes to expand the effort to Northern Virginia on July 1, and to make the program mandatory statewide by the summer of 1997, have been put on hold. It wasn't just the reported marketing abuses. Participants were confused over which physicians and hospitals they could use, and there was widespread concern that the sickest people might receive inadequate care.
Officials concede they moved too quickly without adequate safeguards for the people involved.
"We didn't have control of it," said Thomas McGraw, the Virginia Medicaid director heading up the project, who acknowledges that many abuses did occur. "We know there are problems, and we are willing to go back and address them."
Virginia's experience in overhauling health care for the poor is a vivid reminder of the pitfalls and possibilities as jurisdictions across the country struggle to gain control of Medicaid costs by forcing participants into managed-care programs.
The endeavor, dubbed Medallion II in Virginia, dwarfs welfare revision in terms of total cases and overall spending. Yet officials here remain confident that they can make it work for as many as 400,000 Virginians, many of them disabled. The state already has barred direct marketing and tightened its oversight. When Medallion II is up and running properly, officials maintain, private insurers will provide more coordinated care while saving the state's $2.1 billion Medicaid budget an estimated $25 million a year.
"Medicaid managed care is still the trend of the future," agrees Alina Salganikoff, principle policy analyst for the Kaiser Commission on the Future of Health Care. "But states must regulate these areas much more tightly in a way that prevents consumers from being unfairly deceived."
Under Virginia's managed-care approach to Medicaid, doctors and other providers no longer are paid for each procedure performed or service rendered. Instead, the state gives chosen health insurers a predetermined fee per patient in advance and then lets them manage care through health maintenance organizations, which emphasize preventive care and control the use of hospitals and specialists through a primary physician.
In Virginia, where the state's Medicaid bill has increased fivefold over a decade, that preset fee averages $1,500 a person. Should care cost more than that during a year, the insurer absorbs the loss. Should it cost less, the company keeps the difference as profit.
"It is the ideal coordination of care," McGraw said. "The HMOs are put at a financial risk for the health of their clients."
Insurance companies have been offering managed-care programs to private employers for more than a decade. But they have less experience with the poor, who tend to be heavy users of the medical system and often come with complex social needs. Cases involving those who also are disabled, either physically or mentally, are particularly problematic.
"It's tough, and it's not just economic," Salganikoff said.
In Tidewater, five companies helped launch the mandatory pilot project in 1995. In just eight months, they enrolled 93,000 people and were awarded state contracts worth millions of dollars.
But in less than a year, 37 formal complaints about several insurers were filed with the state Medicaid agency. Some patients had been signed up for two competing HMOs. Others learned too late that they would be required to switch doctors or no longer could continue certain therapies, according to mental health advocates.
Their concerns focused on people such as a 32-year-old Virginia Beach man with schizophrenia who said his therapy was disrupted when the HMO he chose unexpectedly made him switch the physician and medication he had used for a decade.
Because of loopholes in the state contracts, officials in Gov. George Allen's administration say they had little power to sanction insurers that acted improperly. One alleged violator was the Rockville, Md.-based Optimum Choice Inc., part of Mid Atlantic Medical Services Inc. Mid Atlantic Vice President Thomas Barbera said the company has fired and disciplined certain employees for abuses in recruiting and is reviewing its case with the state.
At this point, Medicaid managed care won't come to Northern Virginia, where 48,000 participants live, until at least next spring. Before leaving the Capitol last month, state legislators ordered that any expansion of the program be frozen immediately and called for a study of its effect on Tidewater patients.
"Northern Virginia is no more immune to these tactics than anyplace else," said Sen. Joseph Gartlan, D-Fairfax County, a senior lawmaker. "This is an experiment that was showing a lot of signs of going wrong. We wanted to stop before going anyplace else."
Gartlan said legislators recognize that something must be done to control Medicaid costs. "But we don't want that to come at the expense of inappropriate denials or reductions of benefits," he said.
The insurance companies have not played down the difficulty of imposing managed care on Medicaid - nor their potential reward.
"This is a great opportunity. We have got a financial incentive to make health care for this population better than it has ever been," said Don Gilmore, who leads the Medicaid HMO for Sentara Health System.
The insurer, which is based in Hampton Roads, received an annual contract worth about $64 million by signing up 42,000 Medicaid recipients in Tidewater. It has since reduced their emergency room visits by as much as 30 percent at Norfolk General Hospital and 35 percent at Maryview Medical Center in Portsmouth, in part through a new overnight hot line staffed with registered nurses. It also started a transportation service to help patients get to regular doctor appointments.
Ted Wille, senior vice president, understands why some are dubious that private insurers will temper their actions with compassion. But, he added, "we've found ourselves in a situation where we have a lot of economic incentive to sit down with public health workers and learn from them. It's still early, but I think it's been a positive experience."
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