October 1999
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Foreword
In 1997 the Reforming States Group (RSG) and the Milbank Memorial Fund published State Oversight of Integrated Health Systems, a comprehensive report that described how government in the 50 states monitored the most complicated form of managed care: integrated health systems. The report was a self-study by elected and appointed officials and their peers in every state, who volunteered information and then reviewed the description of their oversight of the reorganized health system. This report updates that earlier effort by tracking events since 1997 and cataloging both the changes in and the reaffirmations of oversight policy that have occurred during the intervening period. More than 200 officials from all 50 states supplied the information on which this report is based and reviewed it in draft, some of them several times.
The report is a result of the ongoing collaboration between the RSG and the Milbank Memorial Fund. The RSG, organized in 1992, is a voluntary association of leaders in health policy in the legislative and executive branches of government, currently from more than 40 states. The Fund is an endowed national foundation, established in 1905, that works with decision makers in the public and private sectors to carry out nonpartisan analysis, study, research, and communication on significant issues in health policy.
Members of the RSG Steering Committee planned and organized this report: John Colmers, John Cosgrove, and Sandy Praeger. Carmen Hooker Buell, formerly a member of the Steering Committee and project director for the 1997 report, joined them in guiding this work.
This report uses tables to compare the oversight activities of each state to mid-1999, addressing the following questions:
What Oversight Mechanisms and Activities Are the States Using?
States apply a broad range of oversight mechanisms to the rapidly changing world of managed care. Grouped under the broad rubric of quality assurance are standards for network adequacy, community health status, and internal-external appeal mechanisms. This report also demonstrates that states are relying on both traditional regulatory solvency standards and market-oriented techniques to influence the financial behavior of plans. For instance, guided by the example of the marketplace, a state might use its purchasing power to influence behavior while concurrently acting in its regulatory capacity through the use of incentives that encourage "fair" competition. The most important regulatory incentive is the requirement that plans and providers disclose information about cost, quality, and satisfaction to both consumers and purchasers. Finally, states are coordinating their oversight activities across several executive-branch agencies and enhancing the management capacity of those agencies.
What Factors that Affect Oversight Have Changed since 1996?
The 1997 report had anticipated the growing market domination of large provider-payer hybrid organizations. The state officials who designed, contributed to, and reviewed the self-study during 1996 and 1997 also expected that new business partnerships, widespread mergers, consolidations, and conversions would accompany the expansion of these "mega-systems." However, most jurisdictions report that such systems have not reached their predicted level of growth. Instead, the widely reported misfortunes of certain proprietary organizations like Columbia/LICA and Oxford Health Plan have caused this approach to be re-evaluated. The number of for-profit conversions of both providers and health plans has dropped significantly, partly in response to state officials' heightened scrutiny of these conversions. Finally, in their role as regulators, many states have shifted their attention away from categorizing different insurance entities (i.e., HMO, MCO, PPO, etc.) or ownership types (i.e., traditional carrier or provider-sponsored) to focus on identifying the level of risk assumed by the various entities and assigning oversight commensurate with the degree of risk for which each entity is responsible. (For example, global capitation arrangements entered into by certain provider groups could warrant additional scrutiny.)
What Factors Are Driving Oversight Activities Now?
"Consumer concerns" is the category that is currently exerting the most dramatic influence on state oversight activities. It is also apparent that increased oversight in any particular state is generated by factors like the growth of enrollment in Medicaid or commercial managed care, conversions or mergers, and solvency problems.
By extension, other factors, like the number of plans, the type of plan models in use, and the percentage of the population enrolled in managed care, appear to have less influence on the scope of policy oversight. Further expansion of Medicaid managed care has had a dramatic impact on state oversight strategies, as is most clearly manifested in the shift to greater "reliance on market forces" and "prudent purchasing." Although states continue to lead in health policy development and implementation of health reforms, their policymaking and oversight activities are strongly affected by federal law, such as the Employee Retirement Income Security Act of 1974 (ERISA), the Health Insurance Portability and Accountability Act of 1996 (HIPAA), and provisions of the Balanced Budget Agreement of 1997 (BBA), especially those creating a new health insurance program for children (CHIP) and changing reimbursement under Medicare.
Next Steps in State Oversight
What, then, does the future hold for oversight of the health care system at the state level? Although it is notoriously difficult to predict the trends that will emerge in the health care system, the participants in this project offer a few general observations: First, cost increases, as measured by either premium increases or expenditures for personal health care, which have been at their lowest levels in a generation, are beginning to spike upward. Some fear that this is the result of exhausting the one-time savings associated with the switch to managed care. Others suggest that providers have been successful in their backlash against managed care. Whatever the cause, should inflation return to health care at rates significantly above underlying inflation in the economy, states will be forced, as purchasers and as regulators, to re-emphasize cost concerns and devote less time to issues of quality.
Second, as a result of increasing costs, state officials expect that the number of uninsured persons will continue to rise, as it has gradually throughout the past decade. Despite state reforms of aspects of insurance markets, with assistance from the federal government in the form of HIPAA and CHIP, the number of uninsured Americans has remained constant. Proposals to address this problem have recently been subsumed at the state level by the topic of oversight and related issues of consumer protection. Participants in this year's self-study of oversight worry that either increasing costs or even a modest change in the robust economic growth that most areas of the country have enjoyed could drive up the numbers of uninsured, making it necessary to refocus on the issue of access.
Finally, all participants agreed that the ongoing tension between federal and state policies will remain an important future influence over the course of oversight. Despite the appearance of a more "balanced federalism," as evidenced in HIPAA, many leaders in state government remain frustrated by the limitations imposed by federal law, and how it is interpreted by the executive branch, on their ability to adopt creative solutions in response to constituents' concerns about access to health care of appropriate quality.
This report presents a snapshot of oversight issues in mid-1999 through a series of comparative tables that were completed with the assistance of state health policy leaders nationwide. These tables have been arranged in the following six categories:
- Executive-branch agencies involved
- Division of roles and responsibilities
- Formal coordination of oversight
- Quality-monitoring activities
- Oversight for the protection of consumer rights
- Oversight for the protection of patient–provider or provider–health plan rights
Narratives from each state, revised from those in State Oversight of Integrated Health Systems, are included in the electronic edition of this report only, in the section "State Summaries." Insofar as possible, the officials who provided the information in the earlier narratives or their successors revised them for this report.
John M. Colmers
Chair, Reforming States Group
Executive Director, Maryland Health Care Access and Cost CommissionDaniel M. Fox
President, Milbank Memorial Fund
A Note Regarding the State Summaries
The narrative summaries of oversight activity in each state that are included in the electronic edition of this report are revised and updated versions of the summaries that first appeared in the 1997 report State Oversight of Integrated Health Systems. All participants in the original report were given an opportunity to provide revisions; where they were no longer in office, we made a new request for information to their successors or another appropriate official in the agency in question.
However, these efforts were not always successful, so that some of the summaries have not been updated by all relevant agencies or departments in that particular state. In other cases, we may have received extensive revisions from one department but only minor ones from others. Finally, some participants responded when work on the current report began in mid-1998 and did not provide further information when final drafts were sent for review in the summer of 1999. Each state summary ends with a note indicating when the material was last updated; in addition, the Acknowledgments provide a list of which officials and departments were involved, although some of those listed reviewed the tables only and did not revise the text.
We invite readers of this report to provide revisions or new information by going to the item "Contact Us with Revisions" at the end of the Table of Contents and sending an e-mail message. Please include your name, title, and office and/or the source of your information. This report will remain on the Fund's Web site until June 30, 2000, and will be maintained and updated until then as information is received.
1999 Reforming States Group Steering Committee
Robert A. Bittenbender*
President, National Association of State Budget Officers
Secretary of the Budget
Commonwealth of PennsylvaniaHarriette L. Chandler
Chair, Joint Health Care Committee
Massachusetts House of RepresentativesJohn M. Colmers
Chair, RSG Steering Committee
Executive Director
Maryland Health Care Access and Cost CommissionJohn F. Cosgrove
Deputy Democratic Leader
Florida House of RepresentativesMark Gibson
Vice Chair at Large, RSG Steering Committee
Policy Advisor for Health Care, Human Services and Labor
Office of the Governor of OregonRichard N. Gottfried
Chair, Health Committee
New York State AssemblyLee Greenfield
Lead DFL Member, Health and Human Services Finance Committee
Minnesota House of RepresentativesKemp Hannon*
Chair, Health Committee, National Conferencel of State Legislatures
Chair, Health Committee
New York SenatePatrick J. Johnson
Executive Director
Utah Health Policy CommissionMary E. Kramer
President, Iowa SenateAndrew Levin
Co-chair, Ways and Means Committee
Hawaii SenateWilliam N. Martin
Chair, Appropriations-Human Resources Committee
North Carolina SenateS. Peter Mills
Member, Taxation and Labor Committees
Maine SenateAngela Z. Monson
Vice Chair, Business and Labor Committee
Oklahoma SenateAndrew W. Nichols
Member, Subcommittee on Health and Welfare of the Appropriations CommitteeSandy Praeger
Immediate Past Chair, RSG Steering Committee
Chair, Public Health and Welfare Committee
Kansas SenateRaymond D. Rawson
Assistant Majority Floor Leader
Chair, Human Resources and Facilities Committee
Nevada SenateGeorge M. Reider, Jr.*
President, National Association of Insurance Commissioners
Commissioner
Connecticut Department of InsurancePeggy A. Rosenzweig
Vice Chair, RSG Steering Committee
Ranking Member, Audit Committee
Wisconsin SenateRichard A. Westman
Vice Chair, Appropriations Committee
Vermont House of Representatives
*ex-officio member
Table 1. Oversight Responsibilities of State Executive Branches
Table 2. State Agency Roles and Responsibilities
Table 3. Coordination of Oversight and System Responsibilities
Table 4. State Policies and Programs to Monitor Quality
Table 5. Oversight of Activities Related to Protection of Consumer Rights
Table 6. Oversight Activities Related to Provider–Patient or Provider–Health System Relationships
Data Sources for Tables
In addition to information received directly from state officials, Tables 5 and 6 incorporate data from the following sources:
American Association of Health Plans (AAHP). 1998. The Regulation of Health Plans. Washington, DC.
Maralit, M., T.M. Orloff, and R. Desonia. 1997. Transforming State Health Agencies to Meet Current and Future Challenges. Washington, DC: Health Policy Studies Division, Center for Best Practices, National Governors' Association.
National Governors' Association (NGA). 1998. State Strategies to Improve Managed Care Quality and Oversight in the Competitive Market. Washington, DC: NGA Issue Brief.
Rosenbaum, S., B.M. Smith, P. Shin, M.H. Zakheim, K. Shaw, C. Sonosky, and L. Repasch. 1998. Negotiating the New Health System: A Nationwide Study of Medicaid Managed Care Contracts, 2nd edition. Washington, DC: Center for Health Policy Research, The George Washington University.
Wasman, J.G., and G. Dallek. 1998. Hit and Miss: State Managed Care Laws. Washington, DC: Families USA Foundation.
State Summaries
Alabama
What Is Alabama Overseeing?
Commercial HMO penetration in Alabama has remained steady at approximately 10 percent of the insured population for several years; policymakers do not expect significant increases in the near future. The state's Medicaid agency has developed four managed care plans: the Partnership Health Plan (PHP), which organizes the state into eight hospital districts that provide services on a capitated basis; a primary care case management (PCCM) program; a Maternity Waiver initiated in 1988 (since then converted to the state-plan-based Maternity Care Program, which began going into effect in June 1999); and an 1115 waiver for Mobile County, which was initiated in 1997. Additionally, the state has one program for dual eligibles that provides capitated payments for the co-payments required of the Medicare HMO.
Who Is Overseeing?
The Alabama Department of Insurance (DOI) shares oversight and licensing authority for HMOs with the Department of Public Health (DPH) and regulates solvency.
The Alabama Department of Public Health (DPH) oversees required basic health services. In reviewing organizations for Certificates of Authority, the department performs evaluations of the following: access and continuity of care; provider contracting and network adequacy; marketing materials; enrollee complaint and grievance processes; and overall quality assurance and utilization review. Licensed HMOs began reporting HEDIS-based data to DPH in 1996.
The Alabama Health Care Task Force is part of DPH; the task force comprises 75 participants from different agencies and interest groups and recommends actions on a broad range of health policy issues.
The Alabama Medicaid Agency (MA) operates three managed care programs. The agency is committed to expanding managed care to control Medicaid costs and increase clients access to health care while ensuring that they receive quality care.
The Alabama State Legislature (house and senate) has not passed any major legislation in the area of health care reform.
How Are They Doing?
Solvency Oversight of the Private Market
Although various new plans have attempted to enter the Alabama market, HMO penetration has held steady at around 10 percent in the 1990s. The Alabama Health Care Task Force did not consider private-market HMOs or managed care to be a priority. Nor has capitation, a significant problem in some states, drawn much attention from state officials. DPH's state health officer (SHO) did not know of any HMOs using bonus payments to reduce utilization, but he did say that policymakers had discussed extending HMO regulations to managed indemnity plans: "From an equity standpoint this makes sense, although it would increase costs for these plans."
Quality Oversight of the Private Market
"In general, Alabama has very poor health outcomes across the state," reports the director of the Alabama Health Care Task Force. He attributes this problem to broad socioeconomic factors, not to the quality of managed care plans. The state health officer says there has been neither a particular pattern of complaints nor an increasing trend; there is little legislative interest in imposing new rules or regulations on HMOs. The SHO is interested in encouraging plans that would address public health issues, ideally with lifestyle and environmental issues as part of their mission.
Medicaid Oversight
The Alabama MA's dominant concern is using its limited funding to increase clients' access to health care services. Traditionally, Alabama's Medicaid program has covered few optional eligibility groups. However, recent mandated Medicaid coverage for children and pregnant women, combined with an extensive outstationed eligibility outreach program has improved access to care for many Medicaid beneficiaries. Medicaid benefits for children through the EPSDT program are only limited by medical necessity criteria. The benefit limitations on physician services and hospital days for adults only impact a small percentage of the Medicaid population.
The agency hopes to use its three managed care plans to increase access while keeping costs down. The two key programs are PHP and the PCCM. Alabama's relatively low reimbursement discourages many providers from participating in Medicaid and sometimes restricts patient access. Officials hope that the case management payments through the PCCM will encourage more providers to participate in Medicaid and that the program will employ more aggressive management of health care services. "Initially, we had providers opposed to managed care," comments Medicaid's director of managed care. "Now more are interested."
PHP covers the entire state through eight capitated hospital districts and allows patients to go to any hospital. Alabama's 1115 waiver program operates in only one county through a mandated capitated contract. This demonstration waiver coordinates the infrastructure of the local delivery system. The program was initiated in May 1997 and covers 40,000 Medicare recipients.
Coordinating Oversight
Except for the MA's efforts to introduce managed care, the issues of HMOs, capitated contracting, and private-sector managed care have not assumed a high profile in Alabama. DOI and DPH nevertheless attempt to coordinate their oversight activities and to ensure that plans operating in the state are regulated.
What Is Next for Oversight?
Alabama policymakers do not identify clear trends leading to change in state oversight of managed care, other than Medicaid's plans to increase access and control costs. DOI's deputy commissioner did not foresee any substantial growth in private sector managed care. However, state officials are looking ahead. The SHO indicates a key issue: "What should be regulated? It's clear HMOs should be regulated, but as the insurance system . . . is changing and merging with managed care we are trying to find the correct way to regulate. That's where the big political issue will be." He acknowledges that regulatory changes are not likely to happen soon. Alabama's oversight policies will remain fixed unless the market rapidly expands or a major fiscal or quality care problem emerges.
Additional Resources
- Department of Insurance
www.aldoi.org- Department of Public Health
www.alapubhealth.org
(Last updated August 27, 1999)
Alaska
What Is Alaska Overseeing?
The health care industry in Alaska is still largely operating in a traditional fee-for-service environment. Health plans have made inquiries to the insurance regulator about establishing HMOs or other risk-bearing provider networks, but as of June 1999, none are operating. It is likely that interested parties will determine that either the population is not large enough to support a managed care organization or there is still too much resistance on the part of providers. The Municipality of Anchorage is Alaska's largest borough and has a population of only 255,000. The next largest borough is the Fairbanks North Star Borough with 82,000 residents. Providers are slowly forming networks, but to date none has assumed any insurance risk.
Alaska does have an HMO statute that was enacted in 1990 (based on the National Association of Insurance Commissioners' model act of that time). However, because the evolution of managed care networks and HMOs has been so dramatic in recent years in more populated states, Alaska's statute does not reflect the improved regulatory understanding of appropriate solvency and consumer protection needs.
The state's Medicaid program largely uses a fee-for-service system of reimbursement. In 1998, under its Children's Health Insurance Program expansion, the state extended Medicaid coverage to children and pregnant women in families with incomes below 200 percent of the federal poverty level. Alaska also received an outreach grant under the Robert Wood Johnson Foundation's "Covering Kids" initiative and efforts are underway to design and conduct an effective outreach program.
The largest and most significant integrated health care system in the state is run by a consortium of Alaska Native health corporations. The system covers virtually the entire state and all Alaska Natives (approximately 16 percent of the state's population) are eligible for services. The system operates largely like a staff-model HMO. Oversight is the responsibility of the Indian Health Service.
Who Is Overseeing?
The Alaska Division of Insurance (DOI) is responsible for licensing health care plans. DOI has the statutory authority to evaluate plan solvency and market practice.
The Alaska Department of Health and Social Services (DHSS) administers the state's Medicaid program. The program is largely a fee-for-service system. The Medicaid agency has explored various managed care approaches, most notably the primary care case management option.
Alaska has a citizen Legislature that meets for 120 days of each year. Several consumer protection bills have been introduced or are before the legislature. To date, none has comprehensively addressed consumer protections.
How Are They Doing?
Solvency Oversight of the Private Market
DOI has authority over solvency in the private market. It has had a few inquiries from HMOs regarding licensure in Alaska, but none has pursued a license.
Quality Oversight of the Private Market
By statute, DHSS and DOI have joint responsibility for HMO quality in Alaska.
Medicaid Oversight
There are no managed care plans available to the Medicaid program in Alaska. Managed care strategies have been fully considered by the Medicaid agency, but the lack of these plans in the Alaska market make it very difficult for Alaska to move any of the Medicaid population into managed care arrangements. The Medicaid program is considering a primary care case management (PCCM) approach, although budget reductions have made it difficult to develop the necessary administrative support for that kind of system.
What Is Next for Oversight?
Whether or when managed care and prepaid health care will enter Alaska is unclear. The deputy commissioner of DHSS describes knowledgeable observers as "equally split between those who think managed care is coming [and] those who think it can't work in Alaska." DOI has concentrated on ensuring that firms electing to self-insure do not unwittingly violate the insurance law. "There will definitely be strong attempts at getting into various areas of managed care, especially by large self-insured firms. We are worried that some may pop up without realizing they are becoming insurers," says the director. Alaska officials are alert to the potential problems of risk assumption and quality assurance, and they intend to benefit from the experiences of other states.
Additional Resources
- Division of Insurance
www.commerce.state.ak.us/insurance- Department of Health and Social Services
www.hss.state.ak.us
(Last updated August 6, 1999)
Arizona
What Is Arizona Overseeing?
Arizona has one of the highest HMO penetrations in the country in both the private and Medicaid insurance markets, enrolling an estimated 40 percent of the insured population.
Managed care became the cornerstone of Arizona's Medicaid program in 1982, when the state implemented the Arizona Health Care Cost Containment System (AHCCCS). This Medicaid managed care demonstration is the oldest statewide, capitated program in the country, and it is a model for other states. Pregnant women and children, disabled, elderly, and long-term-care patients are covered in separate managed care components. Residents whose annual income does not exceed $3,200, but who are not eligible for Medicaid, may enroll in the MNMI (Medically Needy, Medically Indigent) arm of the program, as can people with serious illness and injuries who have spent down their savings and assets to the $3,200 income level. Small employers, with from one to 50 employees, can also use some AHCCCS plans to obtain guaranteed issue coverage. This plan, known as Health Care Group, became operational in 1986 and has grown significantly.
A relatively large fraction of the state's population, estimated at between 17 and 23 percent in 1996, remains uninsured. In 1995, the legislature failed to pass a measure that would include 150,000 additional enrollees under AHCCCS. However, in the fall of 1996, Arizona voters approved, by 71 percent, a ballot initiative to expand Medicaid coverage to 100 percent of poverty, which will bring about 180,000 working poor under the Medicaid umbrella. In June 1997, Arizona submitted an amendment to their 1115 waiver and is awaiting approval from the Health Care Financing Administration (HCFA).
Who Is Overseeing?
The Arizona Department of Insurance (DOI) is one of two state agencies responsible for licensing HMOs for the commercial market: it oversees solvency and monitors market practices. When commercial HMOs are also AHCCCS providers, AHCCCS oversees the Medicaid arm of the HMO.
The Arizona Department of Health Services (DHS) oversees network evaluation and has responsibility for continuing oversight of commercial HMOs. When an HMO applies for a license, DHS evaluates the HMO's statement of its plan, facilities, personnel, and geographic area, and notifies DOI of its approval of this statement. DHS also works with AHCCCS to operate programs for special needs groups. The department administers a capitated behavioral health care program through Regional Behavioral Health Agencies (RBHAs), which oversee the contracts with providers and offer case management services to local recipients. Acute-care clients of AHCCCS, except long-term-care recipients, receive behavioral health services through the RBHAs, rather than through their AHCCCS HMO plans.
Arizona's Arizona Health Care Cost Containment System (AHCCCS) is the single state agency responsible for all aspects of the Medicaid and state-funded MNMI program. AHCCCS works with Medicaid-only and commercial health plans; oversees all parts of the delivery system, including provider network solvency, quality assurance, and grievance procedures; provides hearings if a plan fails to address a recipient's grievance adequately; and may intervene if a provider claims to have been denied payment inappropriately or has another grievance. For long-term-care services to elderly and disabled clients, AHCCCS has contracts with eight program contractors, which are private or county-run managed care companies that receive capitation funds to negotiate contracts with long-term care, acute care, and behavioral health providers.
The Department of Economic Security performs eligibility determinations for AHCCCS for the Temporary Assistance to Needy Families (TANF) population and is the health plan for the developmentally disabled population. The department coordinates medical services with the acute-care provider, a managed care company.
The Arizona Legislature (senate and house) has enacted a number of small-group insurance reforms. Although some managed care bills have been presented in the past few years, most have not been adopted. One new law, which went into effect in January 1996, requires HMOs to disclose their plan's incentive features to employers, who in turn must share that information with their employees. In the 1995 session, the legislature created a Joint Legislative Oversight Committee on Tobacco Tax and Health Care to decide how the state would spend the money generated by a new tobacco tax that was created by ballot initiative.
Several health care initiatives were proposed in 1997. Most notably, the legislature passed the Health Care Appeals Process Bill, which requires all health care insurers to provide a uniform appeals process for all enrollees. The process has four steps, including an expedited review and review by external, independent reviewers. The bill was the product of a yearlong Governor's Task Force that included legislators, health care insurers, managed care companies, and consumers. The resulting product is a guaranteed, uniform appeal process for all Arizona enrollees.
How Are They Doing?
Solvency Oversight of the Private Market
Since HMO penetration has been high for a number of years in Arizona, the assistant director of DOI reports that people within the state are knowledgeable about managed care. DOI's regulatory approach focuses on solvency. The agency requires each commercial HMO to have $1 million in capital reserves and an additional $500,000 on deposit with the state treasurer. The legislature removed the premium tax on small-group plans for all insurers in order to lower premium costs. Recent legislation mandates that commercial HMOs disclose incentive features to employer clients. DOI does not review rates, require plans to file rate schedules, or provide oversight of integrated delivery systems, but the agency does review market practices and collects key information on the number of people served.
Quality Oversight of the Private Market
Quality oversight of commercial HMOs in Arizona consists primarily of the DHS's review of quality procedures during licensure, ensuring that there are quality assurance protocols and grievance procedures in place. Apart from DOI's market review and the AHCCCS program, there is no continuous oversight of quality issues. The 1997 Health Care Appeals Process Bill passed both the Arizona Senate and House of Representatives and was signed into law by the governor in July 1997. This law is significant for several reasons. First, it ensures that all Arizona enrollees in health plans are guaranteed the same appeal process. Second, it provides for expedited review of denials of care when medical necessity demands an immediate response. Third, it provides enrollees with an external, independent review by utilization review agents chosen by the insurer.
It is important to note, however, that the assistant director of DOI does not think increased regulation would necessarily resolve every kind of complaint: "Some complaints boil down to differences in medical opinions. The kind of things we read about all the time where someone is denied treatment could be for a number of reasons. It could be that the treatment was not medically indicated for the person." She has not seen an increasing number of complaints from Arizona consumers: "These things have always been part of managed care." She attributes the heightened concern over quality to increased media attention and the fact that more and more people are being covered by managed care plans.
Medicaid Oversight
AHCCCS is the sole agency responsible for all oversight and regulation of the Arizona Medicaid program. The Arizona legislature authorized the state to join the federal Medicaid program in 1972, but implementation did not occur until 1982, when AHCCCS was inaugurated statewide as a Medicaid demonstration. Other services, like behavioral health, long-term care, and family planning, were added after 1982.
AHCCCS contracts with commercially licensed HMOs only if they have a separate arm that operates under the auspices of the Medicaid program and if they agree to abide by the regulations that apply to Medicaid plans. Many of these regulations are more restrictive than licensure laws for the private market. The plan must also agree to disclose specific information on its Medicaid clients, which is not required for private sector enrollees. AHCCCS has compared its oversight procedures with those used by DOI and DHS. AHCCCS's approach is more stringent than either. For example, AHCCCS requires its plans to post the same $1.5 million in capital reserves that is required of commercial HMOs but, rather than paying a tax on premiums, Medicaid plans must post a performance bond equal to one month's projected liabilities.
Both commercial and AHCCCS plans contract with the same provider groups, so AHCCCS enrollees receive mainstream service. The program has been very innovative in putting special needs populations, like the elderly and disabled, into managed care programs under separate contracts. AHCCCS officials are convinced that "keeping it all under one agency" is the best strategy.
Quality of care is an extremely important component of the AHCCCS program. In more than 15 years of operation, AHCCCS has developed a mature quality management system that focuses on the performance of health plans and program contractors. Although this approach is effective, AHCCCS, in partnership with HCFA and the AHCCCS health plans and program contractors, continually seeks ways to introduce other innovations that are tailored for a managed care environment. A proposal to implement a Quality Management Initiative was approved by HCFA in December 1994 as a multiyear project that will (1) develop clinical and long-term care quality management indicators to measure health outcomes and quality of care; (2) use financial indicators for financial performance and solvency standards; (3) conduct member satisfaction surveys that assess access to care, availability of care, and overall member satisfaction; and (4) assess provider satisfaction.
AHCCCS's quality oversight is built on two procedures. First, the agency conducts on-site inspections to assess each plan's quality assurance procedures; these visits are intended to establish a baseline. Plans must have in place complaint tracking, resolution systems, and approved procedures for utilization review. AHCCCS then relies on recipient complaints and satisfaction surveys to determine when more intensive review is required. Overall, however, member complaints have not been a significant problem. AHCCCS health plans have a separate grievance and appeals process, and a special Division of Grievance and Appeals within the administration to review the plans and serve as a secondary appeal to health plan decisions.
Coordinating Oversight
The structure of Arizona's health care regulation requires little coordination between oversight of the commercial market and of Medicaid. DOI and DHS coordinate review of commercial HMO license applications. AHCCCS has sole responsibility for all aspects of Medicaid oversight with its contractors and other state agencies (DHS and DES). The agency also coordinates efforts for some special needs populations and for small-group insurance coverage. For example, the Division of Behavioral Health Services operates via a capitated contract with AHCCCS for all aspects of behavioral health to Medicaid members. DHS and AHCCCS also work together on the Health Start program, which has increased the number of pregnant women receiving prenatal care, and on a program that has raised the immunization rate from 50 percent to more than 75 percent.
AHCCCS funds the Department of Economic Security for its Medicaid eligibility activities and the coordination of acute- and long-term-care services for the developmentally disabled. Counties are responsible for most of the state match for long-term care and a portion of the state match for the acute-care program. There is no mandate to integrate both types of service in a single contract; however, in some cases, the same contractor serves the acute- and long-term-care population. In 1996, the program for long-term-care services expanded the type of setting that is eligible for reimbursement to include supportive residential living, which is expected to increase consumer satisfaction and is estimated to cost 38 percent less.
What Is Next for Oversight?
Arizona's AHCCCS program has been confronting the challenge of implementing the ballot initiative to expand eligibility to 100 percent of the federal poverty level. In addition, the 1998 session addressed several managed care issues, including mandated chiropractic care, the implementation of the 1997 Premium Sharing Demonstration Program, and mandated diabetes coverage. Implementation of a children's health insurance program (CHIP) as a part of AHCCCS, was passed by the legislature in 1998. The state legislature will also continue to confront the effects of the new federal welfare law and of medical coverage for legal immigrants, issues that will have enormous impact on counties.
Arizona is in the process of implementing many of the provisions of the Balanced Budget Act that affect managed care programs. Because of the sophistication of the oversight functions of the AHCCCS program, the BBA impact should be minimal.
On February 1, 1998, the Premium Sharing Demonstration Project began enrolling persons in the program. This is an innovative program that enables uninsured Arizonans to purchase health insurance through the state. Enrollees pay a premium based on their income level and the state subsidizes the rest, creating a joint partnership that enables the state to offer insurance to those who would otherwise be unable to afford it.
A key member of the House Health Care Committee believes that AHCCCS has resulted in cost savings and in high-quality care, and that satisfaction among enrollees is high. The changes introduced by the private sector, and the enactment of the new federal standards for Medicaid and Medicare quality of care, will continue to add to the foundation for managed care oversight that Arizona has established through AHCCCS.
Additional Resources
- Department of Insurance
www.state.az.us/id- Department of Health Services
www.hs.state.az.us
(Last updated August 30, 1999)
Arkansas
What Is Arkansas Overseeing?
Arkansas has nine HMOs that enroll 3.8 percent or more of the insured population. The state Medicaid program does not contract with HMOs for managed care; instead, it uses a primary care case management system (PCCM) under a 1915(b) waiver.
In 1995, the Arkansas legislature passed a broad any-willing-provider law, which requires plans to give any physician or clinic on a list of 21 "protected specialties" the opportunity to participate, if the provider meets the HMO's published standards. The statute prohibits the use of financial incentives or penalties that would influence an enrollee's choice of providers, such as higher co-payments or reduced reimbursement. However, the law's constitutionality was successfully challenged in the state courts and appeals courts and enforcement was enjoined in 1997-1998. In 1999 the legislature passed Act 1469; effective January 1, 2000, the act offers further freedom-of-choice protections for both network and non-network services.
The state enacted small group insurance reforms requiring guaranteed renewal and rating restrictions in 1991. In 1995, it created a high-risk pool that began operation July 1, 1996. Both laws were amended in 1997 to conform to the federal Health Insurance Portability and Accountability Act (HIPAA). Other amendments to the Arkansas HIPAA laws were enacted in Act 881 of 1999, with technical amendments to related laws provided in Act 1356 of that year.
Who Is Overseeing?
The Arkansas Department of Insurance (DOI) shares licensing and oversight responsibility with the Department of Health. DOI regulates plan solvency, monitors market practice, and tracks complaints.
The Arkansas Department of Health (DOH) oversees HMO quality; reviews HMOs during licensure by evaluating their provider networks, quality assurance plans, and grievance procedures; and responds to complaints about quality of care. In 1999, Act 1200 was passed; it requires all health carriers to establish a program of quality assessment and grievance procedures, and authorizes DOH to work with DOI to adopt rules and regulations to improve the quality of health care services.
The Arkansas Division of Medical Services (DMS) oversees the state Medicaid program. DMS runs a primary care case management program that uses fee-for-service providers as gatekeepers and employs sophisticated computer claim monitoring.
How Are They Doing?
Solvency Oversight of the Private Market
With an estimated less than 4 percent penetration of its 2.4 million population, Arkansas has one of the lowest HMO enrollments in the country. However, DOH's director of Health Facilities, Services and Systems estimates that, if self-insured plans are included, "half of the state is in some form of managed care." Self-insured plans are exempt from state regulation, but DOH is trying to introduce oversight by convincing third-party utilization review firms to register with the state. There is no DOI regulation of preferred provider organizations (PPOs) or licensure of provider networks.
Arkansas's 1995 any-willing-provider act has been embroiled in controversy. The act was successfully challenged as unconstitutional and as being in violation of ERISA and federal HMO laws. The court later issued a permanent injunction to prohibit enforcement.
Quality Oversight of the Private Market
Quality-of-care issues have not been a serious problem in Arkansas. "Up to this point the managed care industry . . . is young enough that people have not complained about quality of care," says the director of Health Facilities, Services and Systems. As necessary, complaints are referred to DOH through DOI's Consumer Services Division, and the insurance commissioner reports that few reach his department: "Most are resolved at the HMO level, and usually involve a misunderstanding." DOH intends to increase its staffing so that HMO sites can be visited more frequently. One issue that DOI reviewed and then prohibited in Directive 1-98 is balance-billing of HMO subscribers, where providers bill enrollees for services covered under managed care plans; this can lead to unnecessary payment by enrollees without subsequent reimbursement when their health plan makes its payment.
Medicaid Oversight
Arkansas has chosen to rely on a gatekeeper PCCM approach for its Medicaid program. "We considered a nine-county pilot [for managed care coverage], but the more we talked about it the more we realized we could [get good performance from a PCCM approach]," explains DMS's director. A University of Arkansas study estimated that the program has saved $30 million in health care costs.
The key to Arkansas's program is its sophisticated electronic utilization review system. Participating doctors receive monthly printouts, which describe their utilization patterns, and quarterly report cards, which compare them with other physicians on several measures, including cost and emergency room use. DMS may withhold the three dollars per month case management fee for poorly performing doctors, but the division is "trying to lead with the carrot and not the stick." The director reports that doctors are cooperative, in part because "they desperately want to avoid Medicaid HMOs."
Another feature of Arkansas's PCCM program is electronic claims processing. "We have the best claims processing in the nation, public or private," according to the director. Every billed transaction is electronically recorded and transmitted to DMS; reimbursement is then paid into the physician's account.
In 1996, the division began a health education project in three counties to identify and resolve problems.
Coordinating Oversight
Organized coordination of oversight in Arkansas is minimal. DOI and DOH officials say that they work well together, and DMS reports regularly to the appropriate legislative oversight committees. There is no joint purchasing initiative for managed care coverage.
What Is Next for Oversight?
The immature Arkansas HMO market is soon expected to grow substantially. DMS's director cites funding for broader medical coverage as another critical issue. "Nineteen to twenty percent of the state is uninsured, and there is no talk or money to do anything about it," he explains. DOI and DOH are developing legislative proposals to expand the state's authority to regulate providers that enter into capitated contracts with insurers. Arkansas officials are working to anticipate and forestall problems as managed care develops in the state. The PCP program, ConnectCare, was one of ten winners (from a field of 1,600 entries) in October 1997 of the Ford Foundation's Innovations in American Government competition.
Additional Resources
- Department of Insurance
www.state.ar.us/insurance- Department of Health
health.state.ar.us- Division of Medical Assistance
www.medicaid.state.ar.us
(Last updated September 13, 1999)
California
What Is California Overseeing?
With 49 HMOs that enroll 38 percent of its insured population, California's commercial health care market can be said to rely on managed competition. Two programs have been critical: the California Public Employees Retirement System (CalPERS), a health insurance plan covering almost one million people; and the Health Insurance Plan of California (HIPC), a publicly administered purchasing pool for 6,500 small businesses. By creating larger bargaining groups, these programs have been able to offer employees a choice of health plans negotiated at the best rates.
California's Medicaid program (Medi-Cal) has been steadily moving toward adoption of managed care and has been turning to HMOs for delivery of health care services; it has extended managed care options to Medicaid recipients, region by region, across the state. As of 1993, 20 regions had managed care programs in place, and 13 of these were scheduled to expand. (Medicaid regions are generally contiguous with counties.) Three million of California's 5.5 million Medicaid recipients are expected to enroll eventually in managed care programs.
The California legislature has actively engaged with the topic of managed care quality for several decades, as evidenced by two important legislative actions: the Knox-Keene Act of 1975, one of the first HMO oversight laws in the nation; and the Patient Protection Act of 1994, an important consumer-oriented reform bill. The legislature is also involved in designing the expanded Medi-Cal managed care program.
California voters have expressed their opposition to over-regulation of the health care industry. In 1994, the electorate soundly rejected a single-payer-plan ballot initiative by 74 to 26 percent, and in 1996 it rejected two other initiatives to regulate the activities of HMOs more heavily.
Who Is Overseeing?
The California Department of Corporations (DOC) is the single licensing and oversight agency for commercial HMOs in California. It regulates plan solvency, tracks and responds to consumer complaints, and evaluates plan networks and quality assurance procedures.
The California Department of Health Services (DHS) manages the state's Medicaid program, including the growing managed care component, and contracts with commercial HMOs, Medicaid-only HMOs, and prepaid plans managed by local government.
The California State Legislature (senate and assembly) has taken on a number of managed care issues and has implemented various consumer-oriented protections, such as the prohibition of "gag" rule clauses and the requirement that experimental treatments prescribed for terminally ill patients be independently reviewed to ascertain their medical necessity. Some legislators are frustrated with their minimal involvement in oversight issues. An important member of the assembly's Health Care Committee has commented that "oversight seems more a slogan than anything real, at least here in California." However, there have been achievements: In addition to passing the Patient Protection Act and participating in the design of California's Medicaid managed care program, the legislature, working with the governor, enacted a strong small-group health insurance reform measure, requiring guarantee issue of all small-group products; limiting the extent of coverage exclusions for preexisting medical conditions; providing portability of coverage; and limiting rate variations according to health status.
How Are They Doing?
Solvency Oversight of the Private Market
California's Knox-Keene Act, one of the first HMO laws in the nation, continues to guide legislation for overseeing HMOs. DOC has taken a broad approach to monitoring financial risk. In addition to HMOs, the agency regulates any provider organization that accepts full capitation from an HMO for the provision of both professional services and institutional care. California has several large integrated provider groups, some of which have assumed the responsibility and risk for the health of more than a million patients. The insolvency of any one such provider would create serious medical, economic, and social hardships as evidenced by the July 1998 bankruptcy of FPA Medical Management, Inc., and its affiliates, including FPA Medical Management of California, Inc. In addition, because of concerns regarding solvency, in March 1999 the department intervened in the operations of MedPartners Provider Network, Inc., to preserve continuity of care for the 1.3 million MedPartner enrollees in California.
Recently the attorney general has begun to monitor carefully the activities of nonprofit hospitals that sell, convert, engage in a joint venture, or plan other joint operations with the for-profit sector. DOC must approve the sale or conversion of HMOs and integrated plans, including those that are hospital-based; however, the attorney general is then responsible for overseeing the charitable uses of funds set aside as a result of the conversion of a nonprofit organization. The oversight of conversions goes beyond the issue of solvency to enforce valuation of the converting organization in order to calculate the charitable assets to be preserved and prevent personal inurement by senior executives of the converting organizations. The oversight activity that attracted the most attention in 1996 involved the conversion of the nonprofit Blue Cross of California to a for-profit company, WellPoint Health System, and the transfer of the charitable assets of Blue Cross to two philanthropic foundations. The ongoing legacy of this process is legislation, which went into effect on January 1, 1997, that established rules for oversight of conversions in the future (California Corporations Code Sections 5913-5919).
Quality Oversight of the Private Market
As DOC's senior health care counsel explains, DOC oversees not only financial solvency, but also a plan's "capability to perform its functions," including its quality assurance and internal grievance processes, "in order to ensure that Californians enrolled in HMOs receive the services they are entitled to, and that these services continue to be available and accessible." DOC contracts with outside physicians to review consumer complaints about HMO decisions regarding treatment and to assure that no patient is denied medically necessary treatment. In October 1996, DOC created a toll-free number for consumer complaints, and in 1997 the agency began publishing an annual summary, detailing the number and type of complaints for each plan. DOC has also ordered all HMOs to remove any "gag" clauses from their provider contracts.
The legislature has been actively concerned with improving the oversight of managed care quality. In 1994 it passed the Patient Protection Act, which standardized reimbursement for emergency room use and required health plans to more fully disclose their financial arrangements to consumers. The legislature has since been considering reforms that would prevent "bait and switch" tactics, such as terminating providers after they have been listed in marketing information given to prospective enrollees.
HMO quality is a controversial issue in California. Numerous media reports have questioned the performance of HMOs; for example, the Los Angeles Times ran a major series that explored a range of HMO and managed care quality issues. However, polls cited in that same series reflected high satisfaction with HMOs, and it revealed as well the difficulties of assessing actual and perceived levels of quality. The chief of staff for the California Senate Health and Human Services Committee does not think quality of care or under-treatment are major concerns for HMOs at this point, but he does see the problems as becoming more critical if the organizations are forced by competition to begin excluding high-cost patients.
Medicaid Oversight
The state and 12 of the largest counties are implementing a pilot Medicaid managed care program. In each of the 12 pilot regions, Medi-Cal contracts with at least two managed care plans. DHS selects an HMO through competitive bids, and the region then develops its own government-sponsored managed care plan. These local initiatives can be developed by the County Board of Supervisors or, if the board fails to make a proposal, by other interested parties. All Medicaid plans must meet Knox-Keene licensing standards.
DHS and the legislature have been actively concerned with inclusion of traditional providers of health care services to the indigent, uninsured, and special needs groups. According to DHS's strategic plan in 1993, HMO plans are "encouraged to include safety net and traditional providers in their networks." Local initiatives, however, are "required [emphasis added] to include all safety net providers that agree to provide services," as well as to meet the same terms and conditions required of other entities. The legislature has taken a major role in designing Medi-Cal's managed care program and has carved out a number of fee-for-service enclaves for particular groups.
Some observers are concerned that the local initiatives will not be able to compete effectively with HMOs in Medi-Cal's dual system. The legislative analyst notes that the county plans have moved less quickly than the commercial HMOs in pulling together their provider networks. Moreover, since local initiatives are required to contract with federally qualified health centers (FQHCs), which usually have less healthy and more costly patients, they may face higher costs. The deputy director of the Department of Health Services responds that payment rates for local initiatives have been adjusted to reflect their mandated commitment to FQHCs, and that many commercial plans have in fact contracted with the health centers as well.
Funding of safety-net providers is another issue causing concern. The state distributes monies, termed disproportionate share hospital payments, on the basis of hospital use. If Medicaid recipients prefer HMO plans to traditional safety net providers, these institutions may suffer a critical loss of funding. The chief of staff of the state senate's Health and Human Services Committee thinks that the biggest issue in the Medicaid transition is the impact it may have on the safety net. He estimates that 26 percent of the state population is uninsured and relies on emergency rooms in county hospitals for care. Los Angeles County Hospital has faced near bankruptcy in the 1990s at least partially because of the increasing burden of uncompensated care. A proposed bill to tax HMOs to provide coverage for the uninsured failed several years ago, and this problem remains unresolved.
Coordinating Oversight
There is no single forum for discussing and coordinating policy regarding the oversight of managed care in California. Instead, government officials get together "as needed," according to the DHS deputy director. Oversight agencies work together on several issues; for example, DHS and DOC coordinate their audits of HMOs. The attorney general's aggressive posture on sales and joint ventures of nonprofit hospitals suggests that his office may begin to coordinate its oversight activities more closely with DOC. The Gray administration, like the Wilson administration before it, regularly meets with groups representing consumers, purchasers, and providers to discuss improving California citizens' access to high-quality, affordable health insurance.
What Is Next for Oversight?
Quality of care in HMOs and whether managed care programs can balance quality against cost in a competitive market remain issues of governmental and consumer concern in California. Increased interest in the financial activities of managed care plans, for-profit hospitals, and other major providers seems likely on the part of both the attorney general and the DOC.
Medicaid's expansion of managed care will continue in the near future. The deputy director of DHS hopes to move away from "looking at details and to move toward looking at broader health status measures." However, the chief of staff of the Senate Health and Human Services Committee believes that the problem of the medically indigent and uninsured, and the burden they represent to public hospitals and other providers, is likely to occupy policymakers over the next several years.
Perhaps the most critical challenge facing policymakers is the creation of a funding mechanism to cover the uninsured: both the currently uninsured and those who may lose their Medicaid eligibility as a result of welfare reform.
Managed care oversight, particularly quality-of-care and expansion-of-coverage issues, will remain high on California's legislative agenda for the near future.
Additional Resources
- Department of Corporations
www.corp.ca.gov- Department of Health Services
www.dhs.ca.gov- Office of Statewide Health Planning and Development
www.oshpd.ca.gov
(Last updated June 14, 1999)
Colorado
What Is Colorado Overseeing?
Colorado's HMO market is expanding rapidly. According to the state insurance commissioner, the number of HMOs increased by 58 percent within two years: from 16 in 1994, enrolling 24 percent of the insured population, to 20 licensed by the state in 1998, covering a total of almost 1.6 million enrollees. He reported that Colorado's percentage of HMO penetration was the sixth highest in the country in 1997.
The state's managed care program for Medicaid recipients has also grown. In 1994, only 10,000 of Colorado's 270,000 Medicaid enrollees were in HMOs. As of mid-1996, there were 70,000 Medicaid recipients in HMOs while another 60,000 were in primary care case management (PCCM). Colorado's managed care programs continue to grow. During the 1997 session, the legislature passed a bill requiring 75 percent of the Medicaid population to be enrolled in a managed care plan by July 1, 2000. The Children's Basic Health Plan (CBHP), a non-Medicaid managed health insurance program for children from birth to age 17 whose family incomes fall at or below 185 percent of the federal poverty level, was also created in 1997. The state also has a high-risk pool for persons whose medical conditions make them uninsurable.
Who Is Overseeing?
The Division of Insurance (DOI) within the Colorado Department of Regulatory Agencies is the primary licensing and oversight agency for commercial HMOs. It oversees plan solvency and market practices, tracks complaints, and consults the Department of Public Health and the Environment (DPHE) on quality issues. DOI has promulgated regulations to create a regulatory framework that distinguishes between full-service HMOs and limited-service provider networks.
The Department of Public Health and the Environment (DPHE) acts as DOI's consultant for quality oversight. DPHE reviews the quality assurance procedures and network adequacy of any plan filing for licensure and reports the findings to DOI; it works with that agency on complaints regarding quality of care and access to health care services. DPHE also is the licensing agency for health facilities in Colorado where licensure is required.
The Department of Health Care Policy and Financing (DHCPF) manages Colorado's Medicaid program. It oversees the HMO and PCCM components and a fee-for-service component.
The Colorado State Legislature has considered a number of managed care reforms during the 1990s. Many proposals have been enacted to provide Colorado consumers with additional benefits and health coverage protections.
In 1992, Colorado lawmakers enacted several small-group reforms, including guaranteed renewal, portability of coverage, and rating restrictions. In 1994, the state adopted guarantees for small groups and a modified community rating plan, which were phased in over a three-year period.
The 1997 legislature passed several health insurance consumer protection bills. Among their provisions were the creation of a market conduct examination program under which the insurance commissioner must consider insurance companies' complaint analyses, pricing, and market share; the establishment of standards for the adequacy of managed care networks, including access plans for health care networks; the guarantee that consumers receive a written explanation of the medical basis for denial of medical treatment; the requirement that carriers make a standardized benefits form available; and the establishment of parity in coverage of biologically based mental illness. Further legislation increasing insurers' accountability and mandating coverage of certain conditions was enacted in 1998, including coverage for the following: minimum hospital stays after childbirth; the administration of general anesthesia and hospital charges for dental care for qualified children; and equipment, supplies, and outpatient self-management training and education for the treatment of diabetes. In 1999, Colorado passed new laws to provide for standing referrals, to require coverage for necessary therapies for children, and to implement independent external reviews.
How Are They Doing?
Solvency Oversight of the Private Market
DOI oversees and regulates the solvency of any Colorado entity that accepts prepayment for health services directly. Provider groups that accept capitation downstream from HMOs for HMO-insured risks are not subject to oversight. The division has promulgated regulations that would reduce the solvency standards for organizations that accept risk only for a single service.
Quality Oversight of the Private Market
DPHE shares responsibility for the oversight and regulation of HMOs with DOI. DPHE assesses the ability of the HMO to make available and provide access to health care services, and the ability of the HMO to ensure the quality of its health care services. DPHE has a critical role in the licensing of these entities, in the review and analysis of enrollee complaints relating to health care services provided directly or under contract, and in the examination of HMOs, both routinely and when a problem arises in the quality of the health care services provided. These are continuous and ongoing processes.
DPHE has joined DOI and DHCPF in the coordination of HMO regulation through the establishment of an interagency health plan work group. The project is based on goals outlined in a memorandum of understanding signed by the three agency heads. The project has grown to include representatives of the Mental Health Services Division of the Department of Human Services, the Employee Benefits Section of the Department of General Support Services and Personnel, the Medicaid Managed Care Ombudsman, and the federal Health Care Financing Administration. The group engages in coordinated policy development, problem solving, licensing efforts, enrollee complaint resolution efforts, provider issues, and access issues.
DOI has successfully used its analysis and research to head off legislative action. "We have a cooperative relationship with the legislature. They view us as a resource to work out policy issues," reports the commissioner.
Medicaid Oversight
"Colorado Medicaid has a strong and comprehensive quality assurance program," notes the manager of DHCPF's Quality Assurance Section. "We focus on quality in a variety of different areas, which gives the department a more complete and detailed perspective. For instance, the client survey gives the department feedback on the client perspective. This information fits into our whole puzzle so we can obtain a more complete picture of the quality of Medicaid health care."
DHCPF currently employs HEDIS measures; the Consumer Assessment of Health Plans Study (CAHPS), a nationally recognized consumer survey; focused studies on access and clinical issues; individual case reviews; and comprehensive administrative HMO site reviews. The HEDIS results for the HMOs are available in a performance report published in 1998 by the National Committee for Quality Assurance (NCQA).
Certain measures of the CAHPS survey have been placed on a consumer report card used to aid Medicaid clients in making an enrollment choice into an HMO or the Primary Care Physician Program (PCPP). In 1999, the report card will be expanded to include HEDIS and focused study results. This will provide Medicaid clients with more information and therefore offer a more informed choice.
The focused studies have been used for the PCPP, unassigned fee-for-service, and HMO populations. The first-year studies focused on diabetes, EPSDT, and discharge planning for persons with special needs. For fiscal year 1999-2000, a focused study will examine prenatal care and another will include a provider survey to assess cultural competency and disability awareness. In addition to DHCPF's External Quality Review Organization conducting the focused studies, it is also responsible for investigating quality of care concerns for Medicaid clients in an HMO. DHCPF's peer review organization (PRO) investigates quality of care concerns for Medicaid clients who are in the PCPP or unassigned fee-for-service (FFS) programs.
DHCPF conducts extensive site reviews to monitor contract compliance for the Medicaid HMOs. A desk audit is conducted and followed with an onsite review where the HMO's personnel are interviewed. Providers in the community are also interviewed to obtain their feedback on the HMO's communication and assistance with any Medicaid HMO related issue.
Coordinating Oversight
Managed care oversight in Colorado is primarily carried out by DOI and DHCPF. DPHE sees its role as consulting and assisting DOI with its oversight duties. Because the coordination of purchasing activities is in a formative stage, there is no joint purchasing in the Medicaid managed care program.
Colorado has an advantage in that the three regulatory agencies––Health Care Policy and Financing, Public Health and Environment, and the Division of Insurance––are able to sit down together and work out collaborative ways to address managed care. In addition, there has been a good relationship between these agencies and legislators who are involved in health care issues. This is especially important because, by state constitution, the state has a form of government that is a "weak executive and strong legislature." In 1997, the Division of Insurance, the Department of Health Care Policy and Financing, and the Department of Public Health and Environment signed a memorandum of understanding regarding the oversight of health insurance organizations. The agencies agreed to work collaboratively to: develop appropriate standards for access and adequacy of HMOs; develop a streamlined coordinated licensing process for HMOs; coordinate examination of HMOs; adopt consistent requirements for HMO grievance procedures; create a shared data system to support HMO oversight activities of the agencies; and set up a joint committee to review and coordinate, on a regular basis, activities consistent with this agreement.
The collaborative efforts of the three agencies has led to the development of a number of consumer protection measures. These developments include legislation described above, new regulations governing utilization review, and educational outreach to consumers. The new regulations provide specific time lines and procedures to be followed when health plans deny care or benefits based on utilization review. In addition, a consumer brochure has been developed to advise individuals about their rights and responsibilities with respect to complaints and grievances against health plans.
Although the three departments do collaborate effectively, they are also respectful of their differences, mandated by statutory and regulatory requirements as well as constituent input.
What Is Next for Oversight?
Colorado health officials see a number of issues on the horizon for the state. DHCPF's executive director is interested in finding a way to make managed care work for special needs groups, like the disabled. The expansion of Medicaid enrollment will continue to be widely debated.
DHCPF's executive director explains: "People took for granted that there was a lot of fluff in the system which could be used to cover the uninsured. The states have done very little direct work for the indigent, but there is a lot of indirect support. As indirect support gets squeezed, the direct funding is so small we will have a lot of tough decisions on our hands." He anticipates that maintaining the safety net will be very costly and adds, "The nature of the universal coverage debate will change dramatically if the safety net collapses."
While managed care is an accepted part of Colorado's health care system, state officials still face tough challenges in quality assessment and oversight and expansion of access to coverage.
Additional Resources
- Department of Health Care Policy and Financing
www.chcpf.state.co.us- Department of Public Health and the Environment
www.cdphe.state.co.us- Department of Regulatory Agencies, Division of Insurance
www.dora.state.co.us/insurance
(Last updated September 2, 1999)
Connecticut
What Is Connecticut Overseeing?
There are 15 licensed HMOs in Connecticut as well as a Blue Cross plan that operates an HMO as a line of business; these have enrolled 27 percent of the insured population. The state has been a pioneer in insurance reform. In 1990 the legislature enacted guaranteed issue, mandatory reissue, and portability of coverage, and limited exclusions for preexisting conditions for all groups of fewer than 25 members. In 1994 the Joint Standing Public Health Committee outlined a general road map for expanding access to coverage and established the Office of Health Care Access to develop a plan in cooperation with the Department of Public Health (DPH). The plan aimed to ensure coverage of all state residents in a certified health plan by January 1997. However, this mandate was repealed in 1995.
Also in 1994, at the recommendation of the Human Services Committee and then-Governor Weicker, the legislature extended Medicaid coverage to all children between the ages of one and eleven whose family incomes were less than 185 percent of the federal poverty level (FPL); coverage was to have been expanded progressively to include all income-eligible children under the age of 19 by October 2002. However, in October 1997, the state enacted its HUSKY (Health insurance for UninSured Kids and Youth); under Part A (Medicaid) of HUSKY, coverage was extended to that group effective January 1, 1998.
Under an approved 1915(b) waiver, Connecticut's Department of Social Services (DSS) enrolled 250,000 clients in a managed care program by January 1997. The legislature has appointed the Medicaid Managed Care Advisory Council to advise the department on the implementation of the 1915 waiver.
Who Is Overseeing?
The Connecticut Insurance Department (ID) is the sole licensing and oversight agency for HMOs serving the commercial market. The department oversees solvency; monitors market practices and network adequacy; reviews grievance and quality assurance procedures; and tracks consumer complaints. ID is not empowered to override health plan decisions about treatment choices or grievance resolutions.
The Connecticut Department of Public Health (DPH) has no oversight responsibilities for managed care.
The Connecticut Department of Social Services (DSS) manages the state's Medicaid program. It is implementing a prepaid managed care program for the state's Aid to Families with Dependent Children (AFDC) recipients and related groups, under a 1915(b) waiver. DSS contracts, through provider agreements, with all kinds of health care providers for the purpose of delivering services to its clients under fee for service. For managed care, DSS contracts with licensed HMOs and managed care organizations (MCOs) sponsored by federally qualified health centers and hospitals (FQHCs). In August 1999, the department had contracts with four HMOs and one MCO that is sponsored by FQHCs.
The Office of Health Care Access (OHCA) was established in 1994 to develop a plan for universal coverage, since tabled; OHCA is now responsible for health data collection.
Although the Connecticut State Legislature (senate and house) is part-time, it has been very active in health care reform in the 1990s. The first small-group insurance reforms were passed in 1990 and expanded in 1993 and 1995. Lawmakers have also established a series of health care commissions and task forces and have acted on several of the recommendations submitted by these bodies. During the 1997 legislative session, a managed care reform act was promulgated. It requires the ID to issue a consumer report; to file quality assurance statistics, provider contracts, and financial arrangements; creates an external review procedure for denial of services; and establishes parity in insurance coverage for biologically based mental health disorders.
How Are They Doing?
Solvency Oversight of the Private Market
Solvency oversight has not been a major issue in Connecticut. Two HMOs went bankrupt in the late 1970s and early 1980s, but none have become insolvent in the last 10 years. ID oversight focuses on the assumption of risk. Any entity that accepts capitated payments directly from employers or enrollees is treated and regulated as an HMO and must maintain $1 million in capital and reserves. As a result of legislation passed in 1997, $3 million is required for point-of-service products; most filing requirements began as of May 1, 1998. ID is under strong contracting disclosure legislation, which requires HMOs to provide information about their contracting relationships and incentive systems with providers. However, a key legislator notes that ID has yet to do anything about implementing their legislative mandate. "They are said to be in the process of doing it soon," she notes.
Quality Oversight of the Private Market
In 1996, the Connecticut legislature considered and rejected a major managed care reform proposal that would have granted responsibility for quality oversight to DPH, eliminated contract "gag" rules, and required HMOs to obtain accreditation from the National Committee for Quality Assurance (NCQA) or a like organization. The bill was an "attempt to reach some consensus about the level of concern" surrounding managed care, explains the vice chair of Connecticut's Senate Public Health Committee, who thinks that "the market is not mature enough to reach consensus." The majority of complaints behind the proposed bill were from "providers who are being frozen out of networks," according to a principal examiner for ID. The chief for DPH's office of policy planning and evaluation, which would have the authority for quality oversight under the proposed legislation, agreed that provider complaints were the major impetus, but added: "We need some protection for providers to make sure they can help patients."
The 1997 managed care reform act prohibits "gag" clauses and requires provider input before materially changing medical protocols; in addition, provider profit development must make allowance for patient mix and severity of illness under the Insurance Commission's control.
Apart from provider complaints, the bill's supporters offered little evidence to substantiate their concerns over HMO quality, and opponents, particularly employers, objected that increased regulation would raise costs. "Affordability is a big issue here. The more regulation the higher the premiums will go," says ID's examiner, while "capitation is more of a perception problem than a reality." The examiner reports that the department has received no capitation-related complaints. Opponents were also concerned that, given Connecticut's reputation as an insurance industry state, the bill would send the rest of the nation a strong negative message about managed care. In the end, explains the vice chair: "I didn't feel that those who want increased regulation had demonstrated concrete problems that would justify the level of regulation."
Medicaid Oversight
Connecticut's capitation program for Medicaid clients is built around the use of purchasing strategies rather than regulation to improve managed care performance. "The regulatory process is very lengthy. One thing we don't want to do is tie up managed care plans so they can't have any creativity," states the medical policy director for DSS. To ensure performance, he adds: "It is essential to think out what you want in advance and have a contract enforcement system."
The legislature has raised several concerns about the Medicaid managed care program, including questions about health plan marketing and practices payment rates. "There wasn't sufficient baseline data to set rates to cover costs. The rates for behavioral health have been phenomenally low," says the Public Health Committee's vice chair. Another problem arose as managed care plans contracted with hospitals and fewer Medicaid patients used FQHCs, causing anxiety over the future of the health centers. The director acknowledged the problems but responded that DSS has taken steps to deal with them. The department has imposed temporary enrollment freezes on some plans with inadequate provider networks and has contracted directly with those hospitals and FQHCs that meet DSS solvency and network standards. The department also contracts with licensed HMOs and an MCO that meet the network adequacy standards required of all Medicaid health plans and the department's solvency standards. The MCO is sponsored by the state's FQHCs.
The vice chair agrees that "problems are working themselves out" as DSS gains more experience with managed care. Legislators realize the difficulty of attempting to manage the details of implementation. "It is very hard . . . to dictate by statute," admits the vice chair. Asking the Health Care Financing Administration (HCFA) to review the capitation rates is not feasible, for example, because HCFA will meet formally only with the executive branch. The legislature has dealt with oversight by appointing advisory commissions to monitor implementation.
Coordinating Oversight
The Medicaid Managed Care Advisory Council includes representatives of the Department of Public Health; the Department of Children and Families (the child welfare agency); the Department of Mental Health and Addiction Services (the mental health and substance abuse agency); the Office of the State Comptroller, an independently elected official who contracts with health plans on behalf of state employees and retirees; the Department of Insurance; the Department of Social Services; and the Office of Policy and Management, which is the governor's statewide planning and budgeting agency. There have been no joint purchasing efforts to date. But in the 1996 legislative session, the legislature voted to allow any municipality to use the state's purchasing clout and be part of the state's HMO health plans. The ID has sole responsibility for the private market, and Connecticut's insurance industry is opposed to any sharing or diminution of that authority, according to PHD's chief of policy planning and evaluation. Medicaid conducts solvency oversight for its own contractors. PHD has been interested in participating in data collection for HMO performance evaluation, but the Health Care Access Commission retains sole responsibility.
In 1997 the Connecticut General Assembly adopted legislation for "quality" oversight of managed care organizations. Public Act (PA) 97-99 placed this oversight with the Insurance Department, but there are several areas where input from the Department of Public Health is required, including the development of regulations governing utilization review companies; regulations governing external appeals to the commissioner of insurance (after an adverse determination by managed care companies and utilization review companies concerning admissions or lengths of stay); and a report card comparing managed care organizations. Additionally, the Department of Public Health is allowed to request and receive HEDIS data collected by the Insurance Department from managed care organizations.
What Is Next for Oversight?
All the respondents agree that Connecticut's debate about HMO quality oversight is not over. Many consumer groups are anxious about the increased market penetration of HMOs. DPH's chief reports complaints from elderly residents, who are worried about "bait and switch" tactics by HMOs. Legislative discussions about mandating NCQA or similar accreditation and granting increased oversight authority to DPH will continue. In 1998 the legislature planned to debate solvency and quality oversight of Provider Service Organizations (PSOs). These entities do not currently fall under the authority of PA 97-99. Additionally, the viability of safety-net providers is also of issue and is being investigated by the Legislature's Medicaid Managed Care Council.
DSS's medical policy director describes the Medicaid program agenda as "ambitious." The state had hoped to have approval of its 1115 waiver and to move dual eligibles, elderly, and disabled clients, into managed care by July 1997, but this project is on indefinite hold. The policy director believes that the federal government should give states more discretion in designing their Medicaid managed care models. "There is a need in this country to get away from the Medicaid model," he argues. "How many waivers are necessary to prove the point that there is a better way than fee-for-service to serve this population? It is better for the states to learn more about how to build a program [than to apply for multiple waivers]." Connecticut officials are committed to find ways to address issues of quality and access within the constraints of their state.
Additional Resources
- Department of Insurance
www.state.ct.us/cid- Department of Public Health
www.state.ct.us/dph- Department of Social Services
www.dss.state.ct.us- Office of Health Care Access
www.state.ct.us/ohca
(Last updated August 23, 1999)
Delaware
What Is Delaware Overseeing?
Although Delaware has six Managed Care Organizations (MCOs) with an enrollment share of 20 percent of the insured population, a Department of Insurance analyst estimated that firms self-insured under ERISA control more than 70 percent of the market. The state's HMO law dates back to 1983.
Delaware operates a Medicaid managed care program. This program, the Diamond State Health Plan, is an 1115 waiver that is statewide and mandatory for all of the eligible population. The Diamond State Health Plan was approved by the Health Care Financing Administration (HCFA) in May 1995 and implemented in January 1996. The plan covers all Medicaid-eligible persons who are not in the Medicare program or in the state's Home- and Community-based waiver programs. It also expands Medicaid coverage for more than 13,000 previously uninsured adults at or below 100 percent of the federal poverty level. Three MCOs provide coverage; as of March 1998, enrollment was more than 64,000.
Who Is Overseeing?
The Diamond State Health Plan was the result of recommendations from the Delaware Health Care Commission (DHCC) in 1994. The DHCC is the key agency in setting the state's health policy agenda. The major objectives of the DHCC are cost containment, primary care access, increased health care coverage, state health data collection and evaluation of existing programs.
The commissioner of the Delaware Department of Insurance (DOI) is an elected position. Under the 1987 HMO Act, the DOI regulates HMO solvency but has no jurisdiction over preferred provider organizations (PPOs) and physician health organizations (PHOs).
The Delaware Department of Health and Social Services (DHSS) houses the state Medicaid office within the Division of Social Services. In January 1996, Medicaid implemented the Diamond State Health Plan (DSHP). The Medicaid office also houses the Medicaid Surveillance and Review unit, which provides quality oversight for the DSHP. The state also contracts with an external quality review organization (EQRO) to provide external quality review. The program is also evaluated by a HCFA-contracted independent evaluator.
The Division of Public Health (DPH), also within DHSS, delivers public health services; traditionally it has included services directed to the indigent population. DPH contracts with managed care organizations and works closely with hospitals, community health centers, and others to ensure quality medical care.
The Delaware State Legislature (general assembly) passed an insurance reform package in 1992 and approved the Nemours CHILD plan. In 1995 lawmakers approved the plan for the state's 1115 waiver request (the Diamond State Health Plan). The Nemours CHILD plan providers became MCO-contracting providers under the 1115 waiver.
How Are They Doing?
Solvency Oversight of the Private Market
In 1997 the Delaware Legislature passed HR 94. This resolution led to the revision of the state's regulations for the private MCO market. The redraft of the private market regulations are well underway and were to have been completed in mid-1998. HB 366 also revised some oversight for the private MCO market. Seventy percent of the insured population remains ERISA exempt.
Quality Oversight of the Private Market
There continues to be little formal oversight of the care quality for the private market. This, too, will be addressed by the changes that occur from HR 94. Complaints in this area seem to be around misunderstandings of how managed care programs work and, more recently, slow claims payment. DOI staff counsel members on how to obtain authorizations for services.
Medicaid Oversight
DHCC recommended Delaware's move into managed care to address three problems: lack of access to care for Medicaid members, increased Medicaid costs, and a large uninsured population. Implementation and operation of the Diamond State Health Plan lies with the Medicaid office in DHSS. The legislature retains budgetary authority.
The chief administrator for the Diamond State Health Plan states that implementation went well and the plan has been operational for more than two years. The state has been able to expand the number of providers available to Medicaid members by requiring that the MCO providers open their panels to all members, private and Medicaid. In early 1998 the Medicaid office reported more than 13,000 additional members as a result of this requirement. These members were a previously uninsured population.
The Medicaid office meets monthly with the MCO, the MCO provider, and client service staff and MCO case managers. At these meetings other state agency staff, advocates, and providers voice their concerns and address challenges. In April 1996 the state, the MCOs, and the enrollment broker began to meet monthly with a group of parents of children with disabilities to help address issues with this special population as they occurred. The state has been proactive rather reactive with this population.
The state and the MCOs continue to work with the community providers as they move forward with managed care. MCOs are not required to contract with all community providers; the chief administrator explains that the best way to improved access is through these providers. The state strongly encourages contracts with the community providers, in particular the state federally qualified health centers (FQHCs).
Coordinating Oversight
In the beginning of the program DPH was very concerned about quality oversight. However, DPH now has contracts with all three MCOs and are part of the state's EQRO oversight initiative. There has been some staff turnover at DPH, and Medicaid, the MCOs, and DPH are working closely together. The Medicaid office and the MCOs also work closely with the Division of Child Mental Health, the Division of Alcohol, Drug Abuse and Mental Health (the adult mental health agency), and the Department of Education. The Division of Child Mental Health was recently accredited as a behavioral health managed care organization by the Joint Commission on the Accreditation of Healthcare Organizations (JCAHO).
What Is Next for Oversight?
As noted above, the state is in the process of increasing the oversight for the private managed care market. The secretary of health and social services recently changed and the relationship between the department and the Department of Insurance is moving the new regulations forward.
Providers are increasingly vocal about the impact of managed care on their practices and the state will probably see some proposed legislation in this area.
Medicaid's deputy director feels "the program has come a long way and we have addressed many of the issues that arose in the very beginning of the program." The office is in the process of a Long Term Care Managed Care proposal and will be the responsible office for the implementation of the state's Title XXI program for children.
The Medicaid office will continue to work with the EQRO and the state utilization review unit to provide oversight for all three programs as they move forward.
Issues related to oversight of the private managed care market were expected to be addressed in mid- to late 1998.
Additional Resources
- Department of Insurance
www.state.de.us/inscom- Department of Health and Social Services
www.state.de.us/dhss/irm/dhss.htm- Delaware Health Care Commission
www.state.de.us/dhcc
(Last updated March 25, 1998)
Florida
What Is Florida Overseeing?
Florida has 34 HMOs, which enroll 36 percent of the state's insured population. Fourteen Medicaid HMOs enroll 380,000 clients. The state's Medicaid Primary Care Case Management System (PCCM)––known as Medi––Passenrolls an additional 520,000 Medicaid recipients. Florida is no longer attempting to implement universal coverage by a fixed deadline. But, as in other states, government officials are working on incremental expansions of coverage, consumer information and on improving care for some of the most serious diseases, such as AIDS, diabetes, and asthma.
In the period from 1992 to 1995, the Agency for Health Care Administration (AHCA), and the Community Health Purchasing Alliances (CHPAs) were created and the Florida Health Security Plan was submitted to the state legislature. Between 1992 and 1996 the old super agency, the Department of Health and Rehabilitative Services (HRSO), was dismantled, with its functions transferred primarily to two new departments––the Department of Health and the Department of Children and Family Services––but also to the Agency for Health Care Administration, the Department of Elder Affairs, the Department of Juvenile Justice, and the Department of Revenue.
Based on the managed competition concept, the Florida Health Security Plan called for using managed care savings to the Medicaid program to fund subsidized enrollment in the CHPAs for families with income less than 250 percent of the federal poverty level. This key component was not approved by the legislature. However, the CHPAs are successful in the small business health insurance market, enrolling about 85,000 persons in managed care plans as of March 1998.
The Florida Healthy Kids program is a nationally recognized innovator of school based health insurance. Healthy Kids contracts with HMOs to provide school children with a carefully tailored package of benefits. The program, which is voluntary on the part of the parents, has expanded to cover 42,000 children from 16 counties. With funding from the federal-state Children's Health Insurance Program (CHIP), Healthy Kids is expected to cover 194,000 children throughout the state in the year 2000. Current plans also call for expanding the number of children in Medicaid, the great majority of whom will be enrolled in managed care.
AHCA is implementing four Medicaid demonstration projects where PSOs (officially known as provider service networks) will provide comprehensive care to Medicaid recipients at discounted rates.
Who Is Overseeing?
The Florida Department of Insurance (DOI) shares oversight and licensing responsibility for commercial HMOs with AHCA. DOI oversees HMO solvency, investigates the background of HMO owners and executives, monitors market practices, and tracks non-quality-related complaints.
Florida Healthy Kids is a nonprofit corporation sponsored by the state, with the commissioner of insurance serving as chairman of the board.
The HMO Consumer Assistance Plan (CAP) is a board affiliated with the insurance industry that is organized by DOI. It arranges for health insurance for members of HMOs declared insolvent by the department. The CAP was invoked for the first time ever in 1997.
The Agency for Health Care Administration (AHCA) manages Florida's Medicaid program, oversees the quality aspects of all commercial and Medicare HMOs. For all HMOs, AHCA evaluates plan networks and quality assurance procedures. Through the Statewide Provider and Subscriber Assistance (SPSA) panel, the agency processes and resolves consumer complaints of HMO denial of coverage for medically necessary care. AHCA also handles state licensure and/or federal certification for more than 35 types of health care services and facilities, as well as the investigation and prosecution activities related to the discipline of health care professionals.
The recently created Department of Health (DOH), has primary responsibility for public health services, programs for children with special health care needs, and the state's health professional licensing boards.
Florida's Legislature (senate and house) passed an omnibus managed care regulation bill in 1996. This law included provisions tightening the oversight of Medicaid HMOs, regulating the ownership and management of all HMOs and requiring coverage of emergency room treatment under certain conditions.
In 1997 legislation was enacted to outlaw "gag" clauses and mandate that HMOs have internal grievance procedures to address complaints of denial of care (if the internal process is unsatisfactory to the consumer, they can appeal to the state-run SPSA). A state-run survey of HMO enrollees was authorized. Several other pieces of HMO related legislation were enacted in 1996 and 1997 and more were under consideration for the 1998 legislative session.
How Are They Doing?
Solvency Oversight of the Private Market
Currently, any entity that contracts directly with employers or enrollees on a prepaid basis is regulated by DOI. Medicaid demonstration PSOs, which primarily contract with AHCA, are not currently regulated by DOI. Provider networks accepting capitation from HMOs are not regulated either.
DOI's goal at the time of licensure is to establish that a plan has the capability to remain solvent. Department staff check the plan's capital reserves and the backgrounds of the chief officers and owners. After licensure, DOI continuously monitors financial statements, conducts on-site examinations and tracks each plan's loss ratio while looking for "early warning signs" of financial trouble.
Quality Oversight of the Private Market
AHCA certifies HMOs as health care providers. Before issuing the certificate, AHCA requires all plans to submit HEDIS and EPSDT data, and it evaluates plan networks for quality. Florida was the first state to require plans to seek accreditation from a nationally recognized organization. One expert asserted that current measures are sufficient for the private market: "The commercial market kind of regulates itself through competition. They must supply a low price and good quality or the employer will move to another plan."
AHCA has published the 1996 Guide to Hospitals in Florida, the 1997 Report on Physician Discipline and Malpractice, regional nursing home guides with quarterly updates, and in 1998, a statewide HMO consumer satisfaction survey. An expanded update of this survey is planned for publication in 2000. In 1999, the Department of Health published an internet-based physician profiling system for the state's licensed physicians.
Medicaid Oversight
Florida's Medicaid HMO program has undergone several rounds of reform. After being exempt in the early 1990s, Medicaid HMOs were required in 1995 to obtain HMO licenses. Door-to-door sales and other inappropriate marketing methods were prohibited in 1996. Perhaps most significant, two of the most negligent HMOs lost their Medicaid contracts and went out of business.
The state's Medicaid PCCM program, MediPass, gained hundreds of thousands of enrollees when restrictions were imposed on HMOs. MediPass currently enrolls approximately 500,000 recipients, while Medicaid HMOs enroll a total of about 380,000 persons. The MediPass program says physicians and other providers $3 per month for each recipient for whom they provide case management services. Medical services are still reimbursed on a fee for service basis but the program seems to be effective in eliminating abuses.
Coordinating Oversight
While several different agencies are involved in managed care oversight, the division of responsibilities is clear and manageable. DOI and AHCA staff meet once a month to review current issues and coordinate efforts. Substantial informal contact between AHCA, DOI, and DOH staff is sufficient to resolve minor problems. Departmental and agency employees are in regular contact with state legislators and their staffs, especially the chairs and other members of the senate and house committees that address health care and finance.
What Is Next for Oversight?
