A new health plan

Louisiana is trying a different approach to health care for Medicaid recipients: privatization.

In 2008, The Pediatric Clinic on Tara Boulevard opened a 5,000-square foot satellite location, Old Hammond Pediatrics, specifically to accommodate Medicaid patients. Clinic administrator Whitney Hilbun says there was a need for more pediatricians willing to accept patients covered by the state-operated, mostly federally funded insurance program for the poor.

“We finally jumped in,” she says. But as the business makes loan payments on that new office, she's now wondering: “What did we jump into?”

Louisiana is embarking on a fundamental shift in how it handles the care of about two-thirds of the state's 1.2 million Medicaid recipients, mostly women and children. Essentially, the state is outsourcing the managed care of those patients to five private insurers.

Officials say privatization will lead to better care and save the state money. Critics worry the insurers will be more concerned about profits than patients. And providers are wondering if the problems that have cropped up so far are simply growing pains, or indications that the entire program hasn't been very well thought out.

Bayou Health, as the program is known, was slated to roll out in Baton Rouge April 1. But about 15% of Old Hammond Pediatrics' patients come from the region that includes Livingston Parish, which went live Feb. 1. So Hilbun got an early preview of the program.

Of her clinic's affected patients, Hilbun says about 20% did not choose the private plan that included the clinic and were auto-assigned incorrectly. She says some patients have been told the clinic is part of a network that it's not actually in. And she knows some mothers will be upset when they discover their preferred pediatrician isn't in the same network as their preferred OB/GYN.

“The problem the state forgets is we're all having to respond to the patient face-to-face, not them,” Hilbun says.

“We told them before it started it wasn't ready to go live,” says Dr. Floyd Buras, a Metairie pediatrician whose practice largely depends on Medicaid. The New Orleans area is in the same implementation region as Livingston.

The computers for two of the five insurers—known as coordinated care networks, or CCNs­—wouldn't talk to the computers used by the contractor that's cutting the checks. Buras says his practice hasn't been paid since Feb. 1, and he says he cashed out a life insurance policy to pay his bills.

The Department of Health & Hospitals cut $1.2 million in new checks to compensate people like Buras. At press time, DHH Secretary Bruce Greenstein was insisting that full implementation would go on as scheduled, despite urging from some providers and legislators to slow down while the kinks are being worked out. Some providers say both physicians and patients have had difficulty navigating the new system, although DHH has been holding daily conference calls to answer questions and concerns.

“They just threw this out without ever testing the systems they were putting in place,” Buras says. “The lack of payment is just a symptom of a flawed system.”

Greenstein says payment issues with two of the plans appear to have been resolved. Three of the plans have been turning around payments in four to six days, faster than the Medicaid program ever has, and he disputes the claim that Bayou Health is being implemented haphazardly.

“We're doing it in a very deliberate, stepwise fashion,” Greenstein says.

At the same time, the state's poor health outcomes dictate that reform can't wait, he says. Medicaid pays for over 70% of all births in Louisiana, and Greenstein says the state ranks second worst in the nation for infant mortality, to pick only one of any number of sobering statistics.

Part of the problem is that health care in Louisiana is mostly reactionary and relies too much on hospitals and emergency rooms. The CCNs are supposed to make up-front investments in wellness and primary care, hopefully leading to better outcomes, savings for the state, and profit for the companies.

Three of the CCNs operate under a prepaid system, whereby the state pays a monthly fee for each enrollee and the companies handle both authorization and claims payments, and manage the care of each member within the provider network. The other two work on a “shared savings” model, whereby the plans handle authorization, the state processes claims, and providers theoretically will be able to share in the money saved by coordinating care.

According to the Public Affairs Research Council, privatized managed care has received mixed reviews. Some states have saved money and improved outcomes, while others have wrestled with fraud and demands by the companies for higher payment rates. Some states have tried a model similar to Louisiana's, only to bring care management back under government control.

Greenstein says DHH studied 28 states and learned what to do, and what not to do.

“We have the tools necessary to make sure we're getting our money's worth,” Greenstein says. “We basically used what other states told us they wished that they had had. We wrote it into our contracts and demanded it up front.”

Those tools include detailed financial reporting and a “medical loss ratio” that requires 85% of funds be dedicated to direct health care costs. A committee that includes providers and two legislative appointees will monitor performance, and members will have the opportunity to appeal claims denials.

The accountability will be far greater than the state has ever gotten from its Medicaid program in the past, Greenstein says.

He says the state will save $135.9 million next fiscal year alone. By percentage, he says, savings start at about 3% of total spending, and this amount would otherwise have to be cut from providers' reimbursements.

The fact that overall costs kept going up while Medicaid reimbursement rates for doctors kept getting slashed is proof enough that the old system was unsustainable, says Dr. Anthony Blalock, president of the Louisiana State Medical Society.

He says the concept behind Bayou Health is a move in the right direction, but the execution has been sloppy. Even as the initial problems are smoothed out, Blalock says, the negative buzz could discourage doctors from participating in the system, although DHH says Medicaid physicians do not appear to be dropping out.

Greenstein stresses that members are free to switch plans during the first 90 days, and he urges providers to sign up for all five plans to give their patients more options. He says Medicaid recipients in Hammond, for exaple, have more physicians from which to choose than under the old system.

Blalock says signing up for all five plans would be an administrative nightmare for providers, particularly for practices with small staffs. He says most doctors he's spoken with only intend to join one of the CCNs.

“We understand that something had to change,” Blalock says. “Is this a better system? That remains to be seen.”

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