The Malloy administration announced plans Tuesday to move the HUSKY and Charter Oak health programs out of managed care and increase care coordination in the state's other Medicaid programs, an effort officials said would save money while giving the state more control over health programs that serve more than 500,000 people.
The administration also plans to expand the Money Follows the Person program, which is aimed at getting seniors and adults with disabilities out of institutions and enabling them to live at home or in community-based housing. Under the plan, the program could serve as many as 5,200 people by 2016--nearly a quarter of the people currently receiving Medicaid coverage for nursing home care.
Lieutenant Governor Nancy Wyman and budget director Benjamin Barnes said the changes could save "tens of millions" of dollars a year in the $4 billion Medicaid program and would best position the state for the implementation of federal health care reform.
"We will be able to get more funding from the federal government and deliver a better service and save money for the people in the state," Wyman said during a press conference.
The plans delighted patient advocates who have long been critical of using managed care to administer the HUSKY program, which serves more than 400,000 mostly low-income children and their parents.
"This is huge, and we could save a lot of money," said Ellen Andrews, executive director of the Connecticut Health Policy Project and a member of the Medicaid oversight council. "This has all been tried in other states. It's working in other states."
In the current system, the state pays three managed care companies set fees for each HUSKY and Charter Oak member every month, and the companies use the money to pay medical claims. Critics say it gives the managed care companies an incentive to deny care since they get to keep the money not spent on medical costs.
Under the plan announced Tuesday, HUSKY and Charter Oak will be moved into a self-insured system in which the state, rather than the managed care companies, pays medical claims. The state would pay one or more companies, known as administrative service organizations, a smaller fee to administer the programs.
Barnes noted that the state currently pays managed care companies to assume the financial risk for medical claims, even though the risk is not significant because of how large the insurance pool is.
"We're no longer going to pay somebody to take on risk which we think we can absorb ourselves at no cost," he said.
Although the company administering the programs in the new model would not have a direct financial incentive to contain costs, Barnes said the state's request for proposals--expected to be issued next month--will call for significant care management, which would likely save money. The administration is also looking into providing incentive payments if the administrative service organization hits savings and patient wellness targets.
Barnes said the new model will also make the state better able implement delivery system changes such as medical homes, which are aimed at better coordinating patient care. The state expects to aggressively expand the use of medical homes, he said, including through the primary care case management program.
Care coordination will also apply to two Medicaid-covered groups that have not had it in the past. More than 60,000 people are covered by a program for aged, blind and disabled residents, and close to 59,000 people are covered by a new Medicaid program for low-income adults. Both are now paid for on a fee-for-service basis, and that will not change. But Barnes said they will gain access to care coordination. Examples of the coordination they would get include care management and call centers that could help with referrals, appointment scheduling and transportation.
This is not the first call to change the way state Medicaid programs are administered. Former Gov. M. Jodi Rell proposed moving HUSKY out of managed care in her last budget, and legislators passed a law authorizing, but not requiring, the state Department of Social Services to do so. The department has not, and department leaders have raised concerns about the proposed model.
The Malloy administration does not need legislative approval to move forward with the changes, Barnes said. The new system is expected to begin Jan. 1, 2012.
Aetna, one of the three HUSKY managed care companies, issued a statement expressing interest in the details of the request for proposals. "Until we see those details, it is difficult to say for sure, but we would anticipate responding to it. In the meantime, we remain dedicated to serving the needs of the 105,000 people served by Aetna Better Health in the HUSKY A & B and Charter Oak programs," the statement said.
A second managed care organization, United Healthcare's AmeriChoice, issued a written statement indicating the company and the state "share the common goal of ensuring that members continue to have access to quality health care services and benefits. We are eager to discuss with the state their proposed changes to the administration of health care services for the Connecticut Medicaid programs."
Under another change announced Tuesday, children would be presumed eligible for the HUSKY B program--which covers children whose family incomes are too high for Medicaid--based on the family's declaration of income, allowing children to be covered sooner. The federal government has been promoting the concept, and the state is expected to receive between $1 million and $4 million in federal bonus funds, which Barnes said would exceed any potential cost of the change.
More Home Care
The plan to expand alternatives to nursing home care could garner strong support in the legislature, where increasing numbers of lawmakers from both parties, as well as Connecticut's business community, have called for tighter controls on an expense that is expected to grow dramatically in the coming decades.
A coalition of business and economic development groups issued a report last March projecting that the state will face nearly $3.4 billion in increased annual costs for long-term care between now and 2025. But if the state could have 75 percent of Medicaid long-term care delivered in non-institutional settings--a dramatic shift--it could knock more than $900 million of the costs each year, the report projected.
Roughly 40,000 patients received long-term care coverage through Medicaid last year. Less than half--about 18,700--received care in nursing homes, but the cost of their care accounted for $1.2 billion, or 30 percent of the state's overall Medicaid budget.
And the over-65 population of the state is set to jump by 40 percent over the next decade-and-a-half.
The Malloy administration's goal of moving 5,200 people out of nursing homes by 2016 likely would push Connecticut's share of long-term care patients outside of nursing homes beyond the 60 percent mark.
The Connecticut Association of Health Care Facilities, the state's largest nursing home coalition, pledged to work with the Malloy administration, but warned against undervaluing the role they play.
"Aggressive rebalancing under these circumstances if not done correctly may jeopardize quality health care for seniors," said Matthew V. Barrett, the association's executive vice president. "Certainly a strong and vibrant nursing home options will remain critically important in the continuum of long term in the future. We are very much talking about different level of care needs--home care is intermittent care, whereas nursing homes provide 24/7 personal and nursing care."
Connecticut should also be fully exploring new federal options to assist nursing homes, Barrett added, including the so-called "bed buy-back" programs that provide financial incentives for homes to limit the supply of beds.
Connecticut's nursing home industry is suing state government, charging that it has under-funded long-term care in violation of federal Medicaid standards.
State government hasn't increased general rates for nursing homes since 2007, and the current budget made to changes that cost homes $166 million this fiscal year: the cancellation of a scheduled rate adjustment and an accounting maneuver designed to push a portion of the June monthly rate payment into 2011-12.
Barnes said the state is working with the federal government to ease the transition for the nursing home industry. Wyman spoke of helping nursing homes become rehabilitation centers, which could help people move from hospitals to their homes.
AARP State Director Brenda Kelley praised Malloy for expanding Money Follows the Person, and said the state has lagged behind the rest of the country on shifting long-term care dollars to non-institutional care.
"The Governor's announcement today begins to change that," Kelley, a member of the state's Long-Term Care Advisory Council and the Money Follows the Person Steering Committee, said in a statement. "His proposal not only recognizes and reinforces the success of the Money Follows the Person, but lays out a bold vision that over time will save the state money, while providing thousands of older residents with what they want - the ability to live independently in their homes and communities as they age."