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Report Faults Medicaid Managed Care Plan

By Richard Perez-Peca, the New York Timesa

October 14, 2003

People are dropped from the Medicaid rolls in New York too frequently, only to re-enroll later, hindering the program's ability to cut costs and provide high-quality health care to millions of poor people, a report says.

For 12 years, the state has tried to get Medicaid recipients out of fee-for-service programs and into health maintenance organizations, a transition that officials predicted would improve care and save money. But there has been little success in either area, and the main problem is "churning," in which recipients move in and out of the Medicaid program, according to the report by the United Hospital Fund, a policy group that receives financial support from hospitals.

"Plans have reported a turnover of almost half their members over the course of a year, through involuntary disenrollment generally attributable to lost eligibility," it says. That fact, it adds, "renders financial incentives for prevention and early detection fairly meaningless."

Robert R. Hinckley, the senior health care adviser to Gov. George E. Pataki, said such conclusions were premature and at least partly inaccurate. "I think it's still early in the process to understand churning the way that we should and to be making judgments," he said. He also said moving Medicaid recipients into managed care had saved money, though he could not say how much, and had significantly improved care for people who stay in the program.

The state began concerted efforts to move Medicaid recipients into managed care plans in 1991, but the program's growth was slowed for years by legal, political and financial snags. It began to boom in late 2001, and the number of Medicaid recipients in H.M.O.'s has tripled in two years, to about 1.7 million people.

The cost of Medicaid, the biggest part of the state budget at well over $30 billion per year, continues to rise steeply, but the fastest-growing element is prescription drugs, which state lawmakers decided to leave out of the managed care program.

The region's big health insurance companies, like Oxford Health Plans, Aetna and Empire Blue Cross Blue Shield, refuse to take Medicaid recipients, having concluded that the program is a money loser for them. Insurance executives have said that the rapid turnover of enrollees has meant constant duplication of paperwork and laboratory tests. Under New York's system, Medicaid recipients are often assigned randomly to H.M.O.'s, so that someone who is dropped from the program and then re-enters it might not have the same insurer, much less the same doctor.

For patients, the report says, that turnover hampers treatment because doctors often treat patients they do not know and whose records they have never seen.

"Churning might be the single biggest obstacle to making the managed care model work for Medicaid," said Kathryn Haslanger, vice president of the United Hospital Fund and author of the report, who has written extensively on the health care system.

The report and the United Hospital Fund do not recommend a return to the fee-for-service approach, in which doctors are paid per visit rather than receiving a flat rate per patient. "It was awful, and there's no going back," said James R. Tallon Jr., president of the group. But the report and the group advocate changes in the program, starting with making it easier for people to enroll and stay enrolled.

The United Hospital Fund officials cited a host of reasons for people being dropped from the Medicaid rolls, like patients' failure to comply with paperwork requirements, local officials' continued improper enforcement, and recipients finding jobs or changing addresses without making sure that the paperwork follows them.


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