Why Are HMOs Afraid Of Full and Fair Disclosure?

The question is: Does a state regulatory authority have the right to ask for specific administrative information from the HMO industry that they are paying “$750 million taxpayer dollars annually too”? You bet your sweet whatever they do. These are taxpayer dollars and the state government has a regulatory responsibility to make absolutely sure that these dollars are being expended appropriately. Do HMOs think that they are exempt from the laws?

http://online.wsj.com/article/SB121063944236086957.html

HMO Pullouts Upend Connecticut Medicaid

By JANE ZHANG

May 13, 2008; Page A4
NEW HAVEN, Conn. — What started as a legal-aid lawyer’s effort to improve health care for poor people has left Connecticut’s Medicaid program in turmoil, jeopardizing health care for thousands of poor residents.

The dispute began in late 2004 when Sheldon Toubman, a staff attorney at the New Haven Legal Assistance Association, filed a request under Connecticut’s freedom of information law to get health-maintenance organizations to disclose how often the HMOs’ computers rejected pharmacy requests to fill Medicaid enrollees’ prescriptions. His request came on the heels of one by Yale assistant clinical professor Kari Hartwig, who sought to get physician reimbursement records from managed-care companies.

Three years later, the governor demanded more accountability, essentially treating them as a public agency. When two companies refused to follow the order, the state program, known as Husky, stripped all four companies of duties such as setting provider rates. Last month, two HMOs pulled out and a third is scheduled to leave on July 1.

The state plans to sign new contracts by July 1 with three providers who pledged to abide by the public-disclosure requirement. But two providers have no existing Husky networks of doctors, hospitals and other health-care providers. A legislative effort to stop new contracts until the state had studied whether HMOs were the best way to provide Husky health care died when the state legislature adjourned last week.

As budget-squeezed states try to rein in costs and improve health care for those enrolled in the state-federal health-care program for the poor, many are targeting waste, fraud and management shortcomings of the private insurers that manage Medicaid programs. And in an effort to improve care for enrollees, some are also demanding greater public disclosure, using “secret shoppers” to test services and increasing fines.

In Connecticut, Mr. Toubman’s petition won him allies in the state legislature’s Democratic majority and in Attorney General Richard Blumenthal, also a Democrat. Gov. Jodi Rell, a Republican, saw an opportunity to underscore the need for tougher state contracting standards, and in November 2007 announced she would terminate contracts with HMOs that refused to comply with demands for greater disclosure.

Two contractors, Anthem Health Plans Inc. and Health Net of Connecticut are challenging the public-disclosure requirement before the Connecticut Supreme Court. A third, the nonprofit Community Health Network of Connecticut, dropped out of the lawsuit. A fourth, WellCare Health Plans Inc., agreed to comply with the disclosure demands but later withdrew from Husky.

By Jan. 1, the state government had taken over most of the Husky program’s management from all four companies. By February, it had taken over managing the pharmacy benefits, too. The four companies assumed administrative duties, but this past April 1, two dropped out completely, forcing 120,000 Medicaid enrollees to transfer to other companies or to traditional fee-for-service Medicaid. For some, it meant delays in care, unfamiliar doctors or using facilities that were far away.

On July 1, the third managed-care company will start leaving the Connecticut program, and by the end of the year, some 226,000 Husky enrollees will be reassigned — some for the second time.

In Waterbury, Heather Greene, a 33-year-old mother of two, says it took her family two weeks last month to complete the transition. She will face similar hurdles again this summer. “This is just crazy, and I am very, very worried about it,” says Ms. Greene. “Stop bouncing us like a yo-yo or bouncing ball.”

Mr. Toubman, a University of Pennsylvania Law School graduate, calls his opponents “overpaid, fancy-suited lawyers” who profit at the expense of poor patients. He says he couldn’t have predicted the outcome, but adds, “I did realize that there was tremendous resistance to public accountability.”

Keith Stover, spokesman for the Connecticut Association of Health Plans, says the companies “made every effort to come up with a reasonable and rational compromise.” But their main concern remained: Such public disclosure on their Medicaid contracts could put proprietary information on the commercial side of their business — and subcontractors’ businesses — at risk, he says.

The big question, Mr. Toubman says, is whether managed-care companies offer the best solution to delivering care to Medicaid enrollees. “We’ve imposed major changes on this vulnerable population over a short period of time already,” he says, calling for “careful review of all the different models of delivery” before deciding what to do.

Mr. Toubman and others who believe the solution lies in giving physicians, not insurers, the power to manage patient care have been working with Gov. Rell’s administration on a pilot program to start Oct. 1.

Connecticut isn’t alone in cracking down on the private insurers that manage Medicaid services. Some states, such as New York, have enacted antifraud laws. Some are requiring quality reviews and increased fines, and some turned to secret shoppers to gauge their marketing tactics. The steps, which can help states save millions of dollars, could accelerate as the weak economy squeezes state budgets and boosts enrollment in Medicaid programs.

Connecticut’s Husky program provides health care to children, families and pregnant women. In 2007, the state paid managed-care companies more than $750 million for 334,000 Husky enrollees, mostly children under 19 years old.

Mr. Toubman has been fighting Medicaid managed care since Connecticut first adopted it in 1995. He has filed numerous appeals, mostly successful, for clients — typically single parents with chronic illnesses — to get medications and other care that managed care providers denied.

His opponents say he has created a huge problem. “While we do respect Mr. Toubman’s determination, we think this is a wrong issue to chase to solve the problem,” says David Olson, senior vice president at Health Net, which had 85,000 Medicaid enrollees in the state. “He didn’t want the private sector involved in Medicaid. Frankly, he’s achieved his goal.”

Write to Jane Zhang at Jane.Zhang@wsj.com