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GOP
Pushing Managed Care for Medicaid
Reform
by
Judah Ken Freed
Colorado
Republicans driving for managed health
care based on Texas model created under
Bush.
.
Colorado
Republican senators are pushing ahead with
plans to reform or dismantle state
Medicaid programs in favor of privatized
"managed care." State Democrats seem to be
playing catch-up.
On the heals of an
announcement by President Bush to change
the Medicaid model, the issue came to the
forefront at a box lunch briefing March 6
sponsored by the Colorado Association of
Commerce and Industry. The session carried
both GOP and Dem endorsements.
The former director
of the Texas Medicaid program under Gov.
George W. Bush came to Denver last week
for a noontime Thursday presentation on
why she favors a move away from Medicaid
"as we've known it" into a new system of
"managed health care."
Speaking Thursday in
the packed first Floor hearing room of the
State Capital Annex at 14th Avenue and
Sherman Street, Linda Wertz told an
audience of legislators and lobbyists
about the Texas experience, then she
defended the new national Medicaid reform
plan of her previous boss, President
Bush.
A letter encouraging
attendance at the briefing was signed by
Senate President John Andrews, House
Speaker Lola Spradley, Joint Budget
Committee Chair David Owen, and Sen. Steve
Johnson, a GOP member of the Health,
Environment, Welfare and Institutions
(HEWI) committee. Democratic Senator Bob
Hagedorn (HEWI) and Rep. Andrew Romanoff
also signed the invitation, among
others.
Now head of The
Wertz Group, a health care management
consultancy, Linda Wertz spent more than
31 years in Texas state government,
serving as state Medicaid director from
1996 until her retirement last October.
She was responsible for a biennial
Medicaid budget of $13 billion serving 2.4
million people in low-income families
along with elderly and disabled
individuals.
Wertz also served as
chair and vice-chair for the National
Association of Medicaid Directors from
1997 to 2002. From 2000 to 2002, she
co-chaired the national review team of the
Center for Health Care Strategies, funded
by the Robert Wood Johnson
Foundation.
Among her
accomplishments in Texas, she implemented
the "Star" program for managed health
care, which is the model for a managed
care pilot project that Sen. Owen said
he's planning to introduce in Colorado
later this session.
When introducing
Wertz last Thursday, Owen said that in a
former life he was French Army tank
driver. He compared today's Medicaid
system to a French tank with one speed for
driving forward and five speeds for going
in reverse, just in case of an
attack.
Replacing him at the
microphone, Wertz responded to Owen's tank
reference by saying that after her years
of service in Texas, "if I'm approached
from the rear, I know what to do. I can
move real fast."
Wertz began by
declaring her personal compassion for
those on Medicaid and decrying the lack of
understanding for their situation. "They
are not like you or me," she
said.
"Most people
associate Medicaid with welfare," she
continued, "but Medicaid mainly takes on
the burden of all those not covered by
private insurance."
Medicaid
participants in Texas break out so about a
fifth are children and a third are
mothers. Forty percent suffer long-term
illnesses, she said, such as diabetes or
TB or AIDS, including all the permanently
disabled. Perhaps a sixth use drug and
alcohol recovery services. About half
receive some form of mental health
support.
Studies confirm that
Medicaid programs are "the glue that holds
life together" for some people, she
noted.
The greatest
difficulty facing meaningful health care
reform, she observed, is educating the
people about caring for themselves, "like
getting those with mental health problems
to take their meds every day, or for
diabetics to take their insulin regularly,
or for others to change their diet to deal
with obesity."
Medicaid programs
nationwide have been hard hit lately by
the economic recession, Wertz said. States
have responded by cutting Medicaid
budgets, and by reducing reimbursement
rates to doctors while trying to cut
expenses for pharmaceuticals.
"Prioritization" is
the name of the game right now, she said,
"and that's the challenge that's keeping
state Medicaid directors awake at night.
How can their clients survive?"
Wertz reviewed
Medicaid budget and service trends in the
Seventies, Eighties and Nineties, when
"managed care" emerged. Women and children
were the first to enter managed care, she
said, because they were "the low-hanging
fruit."
Managed care
replaces the "pay-for-service" model, she
explained. Instead of unlimited spending
with the state simply paying clients'
medical bills as they come in, managed
care installs a spending cap on each
client, who then may choose for themselves
how that money is used for services from
private providers.
For managed care to
stand like a stable three-legged stool,
she said, the three legs need to be
"access, quality and costs."
"All three legs are
needed for balance."
A Texas poll on what
Medicaid recipients wanted most from any
managed care program overwhelmingly
produced one answer, she reported. "They
said they wanted to chose their own
doctors. They want that doctor to know
them and their children, so they can trust
that doctor, and so they don't have to
give their life history every time they go
in for any reason."
Managed care mostly
follows the basic models of HMO and PCP,
Wertz explained. The health maintenance
organization (HMO) is like the Kaiser
plan, where patients see diverse doctors.
The Preferred Care Physician (PCP), as in
Texas under the Star system of private
third-party care management, lets patients
pick a primary doctor from those
participating in the program.
The HMO model
provides "budgetary certainty for
value-added services," she said, but PCP
provides more customer satisfaction.
Of the 500,000 Texas
Medicaid recipients eligible for managed
care programs, she said, about 35 percent
are in an HMO or preferred physician
organization, also called a
PPO.
"One key to managed
care is controlling costs," she said, such
as getting people to visit the doctor's
office early instead waiting for an acute
crisis and going to a hospital emergency
room. An ER delivers the most expensive
medical care, she reminded the audience,
costing more than three times a doctor's
office visit.
If Colorado or any
state converts Medicaid into managed care,
she advised first creating an independent
external organization to document and
evaluate the cost savings under managed
care.
The Texas advisory
group has attested to a saving of about
$200 million under managed care she said.
In working with them, she described
learning the value of being accountable to
an external oversight organization that's
broadly representative of health care
providers and health care consumers.
"I made sure all
parties had a say at the table," she said,
then paused, smiled, and added that as
state Medicaid director, "of course, I had
the final say."
Wertz then remarked
on the new Medicaid reform plan from
President Bush, proposed earlier that
week. "His plan offers flexibility for all
those eligible," she said.
Under the plan, she
said, a state would agree to a ten-year
plan, receiving more money in the first
seven years and then a sharp decrease over
three years. The President has not
specified what happens to Medicaid
programs after these ten years.
"The devil is in the
details," Wertz said. "Each state has to
assess it's own situation, and every state
is different. And there are differences
within each state."
Texas can be
classified as "frontier, rural and urban,"
she stated. "West Texas does not look at
health care or other issues the same way
as South Texas, and I'm told West
Colorado, if that's what you call it, does
not see things the same as
Denver."
She said the
President's plan gives each state
legislature the flexibility it needs to
create a solution that works in their
state. States can decide the duration and
scope of their participation, as well as
which groups they mandate for coverage,
such as focusing on the
uninsured.
She said most states
now pay a base rate on fees for services.
Ramping up to preferred provider systems
with spending caps could take each state a
year to implement, she predicted. "It took
us a year in Texas, anyway."
After the briefing,
some of the legislators attending the
session were asked by telephone for their
response.
"She had some good
points about some of the things Colorado
can do," said Senator David Owen, R-SD-13.
"I knew a lot of the information already,
but for those who have not dealt with this
subject like I have, briefings like this
can be very useful."
Asked to assess who
was among the turnout of more than a
hundred people, Owen said he saw about ten
legislators, saw people from some the JBC
staff, several from state agencies dealing
with health care, and did not recognize a
handful of other faces. "But all the rest,
maybe three quarters of them, were
lobbyists, mostly the managed care or
pharmaceutical lobbyists."
Owen said he's
planning to introduce a bill later in the
session to create a managed care pilot
project in Colorado modeled on the Texas
Star system, "but I'm going to hold off on
it for now."
Asked for details of
his plan, as it stands so far, he said the
managed care system he imagines would
reverse the current pay-for-service system
by fixing costs at specified limits.
Would patients be
allowed to choose their own doctors? He
said it would be up to the case manager to
decide on a case-by-case basis whether
clients could choose their own
doctors.
Owen also has health
care legislation in the Appropriations
committee, S5, aimed at reducing Colorado
Medicaid expenditures.
Sen. Steve Johnson,
R-SD15, said that as chair of HEWI he was
very interested in the Wertz presentation,
reporting that CACI had asked him to host
the presentation with Sen.
Owen.
Would he support the
managed car pilot project bill that
Senator Owen is planning to introduce?
"I'd have to read it first, certainly, but
I would probably look favorably on
it."
Ranking HEWI
minority member Sen. Deanna Hanna, D-SD21,
also attended the briefing. She said Wertz
spoke for those who favor total
privatization of health care, but a
public-private partnership would be more
viable for those who need Medicaid
assistance.
Hearing about Owen's
proposed pilot project, Hanna said, "I'm
open to trying almost anything that might
work, but I'd need to get past the first
blush of the idea to see if it would work
in reality."
Hanna said she's
begun organizing a coalition to develop
alternatives to complete privatization of
health care, citing early interest from
past and current leaders in the medical
industry. She's thinking about a group of
maybe 30 to 35 people. "Any more than that
in a meeting makes it too hard to get
anything done.
"The main thing we
need to think about in government is our
responsibility to health care consumers,"
she said. "We need to be asking ourselves
what we can do to help people take better
care of themselves day by day."
Orginally
written for The Colorado
Statesman.
March 2003
(c) 2002-03 by Judah Ken Freed
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