Health Reform and Aligned Incentives

In further discussing the now dissolved CoOportunity Health, as well as Governor Branstad’s proposed plan to turn over the Iowa Medicaid program to a private managed care company or set of companies, I was going to title this blog entry “Health Reform and the Need for Non-Profit Entities”, which may, in the end, be what the readers of the blog may feel is my conclusion. Instead, I chose the current title to reflect a refinement of my views over the years. To understand this refinement I want to start this post by going back to 1993.

The final report from the Iowa Health Reform Council was published in December, 1993. This Council, formed by then Governor Branstad and led by Dave Lyons, then Iowa Insurance Commissioner and future CEO of CoOportunity Health, produced a series of health reform proposals in the aftermath of the failure of Federal attempts to produce meaningful national health reform. I served on the Subcommittee on Accountable Health Plans and authored, with other members of the subcommittee, a minority report titled, Why Accountable Health Plans Should be Non Profit. In that minority report, I referenced Minnesota’s requirement that health plans to be nonprofit. I then contended that in order to maximize the goals of access to all, high quality, and efficiency, health plans should be nonprofit. Such nonprofit plans would more likely to be subjected to in-state control; would allow excess revenue to stay in the system to improve the system; and finally, encourage provider participation in control and management of health plans. My underlying belief then was that there were so many health needs in our population that allowing a for-profit margin of business would, by necessity, take away from the system’s ability to address these health needs.

With the loss of CoOportunity Health, Iowa and Nebraska have lost a major nonprofit health insurer. With Governor Branstad’s new plan for Medicaid, Iowa would turn over the health care of our most dependent population to possibly four for-profit national managed care entities. Both of these situations touch on the same issues that I addressed in 1993. Throughout my career and now, I have heard about and witnessed several incidents of for-profit health care entities choosing to place the concerns of investors over the concerns of patients. Examples include the exclusion of pre-existing conditions for patients in regard to insurance paying for health care services; creating cumbersome, inefficient, capricious prior authorization requirements and processes for medical procedures designed, in part, to frustrate both provider and patient into foregoing the procedure; enrolling individuals in drug plans with drugs on approved lists that later, after the individual has signed-up, the drugs that the patient is taking are no longer on approved drug list; and most recently, changing the manner in which drugs are charged to patients by using a percentage of the cost of the drug, which allows much higher prices, and makes name brand drugs and drugs new to the market unaffordable for patients.

CoOportunity Health, as a nonprofit cooperative in the private insurance market, for what faults it might have had, always had the best interests of its policy holders/patients as its only priority. When I served on the national CO-OP Advisory Board, I learned the value of these aligned interests in the examples of Group Health in Seattle and Health Partners in Minneapolis, both nationally respected health care cooperatives. Wellmark Blue Cross Blue Shield of Iowa and South Dakota was started as a nonprofit effort by physicians and hospitals to provide financial security regarding the health of patients. In my mind, their decision in 2013 not to join the Exchange and allow their patients with incomes of less than 400 percent of the federal poverty limit (FPL) to have their health insurance premiums partially subsidized by the federal government makes me question their allegiance to the ideal of placing the patients who are their policy holders at the highest priority. In 2017, when finally there will be no further allowances for “grandfathered,” non-ACA compliant insurance policies, I look forward to Wellmark and other nonprofit insurance entities to offer policies available in the individual private health insurance market, operating on the principle of always putting patients/policy holders first.

Moving on to Medicaid Managed Care, I start by agreeing with the Iowa Medical Society’s preamble to their position paper titled, Medicaid Managed Care, which reads:

Iowa Medicaid provides for the healthcare needs of over a quarter of all Iowans, including many of our state’s most vulnerable populations. Moving the State’s Medicaid program to a privately run managed care system will dramatic and diverse implications for both patients and physicians.

Through the years, I have seen several attempts in Iowa to have managed care be used to control Medicaid costs. I have not yet seen it work. The latest effort for which the Request for Proposal (RFP) is currently being written is being done without obvious input from Iowa health care providers. The Iowa Medical Society, as well as several other groups, has several questions about this effort. Currently, the answers to these questions are not forthcoming.The latest information is that up to 4 managed care companies will be chosen. The goal, according to multiple, knowledgeable sources, is to save $51 million. These same sources never expressed that the purpose would be to improve the health of Iowa Medicaid patients. I have been told that in Texas the contract for Medicaid Managed Care called for the simultaneous distribution of saved monies to go to the for-profit managed care company and the State of Texas; I would not want to recreate this situation in Iowa unless I was shown that the Texas Medicaid population had been well served. Several for-profit national managed care companies appear to be ready to vie for this Iowa business; such interest would not be present if there was not anticipation of a substantial profit being made. As a family physician for 31 years in Iowa, who was born, raised, and will die in Iowa, and who is watching his grandchildren grow up in Iowa, I truly believe that the experience of having a national for-profit managed care company come into Iowa and run a Medicaid program will be short-lived, costly, and ultimately, detrimental to my fellow Iowa residents who are Medicaid patients. Iowa is an efficient health care state. Iowa already has low provider rates for Medicaid patients. How does Medicaid Managed Care save $51 million dollars without limiting or denying care to patients.

If Managed Care is to be attempted, I believe the only way to save money is by:

  • Having Iowa providers be part of the input of the transition to Medicaid Managed Care.
  • Having Iowa business ties to the managed care companies.
  • Having managed care companies have significant Iowa provider involvement in management and if possible, ownership of the managed care companies.
  • Having a proportionate number of the managed care companies serving Iowa be nonprofit.
  • Having providers be part of an aligned incentive program to provide quality care while still using resources in an effective, efficient manner.
  • Having the managed care companies continue the current patient care coordination efforts such as the Health Homes program.

In my opinion, these recommendations would align incentives to allow a Medicaid Managed Care transition to appropriately proceed. For the reasons of in-state orientation (smaller state-based nonprofits tend to be more locally focused and locally engaged than large, national nonprofits), keeping profits within the system, and promoting provider involvement, I still believe as I did in 1993— whether it’s called aligned incentives or nonprofit—health care coverage is best served by total commitment to the patient, no matter if the patient is insured in the private insurance market or is a part of the Medicaid population.

In other blog posts I have explained my belief that care coordination at the micro level and that being the primary care provider such as family physician utilizing processes including Medical Homes, has the ability to help control medical costs while enhancing the quality of medical care. Iowa Medicaid through its Health Home program (in which I participate) has been using Medical Home tenets to promote care coordination. The results so far are positive and reflect improvement in patient engagement and quality of care. With Medicaid Managed Care I question whether these care coordination efforts such as Health Homes will be continued by the managed care companies awarded the contract.

Finally, I present this vignette.  Recently one of my Medicaid patients began a several months regimen of oral medications to treat Hepatitis C. The medication for this regimen is expensive— $26,000 per month—and extraordinarily precise. Skipping the scheduled medicine renders the regimen ineffective. Because of my patient’s mental health problems and history of substance abuse, the patient’s infectious disease physician and I have established a process where the patient will meet with my Health Homes’ health coach weekly to verify that my patient is taking the medication as scheduled and is not abusing substances.

For me, this is an example of how using a system of coordinated care promotes quality of care by wise use of resources.

My final question: Will a national for-profit managed care company agree?