Medicaid and HMO's Term Paper

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Medicaid has long been an issue of debate throughout the country. Healthcare is a critical need and many Americans do not have any healthcare. Therefore, Medicaid is vitally important because it provides healthcare to the poor. For many years, both federal and state governments have attempted to reduce the cost associated with Medicare. Some states have resorted to allowing HMO's to take responsibility for some of the recipients of Medicaid. This is particularly true is Georgia with the passage of House Bill 392. According to Goggin (2002) "the shift to managed care has been evident in both the private and public sectors ... Today, over 85% receive health care through some type of "managed delivery." Similarly, growth in managed care coverage of Medicaid clients has grown from 14% in 1993 to 56% in 2000 (Goggin 2002)."

For the purposes of this discussion we will focus on the implications of this bill and explain why such a bill is necessary in the state of Georgia. Medicaid costs are currently outpacing the growth of Georgia's budget. For this reason, many people including state legislators have advocated that healthcare be moved away from state funded programs and placed in the hands of the HMO's. In addition, the research will present an opposing view of Medicaid being outsourced to HMO's.

Proponents for the Outsourcing of Medicaid to HMO's

According to an article released by the Medical Association of Georgia (MAG) entitled "Georgia Medicaid Managed Care RFP Review" the program that will remove 1 million people in Georgia from Medicaid and place them in HMO's has long been under consideration. The article asserts that in the early part of 2005 MAG presented the Department of Community Health's release of a "Request for Proposal," RFP, on January 8, 2005 (Georgia Medicaid Managed Care RFP Review). This RFP was directed at Care Management Organizations systems to function in six regions of the state for numerous Medicaid patients, instead of the current Medicaid program (Georgia Medicaid Managed Care RFP Review). According to the article the proposals were due on April 4, 2005 and the program is supposed to be implemented by January 1 of 2006 in the Atlanta and Central Regions. The implementation of the program in the Eastern and Northern regions were to begin by July 1, 2006 and in other regions by December, 2006 (Georgia Medicaid Managed Care RFP Review).

In addition, the initial contract term will be from July 1, 2005 through June 30, 2006, the Contract will include six annual options for renewal (Georgia Medicaid Managed Care RFP Review).

The review also goes on to reveal several points about the program that reiterate the feasibility of the plan. One of the chief concerns for patients is that they will loose the ability to choose their own primary care physicians (Georgia Medicaid Managed Care RFP Review). However, the article points out that patients can request their physicians and may change their physicians. In addition, the review explains that patient can opt out of the program (Georgia Medicaid Managed Care RFP Review). The article asserts that members can request disenrollment from the program without cause within 90 days of initial enrollment (Georgia Medicaid Managed Care RFP Review). After the initial ninety days member can request disenrollment once per year without cause (Georgia Medicaid Managed Care RFP Review). The article further states that

"A member may request Disenrollment from a CMO plan for cause at any time. Cause my include: member moving out of CMO region, the CMO plan does not, provide the covered service sought;because of moral or religious objections, the member needs related services performed at the same time and not all are available in the network or because of unnecessary risk; the member requests to be assigned to the same CMO plan as family members: the member's eligibility category changes; other reasons related to poor quality of care, access, lack of providers experienced in need area (Georgia Medicaid Managed Care RFP Review)."

The main reason why the passage of this House bill 392 was so important to legislators is that the bill actually establishes the monies needed to place 1 million PeachCare children and Medicaid recipients with privately run HMO's and remove them from the health plan run by the state of Georgia (Tax on HMOs Passes State Senate, 2005). This plan is essential to the reduction of Medicaid cost in the state of Georgia, which have been on the increase by 10 to 12% each year (Tax on HMOs Passes State Senate, 2005). The reduction of these costs is essential because the state budget is only growing by about 5% each year. Last year alone the state spent $2.5 billion on Medicaid expenses (Tax on HMOs Passes State Senate, 2005).

The purpose of House bill 392 is to establish a tax of 6% on HMO's conducting business within the state (Tax on HMOs Passes State Senate, 2005). This tax is referred to as a quality assessment fee. According to the actual bill,

"(a) Each care management organization shall be assessed a quality assessment fee, in anamount to be determined by the department based on anticipated revenue estimates included in the state budget report, with respect to its gross direct premiums for the preceding quarter. The quality assessment fee shall be assessed uniformly upon all care management organizations. The aggregate quality assessment fees imposed under this article shall not exceed the maximum amount that may be assessed pursuant to the 6% indirect guarantee threshold set forth in 42 C.F.R. Section 433.68(f)(3)(i) (House Bill 392 (AS PASSED HOUSE AND SENATE).

The monies gathered from this tax will compensate for the federal funding Georgia will forfeit when it contracts out the healthcare of Medicaid recipients to private HMO's (Tax on HMOs Passes State Senate, 2005).

Many states have outsourced Medicaid to HMO's. The most successful endeavor was accomplished by Michigan. According to Goggin (2002) the state moved incrementally to establish managed care for Medicaid patients. In two years the state was able to move 800,000 people form Medicaid into HMO's. Like Georgia, Michigan implemented the program in increments and enjoyed great success while reducing state costs.

Opponents of outsourcing Medicaid to HMO's

Medicaid is a vitally important resource for million of people across the country. When Medicaid first came about people who were eligible for welfare were automatically signed up for Medicaid. According to Perry (2003), "In 1996, welfare reform eliminated the link between eligibility for Medicaid and AFDC, giving Medicaid the opportunity to redefine itself as a health insurance program for low-income families (Perry 2003)." According to Hill & Ross (2003), Medical care is most important for children. Medicaid has long provided children with the medical care that they need. The authors explain that the process of becoming a Medicaid member is already cumbersome and may be affected even more with the implementation of the program proposed in Georgia.

Indeed one of the most compelling arguments against outsourcing Medicaid to HMO's is the belief that implementing such a program causes huge delays and underperformance. Goggin (2002) asserts that in states where such programs have been implemented the process has been very slow. The author explains that the slowness in the process occurs because it takes patients time to adapt to the managed care environment. In addition, legislators have to be aware of the limits of implementing such a program or the progress of implementation can be slowed further (Goggin 2002). Indeed several states including New York have experienced many problems when transitioning patients from Medicaid to managed care. For the most part these problems occurred because of poor implementation including large amounts of paper work and poor communication.

Another more prominent argument is that managed care treatment is inadequate. Since the popularity of HMO's rose in the 1990's, they have long been touted as unethical and denied many people treatments that could have saved their lives. According to an article found in the journal, Law and Contemporary Problems

'Sources of dissatisfaction with managed care are well-documented. (7) Although most consumers are satisfied with their actual experiences with managed care plans, and the observable quality of care remains high, (8) the public has a generalized concern that managed care plans will lower quality of care, in part by restricting access to beneficial care in an effort to save money for the plan. (9) Such restrictions are thought to take a variety of forms, including restrictions on access to emergency room care, to specialists, and to other costly care that may potentially be beneficial to the plan enrollee (Hall & Sloan, 2002)."

Indeed another article found in the Hastings Report asserts that managed care providers do a great deal of rationing and cannot therefore guarantee the quality of the medical care that is being provided (Baily 2003). With this being understood opponents assert that moving people from Medicaid to managed care will reduce the quality of medical treatment that they receive. The other fear associated with this is that most of the people on Medicaid are the…[continue]

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