October 1999
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Foreword
In 1997 the Reforming States Group (RSG) and the Milbank Memorial Fund published State Oversight of Integrated Health Systems, a comprehensive report that described how government in the 50 states monitored the most complicated form of managed care: integrated health systems. The report was a self-study by elected and appointed officials and their peers in every state, who volunteered information and then reviewed the description of their oversight of the reorganized health system. This report updates that earlier effort by tracking events since 1997 and cataloging both the changes in and the reaffirmations of oversight policy that have occurred during the intervening period. More than 200 officials from all 50 states supplied the information on which this report is based and reviewed it in draft, some of them several times.
The report is a result of the ongoing collaboration between the RSG and the Milbank Memorial Fund. The RSG, organized in 1992, is a voluntary association of leaders in health policy in the legislative and executive branches of government, currently from more than 40 states. The Fund is an endowed national foundation, established in 1905, that works with decision makers in the public and private sectors to carry out nonpartisan analysis, study, research, and communication on significant issues in health policy.
Members of the RSG Steering Committee planned and organized this report: John Colmers, John Cosgrove, and Sandy Praeger. Carmen Hooker Buell, formerly a member of the Steering Committee and project director for the 1997 report, joined them in guiding this work.
This report uses tables to compare the oversight activities of each state to mid-1999, addressing the following questions:
What Oversight Mechanisms and Activities Are the States Using?
States apply a broad range of oversight mechanisms to the rapidly changing world of managed care. Grouped under the broad rubric of quality assurance are standards for network adequacy, community health status, and internal-external appeal mechanisms. This report also demonstrates that states are relying on both traditional regulatory solvency standards and market-oriented techniques to influence the financial behavior of plans. For instance, guided by the example of the marketplace, a state might use its purchasing power to influence behavior while concurrently acting in its regulatory capacity through the use of incentives that encourage "fair" competition. The most important regulatory incentive is the requirement that plans and providers disclose information about cost, quality, and satisfaction to both consumers and purchasers. Finally, states are coordinating their oversight activities across several executive-branch agencies and enhancing the management capacity of those agencies.
What Factors that Affect Oversight Have Changed since 1996?
The 1997 report had anticipated the growing market domination of large provider-payer hybrid organizations. The state officials who designed, contributed to, and reviewed the self-study during 1996 and 1997 also expected that new business partnerships, widespread mergers, consolidations, and conversions would accompany the expansion of these "mega-systems." However, most jurisdictions report that such systems have not reached their predicted level of growth. Instead, the widely reported misfortunes of certain proprietary organizations like Columbia/LICA and Oxford Health Plan have caused this approach to be re-evaluated. The number of for-profit conversions of both providers and health plans has dropped significantly, partly in response to state officials' heightened scrutiny of these conversions. Finally, in their role as regulators, many states have shifted their attention away from categorizing different insurance entities (i.e., HMO, MCO, PPO, etc.) or ownership types (i.e., traditional carrier or provider-sponsored) to focus on identifying the level of risk assumed by the various entities and assigning oversight commensurate with the degree of risk for which each entity is responsible. (For example, global capitation arrangements entered into by certain provider groups could warrant additional scrutiny.)
What Factors Are Driving Oversight Activities Now?
"Consumer concerns" is the category that is currently exerting the most dramatic influence on state oversight activities. It is also apparent that increased oversight in any particular state is generated by factors like the growth of enrollment in Medicaid or commercial managed care, conversions or mergers, and solvency problems.
By extension, other factors, like the number of plans, the type of plan models in use, and the percentage of the population enrolled in managed care, appear to have less influence on the scope of policy oversight. Further expansion of Medicaid managed care has had a dramatic impact on state oversight strategies, as is most clearly manifested in the shift to greater "reliance on market forces" and "prudent purchasing." Although states continue to lead in health policy development and implementation of health reforms, their policymaking and oversight activities are strongly affected by federal law, such as the Employee Retirement Income Security Act of 1974 (ERISA), the Health Insurance Portability and Accountability Act of 1996 (HIPAA), and provisions of the Balanced Budget Agreement of 1997 (BBA), especially those creating a new health insurance program for children (CHIP) and changing reimbursement under Medicare.
Next Steps in State Oversight
What, then, does the future hold for oversight of the health care system at the state level? Although it is notoriously difficult to predict the trends that will emerge in the health care system, the participants in this project offer a few general observations: First, cost increases, as measured by either premium increases or expenditures for personal health care, which have been at their lowest levels in a generation, are beginning to spike upward. Some fear that this is the result of exhausting the one-time savings associated with the switch to managed care. Others suggest that providers have been successful in their backlash against managed care. Whatever the cause, should inflation return to health care at rates significantly above underlying inflation in the economy, states will be forced, as purchasers and as regulators, to re-emphasize cost concerns and devote less time to issues of quality.
Second, as a result of increasing costs, state officials expect that the number of uninsured persons will continue to rise, as it has gradually throughout the past decade. Despite state reforms of aspects of insurance markets, with assistance from the federal government in the form of HIPAA and CHIP, the number of uninsured Americans has remained constant. Proposals to address this problem have recently been subsumed at the state level by the topic of oversight and related issues of consumer protection. Participants in this year's self-study of oversight worry that either increasing costs or even a modest change in the robust economic growth that most areas of the country have enjoyed could drive up the numbers of uninsured, making it necessary to refocus on the issue of access.
Finally, all participants agreed that the ongoing tension between federal and state policies will remain an important future influence over the course of oversight. Despite the appearance of a more "balanced federalism," as evidenced in HIPAA, many leaders in state government remain frustrated by the limitations imposed by federal law, and how it is interpreted by the executive branch, on their ability to adopt creative solutions in response to constituents' concerns about access to health care of appropriate quality.
This report presents a snapshot of oversight issues in mid-1999 through a series of comparative tables that were completed with the assistance of state health policy leaders nationwide. These tables have been arranged in the following six categories:
- Executive-branch agencies involved
- Division of roles and responsibilities
- Formal coordination of oversight
- Quality-monitoring activities
- Oversight for the protection of consumer rights
- Oversight for the protection of patient–provider or provider–health plan rights
Narratives from each state, revised from those in State Oversight of Integrated Health Systems, are included in the electronic edition of this report only, in the section "State Summaries." Insofar as possible, the officials who provided the information in the earlier narratives or their successors revised them for this report.
John M. Colmers
Chair, Reforming States Group
Executive Director, Maryland Health Care Access and Cost CommissionDaniel M. Fox
President, Milbank Memorial Fund
A Note Regarding the State Summaries
The narrative summaries of oversight activity in each state that are included in the electronic edition of this report are revised and updated versions of the summaries that first appeared in the 1997 report State Oversight of Integrated Health Systems. All participants in the original report were given an opportunity to provide revisions; where they were no longer in office, we made a new request for information to their successors or another appropriate official in the agency in question.
However, these efforts were not always successful, so that some of the summaries have not been updated by all relevant agencies or departments in that particular state. In other cases, we may have received extensive revisions from one department but only minor ones from others. Finally, some participants responded when work on the current report began in mid-1998 and did not provide further information when final drafts were sent for review in the summer of 1999. Each state summary ends with a note indicating when the material was last updated; in addition, the Acknowledgments provide a list of which officials and departments were involved, although some of those listed reviewed the tables only and did not revise the text.
We invite readers of this report to provide revisions or new information by going to the item "Contact Us with Revisions" at the end of the Table of Contents and sending an e-mail message. Please include your name, title, and office and/or the source of your information. This report will remain on the Fund's Web site until June 30, 2000, and will be maintained and updated until then as information is received.
1999 Reforming States Group Steering Committee
Robert A. Bittenbender*
President, National Association of State Budget Officers
Secretary of the Budget
Commonwealth of PennsylvaniaHarriette L. Chandler
Chair, Joint Health Care Committee
Massachusetts House of RepresentativesJohn M. Colmers
Chair, RSG Steering Committee
Executive Director
Maryland Health Care Access and Cost CommissionJohn F. Cosgrove
Deputy Democratic Leader
Florida House of RepresentativesMark Gibson
Vice Chair at Large, RSG Steering Committee
Policy Advisor for Health Care, Human Services and Labor
Office of the Governor of OregonRichard N. Gottfried
Chair, Health Committee
New York State AssemblyLee Greenfield
Lead DFL Member, Health and Human Services Finance Committee
Minnesota House of RepresentativesKemp Hannon*
Chair, Health Committee, National Conferencel of State Legislatures
Chair, Health Committee
New York SenatePatrick J. Johnson
Executive Director
Utah Health Policy CommissionMary E. Kramer
President, Iowa SenateAndrew Levin
Co-chair, Ways and Means Committee
Hawaii SenateWilliam N. Martin
Chair, Appropriations-Human Resources Committee
North Carolina SenateS. Peter Mills
Member, Taxation and Labor Committees
Maine SenateAngela Z. Monson
Vice Chair, Business and Labor Committee
Oklahoma SenateAndrew W. Nichols
Member, Subcommittee on Health and Welfare of the Appropriations CommitteeSandy Praeger
Immediate Past Chair, RSG Steering Committee
Chair, Public Health and Welfare Committee
Kansas SenateRaymond D. Rawson
Assistant Majority Floor Leader
Chair, Human Resources and Facilities Committee
Nevada SenateGeorge M. Reider, Jr.*
President, National Association of Insurance Commissioners
Commissioner
Connecticut Department of InsurancePeggy A. Rosenzweig
Vice Chair, RSG Steering Committee
Ranking Member, Audit Committee
Wisconsin SenateRichard A. Westman
Vice Chair, Appropriations Committee
Vermont House of Representatives
*ex-officio member
Table 1. Oversight Responsibilities of State Executive Branches
Table 2. State Agency Roles and Responsibilities
Table 3. Coordination of Oversight and System Responsibilities
Table 4. State Policies and Programs to Monitor Quality
Table 5. Oversight of Activities Related to Protection of Consumer Rights
Table 6. Oversight Activities Related to Provider–Patient or Provider–Health System Relationships
Data Sources for Tables
In addition to information received directly from state officials, Tables 5 and 6 incorporate data from the following sources:
American Association of Health Plans (AAHP). 1998. The Regulation of Health Plans. Washington, DC.
Maralit, M., T.M. Orloff, and R. Desonia. 1997. Transforming State Health Agencies to Meet Current and Future Challenges. Washington, DC: Health Policy Studies Division, Center for Best Practices, National Governors' Association.
National Governors' Association (NGA). 1998. State Strategies to Improve Managed Care Quality and Oversight in the Competitive Market. Washington, DC: NGA Issue Brief.
Rosenbaum, S., B.M. Smith, P. Shin, M.H. Zakheim, K. Shaw, C. Sonosky, and L. Repasch. 1998. Negotiating the New Health System: A Nationwide Study of Medicaid Managed Care Contracts, 2nd edition. Washington, DC: Center for Health Policy Research, The George Washington University.
Wasman, J.G., and G. Dallek. 1998. Hit and Miss: State Managed Care Laws. Washington, DC: Families USA Foundation.
State Summaries
Alabama
What Is Alabama Overseeing?
Commercial HMO penetration in Alabama has remained steady at approximately 10 percent of the insured population for several years; policymakers do not expect significant increases in the near future. The state's Medicaid agency has developed four managed care plans: the Partnership Health Plan (PHP), which organizes the state into eight hospital districts that provide services on a capitated basis; a primary care case management (PCCM) program; a Maternity Waiver initiated in 1988 (since then converted to the state-plan-based Maternity Care Program, which began going into effect in June 1999); and an 1115 waiver for Mobile County, which was initiated in 1997. Additionally, the state has one program for dual eligibles that provides capitated payments for the co-payments required of the Medicare HMO.
Who Is Overseeing?
The Alabama Department of Insurance (DOI) shares oversight and licensing authority for HMOs with the Department of Public Health (DPH) and regulates solvency.
The Alabama Department of Public Health (DPH) oversees required basic health services. In reviewing organizations for Certificates of Authority, the department performs evaluations of the following: access and continuity of care; provider contracting and network adequacy; marketing materials; enrollee complaint and grievance processes; and overall quality assurance and utilization review. Licensed HMOs began reporting HEDIS-based data to DPH in 1996.
The Alabama Health Care Task Force is part of DPH; the task force comprises 75 participants from different agencies and interest groups and recommends actions on a broad range of health policy issues.
The Alabama Medicaid Agency (MA) operates three managed care programs. The agency is committed to expanding managed care to control Medicaid costs and increase clients access to health care while ensuring that they receive quality care.
The Alabama State Legislature (house and senate) has not passed any major legislation in the area of health care reform.
How Are They Doing?
Solvency Oversight of the Private Market
Although various new plans have attempted to enter the Alabama market, HMO penetration has held steady at around 10 percent in the 1990s. The Alabama Health Care Task Force did not consider private-market HMOs or managed care to be a priority. Nor has capitation, a significant problem in some states, drawn much attention from state officials. DPH's state health officer (SHO) did not know of any HMOs using bonus payments to reduce utilization, but he did say that policymakers had discussed extending HMO regulations to managed indemnity plans: "From an equity standpoint this makes sense, although it would increase costs for these plans."
Quality Oversight of the Private Market
"In general, Alabama has very poor health outcomes across the state," reports the director of the Alabama Health Care Task Force. He attributes this problem to broad socioeconomic factors, not to the quality of managed care plans. The state health officer says there has been neither a particular pattern of complaints nor an increasing trend; there is little legislative interest in imposing new rules or regulations on HMOs. The SHO is interested in encouraging plans that would address public health issues, ideally with lifestyle and environmental issues as part of their mission.
Medicaid Oversight
The Alabama MA's dominant concern is using its limited funding to increase clients' access to health care services. Traditionally, Alabama's Medicaid program has covered few optional eligibility groups. However, recent mandated Medicaid coverage for children and pregnant women, combined with an extensive outstationed eligibility outreach program has improved access to care for many Medicaid beneficiaries. Medicaid benefits for children through the EPSDT program are only limited by medical necessity criteria. The benefit limitations on physician services and hospital days for adults only impact a small percentage of the Medicaid population.
The agency hopes to use its three managed care plans to increase access while keeping costs down. The two key programs are PHP and the PCCM. Alabama's relatively low reimbursement discourages many providers from participating in Medicaid and sometimes restricts patient access. Officials hope that the case management payments through the PCCM will encourage more providers to participate in Medicaid and that the program will employ more aggressive management of health care services. "Initially, we had providers opposed to managed care," comments Medicaid's director of managed care. "Now more are interested."
PHP covers the entire state through eight capitated hospital districts and allows patients to go to any hospital. Alabama's 1115 waiver program operates in only one county through a mandated capitated contract. This demonstration waiver coordinates the infrastructure of the local delivery system. The program was initiated in May 1997 and covers 40,000 Medicare recipients.
Coordinating Oversight
Except for the MA's efforts to introduce managed care, the issues of HMOs, capitated contracting, and private-sector managed care have not assumed a high profile in Alabama. DOI and DPH nevertheless attempt to coordinate their oversight activities and to ensure that plans operating in the state are regulated.
What Is Next for Oversight?
Alabama policymakers do not identify clear trends leading to change in state oversight of managed care, other than Medicaid's plans to increase access and control costs. DOI's deputy commissioner did not foresee any substantial growth in private sector managed care. However, state officials are looking ahead. The SHO indicates a key issue: "What should be regulated? It's clear HMOs should be regulated, but as the insurance system . . . is changing and merging with managed care we are trying to find the correct way to regulate. That's where the big political issue will be." He acknowledges that regulatory changes are not likely to happen soon. Alabama's oversight policies will remain fixed unless the market rapidly expands or a major fiscal or quality care problem emerges.
Additional Resources
- Department of Insurance
www.aldoi.org- Department of Public Health
www.alapubhealth.org
(Last updated August 27, 1999)
Alaska
What Is Alaska Overseeing?
The health care industry in Alaska is still largely operating in a traditional fee-for-service environment. Health plans have made inquiries to the insurance regulator about establishing HMOs or other risk-bearing provider networks, but as of June 1999, none are operating. It is likely that interested parties will determine that either the population is not large enough to support a managed care organization or there is still too much resistance on the part of providers. The Municipality of Anchorage is Alaska's largest borough and has a population of only 255,000. The next largest borough is the Fairbanks North Star Borough with 82,000 residents. Providers are slowly forming networks, but to date none has assumed any insurance risk.
Alaska does have an HMO statute that was enacted in 1990 (based on the National Association of Insurance Commissioners' model act of that time). However, because the evolution of managed care networks and HMOs has been so dramatic in recent years in more populated states, Alaska's statute does not reflect the improved regulatory understanding of appropriate solvency and consumer protection needs.
The state's Medicaid program largely uses a fee-for-service system of reimbursement. In 1998, under its Children's Health Insurance Program expansion, the state extended Medicaid coverage to children and pregnant women in families with incomes below 200 percent of the federal poverty level. Alaska also received an outreach grant under the Robert Wood Johnson Foundation's "Covering Kids" initiative and efforts are underway to design and conduct an effective outreach program.
The largest and most significant integrated health care system in the state is run by a consortium of Alaska Native health corporations. The system covers virtually the entire state and all Alaska Natives (approximately 16 percent of the state's population) are eligible for services. The system operates largely like a staff-model HMO. Oversight is the responsibility of the Indian Health Service.
Who Is Overseeing?
The Alaska Division of Insurance (DOI) is responsible for licensing health care plans. DOI has the statutory authority to evaluate plan solvency and market practice.
The Alaska Department of Health and Social Services (DHSS) administers the state's Medicaid program. The program is largely a fee-for-service system. The Medicaid agency has explored various managed care approaches, most notably the primary care case management option.
Alaska has a citizen Legislature that meets for 120 days of each year. Several consumer protection bills have been introduced or are before the legislature. To date, none has comprehensively addressed consumer protections.
How Are They Doing?
Solvency Oversight of the Private Market
DOI has authority over solvency in the private market. It has had a few inquiries from HMOs regarding licensure in Alaska, but none has pursued a license.
Quality Oversight of the Private Market
By statute, DHSS and DOI have joint responsibility for HMO quality in Alaska.
Medicaid Oversight
There are no managed care plans available to the Medicaid program in Alaska. Managed care strategies have been fully considered by the Medicaid agency, but the lack of these plans in the Alaska market make it very difficult for Alaska to move any of the Medicaid population into managed care arrangements. The Medicaid program is considering a primary care case management (PCCM) approach, although budget reductions have made it difficult to develop the necessary administrative support for that kind of system.
What Is Next for Oversight?
Whether or when managed care and prepaid health care will enter Alaska is unclear. The deputy commissioner of DHSS describes knowledgeable observers as "equally split between those who think managed care is coming [and] those who think it can't work in Alaska." DOI has concentrated on ensuring that firms electing to self-insure do not unwittingly violate the insurance law. "There will definitely be strong attempts at getting into various areas of managed care, especially by large self-insured firms. We are worried that some may pop up without realizing they are becoming insurers," says the director. Alaska officials are alert to the potential problems of risk assumption and quality assurance, and they intend to benefit from the experiences of other states.
Additional Resources
- Division of Insurance
www.commerce.state.ak.us/insurance- Department of Health and Social Services
www.hss.state.ak.us
(Last updated August 6, 1999)
Arizona
What Is Arizona Overseeing?
Arizona has one of the highest HMO penetrations in the country in both the private and Medicaid insurance markets, enrolling an estimated 40 percent of the insured population.
Managed care became the cornerstone of Arizona's Medicaid program in 1982, when the state implemented the Arizona Health Care Cost Containment System (AHCCCS). This Medicaid managed care demonstration is the oldest statewide, capitated program in the country, and it is a model for other states. Pregnant women and children, disabled, elderly, and long-term-care patients are covered in separate managed care components. Residents whose annual income does not exceed $3,200, but who are not eligible for Medicaid, may enroll in the MNMI (Medically Needy, Medically Indigent) arm of the program, as can people with serious illness and injuries who have spent down their savings and assets to the $3,200 income level. Small employers, with from one to 50 employees, can also use some AHCCCS plans to obtain guaranteed issue coverage. This plan, known as Health Care Group, became operational in 1986 and has grown significantly.
A relatively large fraction of the state's population, estimated at between 17 and 23 percent in 1996, remains uninsured. In 1995, the legislature failed to pass a measure that would include 150,000 additional enrollees under AHCCCS. However, in the fall of 1996, Arizona voters approved, by 71 percent, a ballot initiative to expand Medicaid coverage to 100 percent of poverty, which will bring about 180,000 working poor under the Medicaid umbrella. In June 1997, Arizona submitted an amendment to their 1115 waiver and is awaiting approval from the Health Care Financing Administration (HCFA).
Who Is Overseeing?
The Arizona Department of Insurance (DOI) is one of two state agencies responsible for licensing HMOs for the commercial market: it oversees solvency and monitors market practices. When commercial HMOs are also AHCCCS providers, AHCCCS oversees the Medicaid arm of the HMO.
The Arizona Department of Health Services (DHS) oversees network evaluation and has responsibility for continuing oversight of commercial HMOs. When an HMO applies for a license, DHS evaluates the HMO's statement of its plan, facilities, personnel, and geographic area, and notifies DOI of its approval of this statement. DHS also works with AHCCCS to operate programs for special needs groups. The department administers a capitated behavioral health care program through Regional Behavioral Health Agencies (RBHAs), which oversee the contracts with providers and offer case management services to local recipients. Acute-care clients of AHCCCS, except long-term-care recipients, receive behavioral health services through the RBHAs, rather than through their AHCCCS HMO plans.
Arizona's Arizona Health Care Cost Containment System (AHCCCS) is the single state agency responsible for all aspects of the Medicaid and state-funded MNMI program. AHCCCS works with Medicaid-only and commercial health plans; oversees all parts of the delivery system, including provider network solvency, quality assurance, and grievance procedures; provides hearings if a plan fails to address a recipient's grievance adequately; and may intervene if a provider claims to have been denied payment inappropriately or has another grievance. For long-term-care services to elderly and disabled clients, AHCCCS has contracts with eight program contractors, which are private or county-run managed care companies that receive capitation funds to negotiate contracts with long-term care, acute care, and behavioral health providers.
The Department of Economic Security performs eligibility determinations for AHCCCS for the Temporary Assistance to Needy Families (TANF) population and is the health plan for the developmentally disabled population. The department coordinates medical services with the acute-care provider, a managed care company.
The Arizona Legislature (senate and house) has enacted a number of small-group insurance reforms. Although some managed care bills have been presented in the past few years, most have not been adopted. One new law, which went into effect in January 1996, requires HMOs to disclose their plan's incentive features to employers, who in turn must share that information with their employees. In the 1995 session, the legislature created a Joint Legislative Oversight Committee on Tobacco Tax and Health Care to decide how the state would spend the money generated by a new tobacco tax that was created by ballot initiative.
Several health care initiatives were proposed in 1997. Most notably, the legislature passed the Health Care Appeals Process Bill, which requires all health care insurers to provide a uniform appeals process for all enrollees. The process has four steps, including an expedited review and review by external, independent reviewers. The bill was the product of a yearlong Governor's Task Force that included legislators, health care insurers, managed care companies, and consumers. The resulting product is a guaranteed, uniform appeal process for all Arizona enrollees.
How Are They Doing?
Solvency Oversight of the Private Market
Since HMO penetration has been high for a number of years in Arizona, the assistant director of DOI reports that people within the state are knowledgeable about managed care. DOI's regulatory approach focuses on solvency. The agency requires each commercial HMO to have $1 million in capital reserves and an additional $500,000 on deposit with the state treasurer. The legislature removed the premium tax on small-group plans for all insurers in order to lower premium costs. Recent legislation mandates that commercial HMOs disclose incentive features to employer clients. DOI does not review rates, require plans to file rate schedules, or provide oversight of integrated delivery systems, but the agency does review market practices and collects key information on the number of people served.
Quality Oversight of the Private Market
Quality oversight of commercial HMOs in Arizona consists primarily of the DHS's review of quality procedures during licensure, ensuring that there are quality assurance protocols and grievance procedures in place. Apart from DOI's market review and the AHCCCS program, there is no continuous oversight of quality issues. The 1997 Health Care Appeals Process Bill passed both the Arizona Senate and House of Representatives and was signed into law by the governor in July 1997. This law is significant for several reasons. First, it ensures that all Arizona enrollees in health plans are guaranteed the same appeal process. Second, it provides for expedited review of denials of care when medical necessity demands an immediate response. Third, it provides enrollees with an external, independent review by utilization review agents chosen by the insurer.
It is important to note, however, that the assistant director of DOI does not think increased regulation would necessarily resolve every kind of complaint: "Some complaints boil down to differences in medical opinions. The kind of things we read about all the time where someone is denied treatment could be for a number of reasons. It could be that the treatment was not medically indicated for the person." She has not seen an increasing number of complaints from Arizona consumers: "These things have always been part of managed care." She attributes the heightened concern over quality to increased media attention and the fact that more and more people are being covered by managed care plans.
Medicaid Oversight
AHCCCS is the sole agency responsible for all oversight and regulation of the Arizona Medicaid program. The Arizona legislature authorized the state to join the federal Medicaid program in 1972, but implementation did not occur until 1982, when AHCCCS was inaugurated statewide as a Medicaid demonstration. Other services, like behavioral health, long-term care, and family planning, were added after 1982.
AHCCCS contracts with commercially licensed HMOs only if they have a separate arm that operates under the auspices of the Medicaid program and if they agree to abide by the regulations that apply to Medicaid plans. Many of these regulations are more restrictive than licensure laws for the private market. The plan must also agree to disclose specific information on its Medicaid clients, which is not required for private sector enrollees. AHCCCS has compared its oversight procedures with those used by DOI and DHS. AHCCCS's approach is more stringent than either. For example, AHCCCS requires its plans to post the same $1.5 million in capital reserves that is required of commercial HMOs but, rather than paying a tax on premiums, Medicaid plans must post a performance bond equal to one month's projected liabilities.
Both commercial and AHCCCS plans contract with the same provider groups, so AHCCCS enrollees receive mainstream service. The program has been very innovative in putting special needs populations, like the elderly and disabled, into managed care programs under separate contracts. AHCCCS officials are convinced that "keeping it all under one agency" is the best strategy.
Quality of care is an extremely important component of the AHCCCS program. In more than 15 years of operation, AHCCCS has developed a mature quality management system that focuses on the performance of health plans and program contractors. Although this approach is effective, AHCCCS, in partnership with HCFA and the AHCCCS health plans and program contractors, continually seeks ways to introduce other innovations that are tailored for a managed care environment. A proposal to implement a Quality Management Initiative was approved by HCFA in December 1994 as a multiyear project that will (1) develop clinical and long-term care quality management indicators to measure health outcomes and quality of care; (2) use financial indicators for financial performance and solvency standards; (3) conduct member satisfaction surveys that assess access to care, availability of care, and overall member satisfaction; and (4) assess provider satisfaction.
AHCCCS's quality oversight is built on two procedures. First, the agency conducts on-site inspections to assess each plan's quality assurance procedures; these visits are intended to establish a baseline. Plans must have in place complaint tracking, resolution systems, and approved procedures for utilization review. AHCCCS then relies on recipient complaints and satisfaction surveys to determine when more intensive review is required. Overall, however, member complaints have not been a significant problem. AHCCCS health plans have a separate grievance and appeals process, and a special Division of Grievance and Appeals within the administration to review the plans and serve as a secondary appeal to health plan decisions.
Coordinating Oversight
The structure of Arizona's health care regulation requires little coordination between oversight of the commercial market and of Medicaid. DOI and DHS coordinate review of commercial HMO license applications. AHCCCS has sole responsibility for all aspects of Medicaid oversight with its contractors and other state agencies (DHS and DES). The agency also coordinates efforts for some special needs populations and for small-group insurance coverage. For example, the Division of Behavioral Health Services operates via a capitated contract with AHCCCS for all aspects of behavioral health to Medicaid members. DHS and AHCCCS also work together on the Health Start program, which has increased the number of pregnant women receiving prenatal care, and on a program that has raised the immunization rate from 50 percent to more than 75 percent.
AHCCCS funds the Department of Economic Security for its Medicaid eligibility activities and the coordination of acute- and long-term-care services for the developmentally disabled. Counties are responsible for most of the state match for long-term care and a portion of the state match for the acute-care program. There is no mandate to integrate both types of service in a single contract; however, in some cases, the same contractor serves the acute- and long-term-care population. In 1996, the program for long-term-care services expanded the type of setting that is eligible for reimbursement to include supportive residential living, which is expected to increase consumer satisfaction and is estimated to cost 38 percent less.
What Is Next for Oversight?
Arizona's AHCCCS program has been confronting the challenge of implementing the ballot initiative to expand eligibility to 100 percent of the federal poverty level. In addition, the 1998 session addressed several managed care issues, including mandated chiropractic care, the implementation of the 1997 Premium Sharing Demonstration Program, and mandated diabetes coverage. Implementation of a children's health insurance program (CHIP) as a part of AHCCCS, was passed by the legislature in 1998. The state legislature will also continue to confront the effects of the new federal welfare law and of medical coverage for legal immigrants, issues that will have enormous impact on counties.
Arizona is in the process of implementing many of the provisions of the Balanced Budget Act that affect managed care programs. Because of the sophistication of the oversight functions of the AHCCCS program, the BBA impact should be minimal.
On February 1, 1998, the Premium Sharing Demonstration Project began enrolling persons in the program. This is an innovative program that enables uninsured Arizonans to purchase health insurance through the state. Enrollees pay a premium based on their income level and the state subsidizes the rest, creating a joint partnership that enables the state to offer insurance to those who would otherwise be unable to afford it.
A key member of the House Health Care Committee believes that AHCCCS has resulted in cost savings and in high-quality care, and that satisfaction among enrollees is high. The changes introduced by the private sector, and the enactment of the new federal standards for Medicaid and Medicare quality of care, will continue to add to the foundation for managed care oversight that Arizona has established through AHCCCS.
Additional Resources
- Department of Insurance
www.state.az.us/id- Department of Health Services
www.hs.state.az.us
(Last updated August 30, 1999)
Arkansas
What Is Arkansas Overseeing?
Arkansas has nine HMOs that enroll 3.8 percent or more of the insured population. The state Medicaid program does not contract with HMOs for managed care; instead, it uses a primary care case management system (PCCM) under a 1915(b) waiver.
In 1995, the Arkansas legislature passed a broad any-willing-provider law, which requires plans to give any physician or clinic on a list of 21 "protected specialties" the opportunity to participate, if the provider meets the HMO's published standards. The statute prohibits the use of financial incentives or penalties that would influence an enrollee's choice of providers, such as higher co-payments or reduced reimbursement. However, the law's constitutionality was successfully challenged in the state courts and appeals courts and enforcement was enjoined in 1997-1998. In 1999 the legislature passed Act 1469; effective January 1, 2000, the act offers further freedom-of-choice protections for both network and non-network services.
The state enacted small group insurance reforms requiring guaranteed renewal and rating restrictions in 1991. In 1995, it created a high-risk pool that began operation July 1, 1996. Both laws were amended in 1997 to conform to the federal Health Insurance Portability and Accountability Act (HIPAA). Other amendments to the Arkansas HIPAA laws were enacted in Act 881 of 1999, with technical amendments to related laws provided in Act 1356 of that year.
Who Is Overseeing?
The Arkansas Department of Insurance (DOI) shares licensing and oversight responsibility with the Department of Health. DOI regulates plan solvency, monitors market practice, and tracks complaints.
The Arkansas Department of Health (DOH) oversees HMO quality; reviews HMOs during licensure by evaluating their provider networks, quality assurance plans, and grievance procedures; and responds to complaints about quality of care. In 1999, Act 1200 was passed; it requires all health carriers to establish a program of quality assessment and grievance procedures, and authorizes DOH to work with DOI to adopt rules and regulations to improve the quality of health care services.
The Arkansas Division of Medical Services (DMS) oversees the state Medicaid program. DMS runs a primary care case management program that uses fee-for-service providers as gatekeepers and employs sophisticated computer claim monitoring.
How Are They Doing?
Solvency Oversight of the Private Market
With an estimated less than 4 percent penetration of its 2.4 million population, Arkansas has one of the lowest HMO enrollments in the country. However, DOH's director of Health Facilities, Services and Systems estimates that, if self-insured plans are included, "half of the state is in some form of managed care." Self-insured plans are exempt from state regulation, but DOH is trying to introduce oversight by convincing third-party utilization review firms to register with the state. There is no DOI regulation of preferred provider organizations (PPOs) or licensure of provider networks.
Arkansas's 1995 any-willing-provider act has been embroiled in controversy. The act was successfully challenged as unconstitutional and as being in violation of ERISA and federal HMO laws. The court later issued a permanent injunction to prohibit enforcement.
Quality Oversight of the Private Market
Quality-of-care issues have not been a serious problem in Arkansas. "Up to this point the managed care industry . . . is young enough that people have not complained about quality of care," says the director of Health Facilities, Services and Systems. As necessary, complaints are referred to DOH through DOI's Consumer Services Division, and the insurance commissioner reports that few reach his department: "Most are resolved at the HMO level, and usually involve a misunderstanding." DOH intends to increase its staffing so that HMO sites can be visited more frequently. One issue that DOI reviewed and then prohibited in Directive 1-98 is balance-billing of HMO subscribers, where providers bill enrollees for services covered under managed care plans; this can lead to unnecessary payment by enrollees without subsequent reimbursement when their health plan makes its payment.
Medicaid Oversight
Arkansas has chosen to rely on a gatekeeper PCCM approach for its Medicaid program. "We considered a nine-county pilot [for managed care coverage], but the more we talked about it the more we realized we could [get good performance from a PCCM approach]," explains DMS's director. A University of Arkansas study estimated that the program has saved $30 million in health care costs.
The key to Arkansas's program is its sophisticated electronic utilization review system. Participating doctors receive monthly printouts, which describe their utilization patterns, and quarterly report cards, which compare them with other physicians on several measures, including cost and emergency room use. DMS may withhold the three dollars per month case management fee for poorly performing doctors, but the division is "trying to lead with the carrot and not the stick." The director reports that doctors are cooperative, in part because "they desperately want to avoid Medicaid HMOs."
Another feature of Arkansas's PCCM program is electronic claims processing. "We have the best claims processing in the nation, public or private," according to the director. Every billed transaction is electronically recorded and transmitted to DMS; reimbursement is then paid into the physician's account.
In 1996, the division began a health education project in three counties to identify and resolve problems.
Coordinating Oversight
Organized coordination of oversight in Arkansas is minimal. DOI and DOH officials say that they work well together, and DMS reports regularly to the appropriate legislative oversight committees. There is no joint purchasing initiative for managed care coverage.
What Is Next for Oversight?
The immature Arkansas HMO market is soon expected to grow substantially. DMS's director cites funding for broader medical coverage as another critical issue. "Nineteen to twenty percent of the state is uninsured, and there is no talk or money to do anything about it," he explains. DOI and DOH are developing legislative proposals to expand the state's authority to regulate providers that enter into capitated contracts with insurers. Arkansas officials are working to anticipate and forestall problems as managed care develops in the state. The PCP program, ConnectCare, was one of ten winners (from a field of 1,600 entries) in October 1997 of the Ford Foundation's Innovations in American Government competition.
Additional Resources
- Department of Insurance
www.state.ar.us/insurance- Department of Health
health.state.ar.us- Division of Medical Assistance
www.medicaid.state.ar.us
(Last updated September 13, 1999)
California
What Is California Overseeing?
With 49 HMOs that enroll 38 percent of its insured population, California's commercial health care market can be said to rely on managed competition. Two programs have been critical: the California Public Employees Retirement System (CalPERS), a health insurance plan covering almost one million people; and the Health Insurance Plan of California (HIPC), a publicly administered purchasing pool for 6,500 small businesses. By creating larger bargaining groups, these programs have been able to offer employees a choice of health plans negotiated at the best rates.
California's Medicaid program (Medi-Cal) has been steadily moving toward adoption of managed care and has been turning to HMOs for delivery of health care services; it has extended managed care options to Medicaid recipients, region by region, across the state. As of 1993, 20 regions had managed care programs in place, and 13 of these were scheduled to expand. (Medicaid regions are generally contiguous with counties.) Three million of California's 5.5 million Medicaid recipients are expected to enroll eventually in managed care programs.
The California legislature has actively engaged with the topic of managed care quality for several decades, as evidenced by two important legislative actions: the Knox-Keene Act of 1975, one of the first HMO oversight laws in the nation; and the Patient Protection Act of 1994, an important consumer-oriented reform bill. The legislature is also involved in designing the expanded Medi-Cal managed care program.
California voters have expressed their opposition to over-regulation of the health care industry. In 1994, the electorate soundly rejected a single-payer-plan ballot initiative by 74 to 26 percent, and in 1996 it rejected two other initiatives to regulate the activities of HMOs more heavily.
Who Is Overseeing?
The California Department of Corporations (DOC) is the single licensing and oversight agency for commercial HMOs in California. It regulates plan solvency, tracks and responds to consumer complaints, and evaluates plan networks and quality assurance procedures.
The California Department of Health Services (DHS) manages the state's Medicaid program, including the growing managed care component, and contracts with commercial HMOs, Medicaid-only HMOs, and prepaid plans managed by local government.
The California State Legislature (senate and assembly) has taken on a number of managed care issues and has implemented various consumer-oriented protections, such as the prohibition of "gag" rule clauses and the requirement that experimental treatments prescribed for terminally ill patients be independently reviewed to ascertain their medical necessity. Some legislators are frustrated with their minimal involvement in oversight issues. An important member of the assembly's Health Care Committee has commented that "oversight seems more a slogan than anything real, at least here in California." However, there have been achievements: In addition to passing the Patient Protection Act and participating in the design of California's Medicaid managed care program, the legislature, working with the governor, enacted a strong small-group health insurance reform measure, requiring guarantee issue of all small-group products; limiting the extent of coverage exclusions for preexisting medical conditions; providing portability of coverage; and limiting rate variations according to health status.
How Are They Doing?
Solvency Oversight of the Private Market
California's Knox-Keene Act, one of the first HMO laws in the nation, continues to guide legislation for overseeing HMOs. DOC has taken a broad approach to monitoring financial risk. In addition to HMOs, the agency regulates any provider organization that accepts full capitation from an HMO for the provision of both professional services and institutional care. California has several large integrated provider groups, some of which have assumed the responsibility and risk for the health of more than a million patients. The insolvency of any one such provider would create serious medical, economic, and social hardships as evidenced by the July 1998 bankruptcy of FPA Medical Management, Inc., and its affiliates, including FPA Medical Management of California, Inc. In addition, because of concerns regarding solvency, in March 1999 the department intervened in the operations of MedPartners Provider Network, Inc., to preserve continuity of care for the 1.3 million MedPartner enrollees in California.
Recently the attorney general has begun to monitor carefully the activities of nonprofit hospitals that sell, convert, engage in a joint venture, or plan other joint operations with the for-profit sector. DOC must approve the sale or conversion of HMOs and integrated plans, including those that are hospital-based; however, the attorney general is then responsible for overseeing the charitable uses of funds set aside as a result of the conversion of a nonprofit organization. The oversight of conversions goes beyond the issue of solvency to enforce valuation of the converting organization in order to calculate the charitable assets to be preserved and prevent personal inurement by senior executives of the converting organizations. The oversight activity that attracted the most attention in 1996 involved the conversion of the nonprofit Blue Cross of California to a for-profit company, WellPoint Health System, and the transfer of the charitable assets of Blue Cross to two philanthropic foundations. The ongoing legacy of this process is legislation, which went into effect on January 1, 1997, that established rules for oversight of conversions in the future (California Corporations Code Sections 5913-5919).
Quality Oversight of the Private Market
As DOC's senior health care counsel explains, DOC oversees not only financial solvency, but also a plan's "capability to perform its functions," including its quality assurance and internal grievance processes, "in order to ensure that Californians enrolled in HMOs receive the services they are entitled to, and that these services continue to be available and accessible." DOC contracts with outside physicians to review consumer complaints about HMO decisions regarding treatment and to assure that no patient is denied medically necessary treatment. In October 1996, DOC created a toll-free number for consumer complaints, and in 1997 the agency began publishing an annual summary, detailing the number and type of complaints for each plan. DOC has also ordered all HMOs to remove any "gag" clauses from their provider contracts.
The legislature has been actively concerned with improving the oversight of managed care quality. In 1994 it passed the Patient Protection Act, which standardized reimbursement for emergency room use and required health plans to more fully disclose their financial arrangements to consumers. The legislature has since been considering reforms that would prevent "bait and switch" tactics, such as terminating providers after they have been listed in marketing information given to prospective enrollees.
HMO quality is a controversial issue in California. Numerous media reports have questioned the performance of HMOs; for example, the Los Angeles Times ran a major series that explored a range of HMO and managed care quality issues. However, polls cited in that same series reflected high satisfaction with HMOs, and it revealed as well the difficulties of assessing actual and perceived levels of quality. The chief of staff for the California Senate Health and Human Services Committee does not think quality of care or under-treatment are major concerns for HMOs at this point, but he does see the problems as becoming more critical if the organizations are forced by competition to begin excluding high-cost patients.
Medicaid Oversight
The state and 12 of the largest counties are implementing a pilot Medicaid managed care program. In each of the 12 pilot regions, Medi-Cal contracts with at least two managed care plans. DHS selects an HMO through competitive bids, and the region then develops its own government-sponsored managed care plan. These local initiatives can be developed by the County Board of Supervisors or, if the board fails to make a proposal, by other interested parties. All Medicaid plans must meet Knox-Keene licensing standards.
DHS and the legislature have been actively concerned with inclusion of traditional providers of health care services to the indigent, uninsured, and special needs groups. According to DHS's strategic plan in 1993, HMO plans are "encouraged to include safety net and traditional providers in their networks." Local initiatives, however, are "required [emphasis added] to include all safety net providers that agree to provide services," as well as to meet the same terms and conditions required of other entities. The legislature has taken a major role in designing Medi-Cal's managed care program and has carved out a number of fee-for-service enclaves for particular groups.
Some observers are concerned that the local initiatives will not be able to compete effectively with HMOs in Medi-Cal's dual system. The legislative analyst notes that the county plans have moved less quickly than the commercial HMOs in pulling together their provider networks. Moreover, since local initiatives are required to contract with federally qualified health centers (FQHCs), which usually have less healthy and more costly patients, they may face higher costs. The deputy director of the Department of Health Services responds that payment rates for local initiatives have been adjusted to reflect their mandated commitment to FQHCs, and that many commercial plans have in fact contracted with the health centers as well.
Funding of safety-net providers is another issue causing concern. The state distributes monies, termed disproportionate share hospital payments, on the basis of hospital use. If Medicaid recipients prefer HMO plans to traditional safety net providers, these institutions may suffer a critical loss of funding. The chief of staff of the state senate's Health and Human Services Committee thinks that the biggest issue in the Medicaid transition is the impact it may have on the safety net. He estimates that 26 percent of the state population is uninsured and relies on emergency rooms in county hospitals for care. Los Angeles County Hospital has faced near bankruptcy in the 1990s at least partially because of the increasing burden of uncompensated care. A proposed bill to tax HMOs to provide coverage for the uninsured failed several years ago, and this problem remains unresolved.
Coordinating Oversight
There is no single forum for discussing and coordinating policy regarding the oversight of managed care in California. Instead, government officials get together "as needed," according to the DHS deputy director. Oversight agencies work together on several issues; for example, DHS and DOC coordinate their audits of HMOs. The attorney general's aggressive posture on sales and joint ventures of nonprofit hospitals suggests that his office may begin to coordinate its oversight activities more closely with DOC. The Gray administration, like the Wilson administration before it, regularly meets with groups representing consumers, purchasers, and providers to discuss improving California citizens' access to high-quality, affordable health insurance.
What Is Next for Oversight?
Quality of care in HMOs and whether managed care programs can balance quality against cost in a competitive market remain issues of governmental and consumer concern in California. Increased interest in the financial activities of managed care plans, for-profit hospitals, and other major providers seems likely on the part of both the attorney general and the DOC.
Medicaid's expansion of managed care will continue in the near future. The deputy director of DHS hopes to move away from "looking at details and to move toward looking at broader health status measures." However, the chief of staff of the Senate Health and Human Services Committee believes that the problem of the medically indigent and uninsured, and the burden they represent to public hospitals and other providers, is likely to occupy policymakers over the next several years.
Perhaps the most critical challenge facing policymakers is the creation of a funding mechanism to cover the uninsured: both the currently uninsured and those who may lose their Medicaid eligibility as a result of welfare reform.
Managed care oversight, particularly quality-of-care and expansion-of-coverage issues, will remain high on California's legislative agenda for the near future.
Additional Resources
- Department of Corporations
www.corp.ca.gov- Department of Health Services
www.dhs.ca.gov- Office of Statewide Health Planning and Development
www.oshpd.ca.gov
(Last updated June 14, 1999)
Colorado
What Is Colorado Overseeing?
Colorado's HMO market is expanding rapidly. According to the state insurance commissioner, the number of HMOs increased by 58 percent within two years: from 16 in 1994, enrolling 24 percent of the insured population, to 20 licensed by the state in 1998, covering a total of almost 1.6 million enrollees. He reported that Colorado's percentage of HMO penetration was the sixth highest in the country in 1997.
The state's managed care program for Medicaid recipients has also grown. In 1994, only 10,000 of Colorado's 270,000 Medicaid enrollees were in HMOs. As of mid-1996, there were 70,000 Medicaid recipients in HMOs while another 60,000 were in primary care case management (PCCM). Colorado's managed care programs continue to grow. During the 1997 session, the legislature passed a bill requiring 75 percent of the Medicaid population to be enrolled in a managed care plan by July 1, 2000. The Children's Basic Health Plan (CBHP), a non-Medicaid managed health insurance program for children from birth to age 17 whose family incomes fall at or below 185 percent of the federal poverty level, was also created in 1997. The state also has a high-risk pool for persons whose medical conditions make them uninsurable.
Who Is Overseeing?
The Division of Insurance (DOI) within the Colorado Department of Regulatory Agencies is the primary licensing and oversight agency for commercial HMOs. It oversees plan solvency and market practices, tracks complaints, and consults the Department of Public Health and the Environment (DPHE) on quality issues. DOI has promulgated regulations to create a regulatory framework that distinguishes between full-service HMOs and limited-service provider networks.
The Department of Public Health and the Environment (DPHE) acts as DOI's consultant for quality oversight. DPHE reviews the quality assurance procedures and network adequacy of any plan filing for licensure and reports the findings to DOI; it works with that agency on complaints regarding quality of care and access to health care services. DPHE also is the licensing agency for health facilities in Colorado where licensure is required.
The Department of Health Care Policy and Financing (DHCPF) manages Colorado's Medicaid program. It oversees the HMO and PCCM components and a fee-for-service component.
The Colorado State Legislature has considered a number of managed care reforms during the 1990s. Many proposals have been enacted to provide Colorado consumers with additional benefits and health coverage protections.
In 1992, Colorado lawmakers enacted several small-group reforms, including guaranteed renewal, portability of coverage, and rating restrictions. In 1994, the state adopted guarantees for small groups and a modified community rating plan, which were phased in over a three-year period.
The 1997 legislature passed several health insurance consumer protection bills. Among their provisions were the creation of a market conduct examination program under which the insurance commissioner must consider insurance companies' complaint analyses, pricing, and market share; the establishment of standards for the adequacy of managed care networks, including access plans for health care networks; the guarantee that consumers receive a written explanation of the medical basis for denial of medical treatment; the requirement that carriers make a standardized benefits form available; and the establishment of parity in coverage of biologically based mental illness. Further legislation increasing insurers' accountability and mandating coverage of certain conditions was enacted in 1998, including coverage for the following: minimum hospital stays after childbirth; the administration of general anesthesia and hospital charges for dental care for qualified children; and equipment, supplies, and outpatient self-management training and education for the treatment of diabetes. In 1999, Colorado passed new laws to provide for standing referrals, to require coverage for necessary therapies for children, and to implement independent external reviews.
How Are They Doing?
Solvency Oversight of the Private Market
DOI oversees and regulates the solvency of any Colorado entity that accepts prepayment for health services directly. Provider groups that accept capitation downstream from HMOs for HMO-insured risks are not subject to oversight. The division has promulgated regulations that would reduce the solvency standards for organizations that accept risk only for a single service.
Quality Oversight of the Private Market
DPHE shares responsibility for the oversight and regulation of HMOs with DOI. DPHE assesses the ability of the HMO to make available and provide access to health care services, and the ability of the HMO to ensure the quality of its health care services. DPHE has a critical role in the licensing of these entities, in the review and analysis of enrollee complaints relating to health care services provided directly or under contract, and in the examination of HMOs, both routinely and when a problem arises in the quality of the health care services provided. These are continuous and ongoing processes.
DPHE has joined DOI and DHCPF in the coordination of HMO regulation through the establishment of an interagency health plan work group. The project is based on goals outlined in a memorandum of understanding signed by the three agency heads. The project has grown to include representatives of the Mental Health Services Division of the Department of Human Services, the Employee Benefits Section of the Department of General Support Services and Personnel, the Medicaid Managed Care Ombudsman, and the federal Health Care Financing Administration. The group engages in coordinated policy development, problem solving, licensing efforts, enrollee complaint resolution efforts, provider issues, and access issues.
DOI has successfully used its analysis and research to head off legislative action. "We have a cooperative relationship with the legislature. They view us as a resource to work out policy issues," reports the commissioner.
Medicaid Oversight
"Colorado Medicaid has a strong and comprehensive quality assurance program," notes the manager of DHCPF's Quality Assurance Section. "We focus on quality in a variety of different areas, which gives the department a more complete and detailed perspective. For instance, the client survey gives the department feedback on the client perspective. This information fits into our whole puzzle so we can obtain a more complete picture of the quality of Medicaid health care."
DHCPF currently employs HEDIS measures; the Consumer Assessment of Health Plans Study (CAHPS), a nationally recognized consumer survey; focused studies on access and clinical issues; individual case reviews; and comprehensive administrative HMO site reviews. The HEDIS results for the HMOs are available in a performance report published in 1998 by the National Committee for Quality Assurance (NCQA).
Certain measures of the CAHPS survey have been placed on a consumer report card used to aid Medicaid clients in making an enrollment choice into an HMO or the Primary Care Physician Program (PCPP). In 1999, the report card will be expanded to include HEDIS and focused study results. This will provide Medicaid clients with more information and therefore offer a more informed choice.
The focused studies have been used for the PCPP, unassigned fee-for-service, and HMO populations. The first-year studies focused on diabetes, EPSDT, and discharge planning for persons with special needs. For fiscal year 1999-2000, a focused study will examine prenatal care and another will include a provider survey to assess cultural competency and disability awareness. In addition to DHCPF's External Quality Review Organization conducting the focused studies, it is also responsible for investigating quality of care concerns for Medicaid clients in an HMO. DHCPF's peer review organization (PRO) investigates quality of care concerns for Medicaid clients who are in the PCPP or unassigned fee-for-service (FFS) programs.
DHCPF conducts extensive site reviews to monitor contract compliance for the Medicaid HMOs. A desk audit is conducted and followed with an onsite review where the HMO's personnel are interviewed. Providers in the community are also interviewed to obtain their feedback on the HMO's communication and assistance with any Medicaid HMO related issue.
Coordinating Oversight
Managed care oversight in Colorado is primarily carried out by DOI and DHCPF. DPHE sees its role as consulting and assisting DOI with its oversight duties. Because the coordination of purchasing activities is in a formative stage, there is no joint purchasing in the Medicaid managed care program.
Colorado has an advantage in that the three regulatory agencies––Health Care Policy and Financing, Public Health and Environment, and the Division of Insurance––are able to sit down together and work out collaborative ways to address managed care. In addition, there has been a good relationship between these agencies and legislators who are involved in health care issues. This is especially important because, by state constitution, the state has a form of government that is a "weak executive and strong legislature." In 1997, the Division of Insurance, the Department of Health Care Policy and Financing, and the Department of Public Health and Environment signed a memorandum of understanding regarding the oversight of health insurance organizations. The agencies agreed to work collaboratively to: develop appropriate standards for access and adequacy of HMOs; develop a streamlined coordinated licensing process for HMOs; coordinate examination of HMOs; adopt consistent requirements for HMO grievance procedures; create a shared data system to support HMO oversight activities of the agencies; and set up a joint committee to review and coordinate, on a regular basis, activities consistent with this agreement.
The collaborative efforts of the three agencies has led to the development of a number of consumer protection measures. These developments include legislation described above, new regulations governing utilization review, and educational outreach to consumers. The new regulations provide specific time lines and procedures to be followed when health plans deny care or benefits based on utilization review. In addition, a consumer brochure has been developed to advise individuals about their rights and responsibilities with respect to complaints and grievances against health plans.
Although the three departments do collaborate effectively, they are also respectful of their differences, mandated by statutory and regulatory requirements as well as constituent input.
What Is Next for Oversight?
Colorado health officials see a number of issues on the horizon for the state. DHCPF's executive director is interested in finding a way to make managed care work for special needs groups, like the disabled. The expansion of Medicaid enrollment will continue to be widely debated.
DHCPF's executive director explains: "People took for granted that there was a lot of fluff in the system which could be used to cover the uninsured. The states have done very little direct work for the indigent, but there is a lot of indirect support. As indirect support gets squeezed, the direct funding is so small we will have a lot of tough decisions on our hands." He anticipates that maintaining the safety net will be very costly and adds, "The nature of the universal coverage debate will change dramatically if the safety net collapses."
While managed care is an accepted part of Colorado's health care system, state officials still face tough challenges in quality assessment and oversight and expansion of access to coverage.
Additional Resources
- Department of Health Care Policy and Financing
www.chcpf.state.co.us- Department of Public Health and the Environment
www.cdphe.state.co.us- Department of Regulatory Agencies, Division of Insurance
www.dora.state.co.us/insurance
(Last updated September 2, 1999)
Connecticut
What Is Connecticut Overseeing?
There are 15 licensed HMOs in Connecticut as well as a Blue Cross plan that operates an HMO as a line of business; these have enrolled 27 percent of the insured population. The state has been a pioneer in insurance reform. In 1990 the legislature enacted guaranteed issue, mandatory reissue, and portability of coverage, and limited exclusions for preexisting conditions for all groups of fewer than 25 members. In 1994 the Joint Standing Public Health Committee outlined a general road map for expanding access to coverage and established the Office of Health Care Access to develop a plan in cooperation with the Department of Public Health (DPH). The plan aimed to ensure coverage of all state residents in a certified health plan by January 1997. However, this mandate was repealed in 1995.
Also in 1994, at the recommendation of the Human Services Committee and then-Governor Weicker, the legislature extended Medicaid coverage to all children between the ages of one and eleven whose family incomes were less than 185 percent of the federal poverty level (FPL); coverage was to have been expanded progressively to include all income-eligible children under the age of 19 by October 2002. However, in October 1997, the state enacted its HUSKY (Health insurance for UninSured Kids and Youth); under Part A (Medicaid) of HUSKY, coverage was extended to that group effective January 1, 1998.
Under an approved 1915(b) waiver, Connecticut's Department of Social Services (DSS) enrolled 250,000 clients in a managed care program by January 1997. The legislature has appointed the Medicaid Managed Care Advisory Council to advise the department on the implementation of the 1915 waiver.
Who Is Overseeing?
The Connecticut Insurance Department (ID) is the sole licensing and oversight agency for HMOs serving the commercial market. The department oversees solvency; monitors market practices and network adequacy; reviews grievance and quality assurance procedures; and tracks consumer complaints. ID is not empowered to override health plan decisions about treatment choices or grievance resolutions.
The Connecticut Department of Public Health (DPH) has no oversight responsibilities for managed care.
The Connecticut Department of Social Services (DSS) manages the state's Medicaid program. It is implementing a prepaid managed care program for the state's Aid to Families with Dependent Children (AFDC) recipients and related groups, under a 1915(b) waiver. DSS contracts, through provider agreements, with all kinds of health care providers for the purpose of delivering services to its clients under fee for service. For managed care, DSS contracts with licensed HMOs and managed care organizations (MCOs) sponsored by federally qualified health centers and hospitals (FQHCs). In August 1999, the department had contracts with four HMOs and one MCO that is sponsored by FQHCs.
The Office of Health Care Access (OHCA) was established in 1994 to develop a plan for universal coverage, since tabled; OHCA is now responsible for health data collection.
Although the Connecticut State Legislature (senate and house) is part-time, it has been very active in health care reform in the 1990s. The first small-group insurance reforms were passed in 1990 and expanded in 1993 and 1995. Lawmakers have also established a series of health care commissions and task forces and have acted on several of the recommendations submitted by these bodies. During the 1997 legislative session, a managed care reform act was promulgated. It requires the ID to issue a consumer report; to file quality assurance statistics, provider contracts, and financial arrangements; creates an external review procedure for denial of services; and establishes parity in insurance coverage for biologically based mental health disorders.
How Are They Doing?
Solvency Oversight of the Private Market
Solvency oversight has not been a major issue in Connecticut. Two HMOs went bankrupt in the late 1970s and early 1980s, but none have become insolvent in the last 10 years. ID oversight focuses on the assumption of risk. Any entity that accepts capitated payments directly from employers or enrollees is treated and regulated as an HMO and must maintain $1 million in capital and reserves. As a result of legislation passed in 1997, $3 million is required for point-of-service products; most filing requirements began as of May 1, 1998. ID is under strong contracting disclosure legislation, which requires HMOs to provide information about their contracting relationships and incentive systems with providers. However, a key legislator notes that ID has yet to do anything about implementing their legislative mandate. "They are said to be in the process of doing it soon," she notes.
Quality Oversight of the Private Market
In 1996, the Connecticut legislature considered and rejected a major managed care reform proposal that would have granted responsibility for quality oversight to DPH, eliminated contract "gag" rules, and required HMOs to obtain accreditation from the National Committee for Quality Assurance (NCQA) or a like organization. The bill was an "attempt to reach some consensus about the level of concern" surrounding managed care, explains the vice chair of Connecticut's Senate Public Health Committee, who thinks that "the market is not mature enough to reach consensus." The majority of complaints behind the proposed bill were from "providers who are being frozen out of networks," according to a principal examiner for ID. The chief for DPH's office of policy planning and evaluation, which would have the authority for quality oversight under the proposed legislation, agreed that provider complaints were the major impetus, but added: "We need some protection for providers to make sure they can help patients."
The 1997 managed care reform act prohibits "gag" clauses and requires provider input before materially changing medical protocols; in addition, provider profit development must make allowance for patient mix and severity of illness under the Insurance Commission's control.
Apart from provider complaints, the bill's supporters offered little evidence to substantiate their concerns over HMO quality, and opponents, particularly employers, objected that increased regulation would raise costs. "Affordability is a big issue here. The more regulation the higher the premiums will go," says ID's examiner, while "capitation is more of a perception problem than a reality." The examiner reports that the department has received no capitation-related complaints. Opponents were also concerned that, given Connecticut's reputation as an insurance industry state, the bill would send the rest of the nation a strong negative message about managed care. In the end, explains the vice chair: "I didn't feel that those who want increased regulation had demonstrated concrete problems that would justify the level of regulation."
Medicaid Oversight
Connecticut's capitation program for Medicaid clients is built around the use of purchasing strategies rather than regulation to improve managed care performance. "The regulatory process is very lengthy. One thing we don't want to do is tie up managed care plans so they can't have any creativity," states the medical policy director for DSS. To ensure performance, he adds: "It is essential to think out what you want in advance and have a contract enforcement system."
The legislature has raised several concerns about the Medicaid managed care program, including questions about health plan marketing and practices payment rates. "There wasn't sufficient baseline data to set rates to cover costs. The rates for behavioral health have been phenomenally low," says the Public Health Committee's vice chair. Another problem arose as managed care plans contracted with hospitals and fewer Medicaid patients used FQHCs, causing anxiety over the future of the health centers. The director acknowledged the problems but responded that DSS has taken steps to deal with them. The department has imposed temporary enrollment freezes on some plans with inadequate provider networks and has contracted directly with those hospitals and FQHCs that meet DSS solvency and network standards. The department also contracts with licensed HMOs and an MCO that meet the network adequacy standards required of all Medicaid health plans and the department's solvency standards. The MCO is sponsored by the state's FQHCs.
The vice chair agrees that "problems are working themselves out" as DSS gains more experience with managed care. Legislators realize the difficulty of attempting to manage the details of implementation. "It is very hard . . . to dictate by statute," admits the vice chair. Asking the Health Care Financing Administration (HCFA) to review the capitation rates is not feasible, for example, because HCFA will meet formally only with the executive branch. The legislature has dealt with oversight by appointing advisory commissions to monitor implementation.
Coordinating Oversight
The Medicaid Managed Care Advisory Council includes representatives of the Department of Public Health; the Department of Children and Families (the child welfare agency); the Department of Mental Health and Addiction Services (the mental health and substance abuse agency); the Office of the State Comptroller, an independently elected official who contracts with health plans on behalf of state employees and retirees; the Department of Insurance; the Department of Social Services; and the Office of Policy and Management, which is the governor's statewide planning and budgeting agency. There have been no joint purchasing efforts to date. But in the 1996 legislative session, the legislature voted to allow any municipality to use the state's purchasing clout and be part of the state's HMO health plans. The ID has sole responsibility for the private market, and Connecticut's insurance industry is opposed to any sharing or diminution of that authority, according to PHD's chief of policy planning and evaluation. Medicaid conducts solvency oversight for its own contractors. PHD has been interested in participating in data collection for HMO performance evaluation, but the Health Care Access Commission retains sole responsibility.
In 1997 the Connecticut General Assembly adopted legislation for "quality" oversight of managed care organizations. Public Act (PA) 97-99 placed this oversight with the Insurance Department, but there are several areas where input from the Department of Public Health is required, including the development of regulations governing utilization review companies; regulations governing external appeals to the commissioner of insurance (after an adverse determination by managed care companies and utilization review companies concerning admissions or lengths of stay); and a report card comparing managed care organizations. Additionally, the Department of Public Health is allowed to request and receive HEDIS data collected by the Insurance Department from managed care organizations.
What Is Next for Oversight?
All the respondents agree that Connecticut's debate about HMO quality oversight is not over. Many consumer groups are anxious about the increased market penetration of HMOs. DPH's chief reports complaints from elderly residents, who are worried about "bait and switch" tactics by HMOs. Legislative discussions about mandating NCQA or similar accreditation and granting increased oversight authority to DPH will continue. In 1998 the legislature planned to debate solvency and quality oversight of Provider Service Organizations (PSOs). These entities do not currently fall under the authority of PA 97-99. Additionally, the viability of safety-net providers is also of issue and is being investigated by the Legislature's Medicaid Managed Care Council.
DSS's medical policy director describes the Medicaid program agenda as "ambitious." The state had hoped to have approval of its 1115 waiver and to move dual eligibles, elderly, and disabled clients, into managed care by July 1997, but this project is on indefinite hold. The policy director believes that the federal government should give states more discretion in designing their Medicaid managed care models. "There is a need in this country to get away from the Medicaid model," he argues. "How many waivers are necessary to prove the point that there is a better way than fee-for-service to serve this population? It is better for the states to learn more about how to build a program [than to apply for multiple waivers]." Connecticut officials are committed to find ways to address issues of quality and access within the constraints of their state.
Additional Resources
- Department of Insurance
www.state.ct.us/cid- Department of Public Health
www.state.ct.us/dph- Department of Social Services
www.dss.state.ct.us- Office of Health Care Access
www.state.ct.us/ohca
(Last updated August 23, 1999)
Delaware
What Is Delaware Overseeing?
Although Delaware has six Managed Care Organizations (MCOs) with an enrollment share of 20 percent of the insured population, a Department of Insurance analyst estimated that firms self-insured under ERISA control more than 70 percent of the market. The state's HMO law dates back to 1983.
Delaware operates a Medicaid managed care program. This program, the Diamond State Health Plan, is an 1115 waiver that is statewide and mandatory for all of the eligible population. The Diamond State Health Plan was approved by the Health Care Financing Administration (HCFA) in May 1995 and implemented in January 1996. The plan covers all Medicaid-eligible persons who are not in the Medicare program or in the state's Home- and Community-based waiver programs. It also expands Medicaid coverage for more than 13,000 previously uninsured adults at or below 100 percent of the federal poverty level. Three MCOs provide coverage; as of March 1998, enrollment was more than 64,000.
Who Is Overseeing?
The Diamond State Health Plan was the result of recommendations from the Delaware Health Care Commission (DHCC) in 1994. The DHCC is the key agency in setting the state's health policy agenda. The major objectives of the DHCC are cost containment, primary care access, increased health care coverage, state health data collection and evaluation of existing programs.
The commissioner of the Delaware Department of Insurance (DOI) is an elected position. Under the 1987 HMO Act, the DOI regulates HMO solvency but has no jurisdiction over preferred provider organizations (PPOs) and physician health organizations (PHOs).
The Delaware Department of Health and Social Services (DHSS) houses the state Medicaid office within the Division of Social Services. In January 1996, Medicaid implemented the Diamond State Health Plan (DSHP). The Medicaid office also houses the Medicaid Surveillance and Review unit, which provides quality oversight for the DSHP. The state also contracts with an external quality review organization (EQRO) to provide external quality review. The program is also evaluated by a HCFA-contracted independent evaluator.
The Division of Public Health (DPH), also within DHSS, delivers public health services; traditionally it has included services directed to the indigent population. DPH contracts with managed care organizations and works closely with hospitals, community health centers, and others to ensure quality medical care.
The Delaware State Legislature (general assembly) passed an insurance reform package in 1992 and approved the Nemours CHILD plan. In 1995 lawmakers approved the plan for the state's 1115 waiver request (the Diamond State Health Plan). The Nemours CHILD plan providers became MCO-contracting providers under the 1115 waiver.
How Are They Doing?
Solvency Oversight of the Private Market
In 1997 the Delaware Legislature passed HR 94. This resolution led to the revision of the state's regulations for the private MCO market. The redraft of the private market regulations are well underway and were to have been completed in mid-1998. HB 366 also revised some oversight for the private MCO market. Seventy percent of the insured population remains ERISA exempt.
Quality Oversight of the Private Market
There continues to be little formal oversight of the care quality for the private market. This, too, will be addressed by the changes that occur from HR 94. Complaints in this area seem to be around misunderstandings of how managed care programs work and, more recently, slow claims payment. DOI staff counsel members on how to obtain authorizations for services.
Medicaid Oversight
DHCC recommended Delaware's move into managed care to address three problems: lack of access to care for Medicaid members, increased Medicaid costs, and a large uninsured population. Implementation and operation of the Diamond State Health Plan lies with the Medicaid office in DHSS. The legislature retains budgetary authority.
The chief administrator for the Diamond State Health Plan states that implementation went well and the plan has been operational for more than two years. The state has been able to expand the number of providers available to Medicaid members by requiring that the MCO providers open their panels to all members, private and Medicaid. In early 1998 the Medicaid office reported more than 13,000 additional members as a result of this requirement. These members were a previously uninsured population.
The Medicaid office meets monthly with the MCO, the MCO provider, and client service staff and MCO case managers. At these meetings other state agency staff, advocates, and providers voice their concerns and address challenges. In April 1996 the state, the MCOs, and the enrollment broker began to meet monthly with a group of parents of children with disabilities to help address issues with this special population as they occurred. The state has been proactive rather reactive with this population.
The state and the MCOs continue to work with the community providers as they move forward with managed care. MCOs are not required to contract with all community providers; the chief administrator explains that the best way to improved access is through these providers. The state strongly encourages contracts with the community providers, in particular the state federally qualified health centers (FQHCs).
Coordinating Oversight
In the beginning of the program DPH was very concerned about quality oversight. However, DPH now has contracts with all three MCOs and are part of the state's EQRO oversight initiative. There has been some staff turnover at DPH, and Medicaid, the MCOs, and DPH are working closely together. The Medicaid office and the MCOs also work closely with the Division of Child Mental Health, the Division of Alcohol, Drug Abuse and Mental Health (the adult mental health agency), and the Department of Education. The Division of Child Mental Health was recently accredited as a behavioral health managed care organization by the Joint Commission on the Accreditation of Healthcare Organizations (JCAHO).
What Is Next for Oversight?
As noted above, the state is in the process of increasing the oversight for the private managed care market. The secretary of health and social services recently changed and the relationship between the department and the Department of Insurance is moving the new regulations forward.
Providers are increasingly vocal about the impact of managed care on their practices and the state will probably see some proposed legislation in this area.
Medicaid's deputy director feels "the program has come a long way and we have addressed many of the issues that arose in the very beginning of the program." The office is in the process of a Long Term Care Managed Care proposal and will be the responsible office for the implementation of the state's Title XXI program for children.
The Medicaid office will continue to work with the EQRO and the state utilization review unit to provide oversight for all three programs as they move forward.
Issues related to oversight of the private managed care market were expected to be addressed in mid- to late 1998.
Additional Resources
- Department of Insurance
www.state.de.us/inscom- Department of Health and Social Services
www.state.de.us/dhss/irm/dhss.htm- Delaware Health Care Commission
www.state.de.us/dhcc
(Last updated March 25, 1998)
Florida
What Is Florida Overseeing?
Florida has 34 HMOs, which enroll 36 percent of the state's insured population. Fourteen Medicaid HMOs enroll 380,000 clients. The state's Medicaid Primary Care Case Management System (PCCM)––known as Medi––Passenrolls an additional 520,000 Medicaid recipients. Florida is no longer attempting to implement universal coverage by a fixed deadline. But, as in other states, government officials are working on incremental expansions of coverage, consumer information and on improving care for some of the most serious diseases, such as AIDS, diabetes, and asthma.
In the period from 1992 to 1995, the Agency for Health Care Administration (AHCA), and the Community Health Purchasing Alliances (CHPAs) were created and the Florida Health Security Plan was submitted to the state legislature. Between 1992 and 1996 the old super agency, the Department of Health and Rehabilitative Services (HRSO), was dismantled, with its functions transferred primarily to two new departments––the Department of Health and the Department of Children and Family Services––but also to the Agency for Health Care Administration, the Department of Elder Affairs, the Department of Juvenile Justice, and the Department of Revenue.
Based on the managed competition concept, the Florida Health Security Plan called for using managed care savings to the Medicaid program to fund subsidized enrollment in the CHPAs for families with income less than 250 percent of the federal poverty level. This key component was not approved by the legislature. However, the CHPAs are successful in the small business health insurance market, enrolling about 85,000 persons in managed care plans as of March 1998.
The Florida Healthy Kids program is a nationally recognized innovator of school based health insurance. Healthy Kids contracts with HMOs to provide school children with a carefully tailored package of benefits. The program, which is voluntary on the part of the parents, has expanded to cover 42,000 children from 16 counties. With funding from the federal-state Children's Health Insurance Program (CHIP), Healthy Kids is expected to cover 194,000 children throughout the state in the year 2000. Current plans also call for expanding the number of children in Medicaid, the great majority of whom will be enrolled in managed care.
AHCA is implementing four Medicaid demonstration projects where PSOs (officially known as provider service networks) will provide comprehensive care to Medicaid recipients at discounted rates.
Who Is Overseeing?
The Florida Department of Insurance (DOI) shares oversight and licensing responsibility for commercial HMOs with AHCA. DOI oversees HMO solvency, investigates the background of HMO owners and executives, monitors market practices, and tracks non-quality-related complaints.
Florida Healthy Kids is a nonprofit corporation sponsored by the state, with the commissioner of insurance serving as chairman of the board.
The HMO Consumer Assistance Plan (CAP) is a board affiliated with the insurance industry that is organized by DOI. It arranges for health insurance for members of HMOs declared insolvent by the department. The CAP was invoked for the first time ever in 1997.
The Agency for Health Care Administration (AHCA) manages Florida's Medicaid program, oversees the quality aspects of all commercial and Medicare HMOs. For all HMOs, AHCA evaluates plan networks and quality assurance procedures. Through the Statewide Provider and Subscriber Assistance (SPSA) panel, the agency processes and resolves consumer complaints of HMO denial of coverage for medically necessary care. AHCA also handles state licensure and/or federal certification for more than 35 types of health care services and facilities, as well as the investigation and prosecution activities related to the discipline of health care professionals.
The recently created Department of Health (DOH), has primary responsibility for public health services, programs for children with special health care needs, and the state's health professional licensing boards.
Florida's Legislature (senate and house) passed an omnibus managed care regulation bill in 1996. This law included provisions tightening the oversight of Medicaid HMOs, regulating the ownership and management of all HMOs and requiring coverage of emergency room treatment under certain conditions.
In 1997 legislation was enacted to outlaw "gag" clauses and mandate that HMOs have internal grievance procedures to address complaints of denial of care (if the internal process is unsatisfactory to the consumer, they can appeal to the state-run SPSA). A state-run survey of HMO enrollees was authorized. Several other pieces of HMO related legislation were enacted in 1996 and 1997 and more were under consideration for the 1998 legislative session.
How Are They Doing?
Solvency Oversight of the Private Market
Currently, any entity that contracts directly with employers or enrollees on a prepaid basis is regulated by DOI. Medicaid demonstration PSOs, which primarily contract with AHCA, are not currently regulated by DOI. Provider networks accepting capitation from HMOs are not regulated either.
DOI's goal at the time of licensure is to establish that a plan has the capability to remain solvent. Department staff check the plan's capital reserves and the backgrounds of the chief officers and owners. After licensure, DOI continuously monitors financial statements, conducts on-site examinations and tracks each plan's loss ratio while looking for "early warning signs" of financial trouble.
Quality Oversight of the Private Market
AHCA certifies HMOs as health care providers. Before issuing the certificate, AHCA requires all plans to submit HEDIS and EPSDT data, and it evaluates plan networks for quality. Florida was the first state to require plans to seek accreditation from a nationally recognized organization. One expert asserted that current measures are sufficient for the private market: "The commercial market kind of regulates itself through competition. They must supply a low price and good quality or the employer will move to another plan."
AHCA has published the 1996 Guide to Hospitals in Florida, the 1997 Report on Physician Discipline and Malpractice, regional nursing home guides with quarterly updates, and in 1998, a statewide HMO consumer satisfaction survey. An expanded update of this survey is planned for publication in 2000. In 1999, the Department of Health published an internet-based physician profiling system for the state's licensed physicians.
Medicaid Oversight
Florida's Medicaid HMO program has undergone several rounds of reform. After being exempt in the early 1990s, Medicaid HMOs were required in 1995 to obtain HMO licenses. Door-to-door sales and other inappropriate marketing methods were prohibited in 1996. Perhaps most significant, two of the most negligent HMOs lost their Medicaid contracts and went out of business.
The state's Medicaid PCCM program, MediPass, gained hundreds of thousands of enrollees when restrictions were imposed on HMOs. MediPass currently enrolls approximately 500,000 recipients, while Medicaid HMOs enroll a total of about 380,000 persons. The MediPass program says physicians and other providers $3 per month for each recipient for whom they provide case management services. Medical services are still reimbursed on a fee for service basis but the program seems to be effective in eliminating abuses.
Coordinating Oversight
While several different agencies are involved in managed care oversight, the division of responsibilities is clear and manageable. DOI and AHCA staff meet once a month to review current issues and coordinate efforts. Substantial informal contact between AHCA, DOI, and DOH staff is sufficient to resolve minor problems. Departmental and agency employees are in regular contact with state legislators and their staffs, especially the chairs and other members of the senate and house committees that address health care and finance.
What Is Next for Oversight?
With 4.5 million Floridians enrolled in HMOs, it is expected that HMO regulation will remain a major issue. In 1996 the governor vetoed a law giving consumers the right to sue HMOs over denial of coverage, but this proposal may come before the legislature again. Other potential issues include consumer choice of provider and access to second opinions, specialist physicians, or alternative medicine practitioners.
The governor has presented a plan to implement CHIP by increasing enrollment in both the Healthy Kids and Medicaid programs (see above). This plan may be modified, or possibly transformed, by the legislature. It seems certain that one or more types of managed care will be used to expand children's coverage, but every year brings new managed care options.
Additional Resources
- Agency for Health Care Administration
www.fdhc.state.fl.us- Department of Insurance
www.doi.state.fl.us- Department of Health
www.doh.state.fl.us
(Last updated August 27, 1999)
Georgia
What Is Georgia Overseeing?
As of January 1, 1999, Georgia's 17 HMOs had enrolled more than 1.35 million members, an estimated 19 percent of the population. More than 100 insurers in the state offer approved preferred provider organization (PPO) products, although many of them are not actively writing such coverage in Georgia. The state Medicaid program has two components: a primary care case management program, known as Georgia Better Health Care (GBHC), and a voluntary HMO program offered in the Atlanta metropolitan area. More than 18 percent of Georgia's residents are uninsured.
The state has imposed increasing numbers of health-benefit mandates in the past five years. During the 1995 session, the Georgia legislature approved portability of coverage. The Patient Protection Act of 1996 established new standards for managed care plans and managed care entities in the area of disclosure, access, quality assurance, emergency treatment, financial incentives, and confidentiality of patient records. Additions to this act in 1999 established a Consumer Choice Option, permitting enrollees to nominate a physician or hospital outside a managed care plan's network (for an additional premium). The act was also amended to establish a system of external, independent review of utilization review decisions under certain appeal situations.
Georgia has elected to use an alternative mechanism to deal with the portability requirements of the federal Health Insurance Portability and Accountability Act of 1996 (HIPAA) to address coverage for persons coming from uninsured plans and exhausting COBRA coverage. Georgia's system is an assignment mechanism that requires insurers in the individual market to accept a pro-rata portion of eligible assignees, based on an insurer's market share.
Who Is Overseeing?
Georgia's Commissioner of Insurance is an elected official. The Office of the Commissioner (OCI) has the statutory authority to issue HMO licenses, to oversee solvency, and to monitor market practice. OCI is the lead agency in tracking and responding to consumer complaints; the office consults with the Office of Regulatory Services on quality-of-care issues. Preferred provider organizations are not licensed directly, but OCI must approve all insurance contracts that offer a PPO network. The legislature has passed a bill that gives the commissioner new authority to regulate managed care providers, but these new responsibilities are not yet defined.
The Office of Regulatory Services (ORS), within the Georgia Human Resources Department, is jointly responsible with OCI for oversight of HMO quality. ORS evaluates HMO networks, quality assurance, and grievance procedures during the licensing process and works with OCI to track and resolve quality-related complaints.
The Georgia Department of Medical Assistance (DMA) runs the states Medicaid program. The primary care case management program, GBHC, operates in 70 of the states 150 counties; the voluntary HMO program is only available in the five-county Atlanta metropolitan area.
The Georgia State Legislature has been very active in health care reform in the mid-1990s, granting new authority to the commissioner of insurance to regulate managed care, enacting portability of coverage for employee groups, and creating new benefit mandates. As of July 1, 1995, all insurers were required to offer optional endorsement coverage of bone marrow transplants for the treatment of breast cancer and to provide basic wellness care coverage for children under six in all group health policies; the following year, 48-hour postpartum care became a required benefit. Lawmakers also approved a measure mandating that where employees are provided health coverage through a single HMO, the HMO must offer an additional point-of-service (POS) option, the extra cost of which may be borne by the employees choosing the option; the POS mandate became effective July 1, 1996. Except for portability of coverage, the legislature has not enacted any small-group or individual reforms.
How Are They Doing?
Solvency Oversight of the Private Market
Although commercial HMO enrollment is increasing in Georgia, "indemnity coverage still predominates. OCI's regulatory oversight extends to insurers of all types; prior to 1996, the agency did not regulate provider groups directly, but conducted indirect oversight through contract review for PPOs. The office is drafting regulations to define its newly granted authority over managed care providers and has promulgated rules governing provider service networks (PSNs). PSNs may contract directly with DMA to provide Medicaid managed care and will have lower reserve requirements than commercial HMOs. Commercial plans must have $4 million in reserves, but PSN reserve requirements will vary between $1 million and $3 million, depending on size.
Quality Oversight of the Private Market
Georgia's director of ORS explains that his office is trying to develop a regulatory approach that provides "a proper level" of quality oversight. ORS's primary role is to evaluate each plan's provider networks, quality assurance, and grievance procedures, and report to OCI, which makes the final determination. OCI receives most consumer complaints, but it often refers quality-of-care issues to ORS for investigation. ORS and OCI attempt to help HMOs and consumers come to a reconciliation. Neither entity has authority to overrule an HMOs decision. "Education is very important," says ORS's director, noting that many consumer complaints are based on a lack of understanding of managed care.
OCI reports that there are relatively few complaints related to managed care incentives. The complaints that do arise usually concern serious but rare problems. Postpartum hospital care was one issue that received attention and prompted a legislative mandate, although there had been no indication in OCI's records that there was a problem. The former director of OCI's life and health services views capitation as a valuable mechanism: "It is a necessary tool in many instances for HMOs to live with a budget, so they can offer their services at a rate employers can pay."
Medicaid Oversight
The managed care component of Georgia's Medicaid program is small but growing. As of July 1996, GBHC had extended coverage to 70 of the state's 150 counties, and the voluntary HMO program had enrolled 10,000 members. The state has contracted with an enrollment broker to educate and advise enrollees about the options. Contractor HMOs are paid 90 percent of the fee-for-service average over the previous three years, with adjustments made for program changes. So far DMA has not rejected any HMOs wishing to contract for Medicaid services. The director of program operations expects that the department will probably try to work with any HMO as much as possible.
There have been some issues of contention in developing the Medicaid programs. One disagreement arose over the legislature's attempt to carve out pharmacies from the HMO program, which was not endorsed by the governor. The media raised another problem, complaining about the slow pace of HMO enrollment. But the former director of program operations argues: "It's a dual-edged sword. If you do it [enrollment] fast, you get problems."
Under new legislation, DMA may contract directly with physician service networks (PSNs), which will not be under the same regulatory structure as commercial HMOs.
Coordinating Oversight
The main areas of coordination in Georgia health service regulation are ORS and OCI's joint responsibilities for licensure and quality-of-care oversight. There are no plans to operate joint purchasing efforts between Medicaid and state employees. Georgia State University's Health Policy Center, which works with state agencies, has developed some policy recommendations in anticipation of federal block grants.
What Is Next for Oversight?
The salient issue for Georgia's health agencies at present is the provision of care to the underserved and uninsured. The commissioner of insurance is developing a new regulatory plan to extend managed care to areas not currently served through reliance on PSNs. The Health Policy Center at Georgia State University is working on a strategic response to anticipated reductions of Medicaid funding, with particular focus on the impact to the medical safety net.
Additional Resources
- Georgia Community Health
www.state.ga.us/gch- Office of the Commissioner of Insurance
www.inscomm.state.ga.us- Office of Regulatory Services
www2.state.ga.us/departments/DHR/ors
(Last updated September 13, 1999)
Hawaii
What Is Hawaii Overseeing?
Hawaii has been a leader in health care reform, particularly in its efforts to achieve universal access for its citizens. In 1974, with passage of the Prepaid Health Care Act, Hawaii became the first state to attempt universal coverage. This act, passed before the federal ERISA law was enacted, requires all employers to offer either indemnity health insurance or managed care plans to full-time employees (working at least 20 hours per week) and covers a large percentage of the state's population. These same plans also provide coverage to Medicaid, Medicare, and Civilian Health and Medical Program of the Uniformed Services (CHAMPUS) recipients. Some estimates of the population covered in the early 1990s were as high as 95 percent. The state economy is currently stagnant, however, and more recent estimates of the uninsured population are between 6 and 7 percent.
In 1991 Hawaii added a limited benefit plan, the State Health Insurance Program (SHIP), to cover the 5 to 10 percent "gap" population left unprotected by the earlier legislation, but this program proved to be inadequate. On August 1, 1994, SHIP was superseded by Med-QUEST, which was designed to cover all individuals with incomes below 300 percent of the federal poverty level in a single seamless purchasing-pool system.
In July 1993, the Health Care Financing Administration (HCFA) granted the state an 1115 waiver to combine the Medicaid, SHIP, and general assistance programs under Med-QUEST, a capitated managed care system using HMOs. Almost immediately, Med-QUEST enrollment increased and within one month exceeded the expected figure of 110,000, eventually peaking at 160,000. Because of a class action lawsuit for the aged, blind, and disabled, who were still subject to the old eligibility requirements (100 percent of federal poverty level and an assets test), eligibility for QUEST reverted to pre-QUEST requirements. QUEST and fee-for-service clients are therefore now subject to the same eligibility standards. The state also received a legal challenge that the program violated the equal accommodation provision of the Americans with Disabilities Act and most recently, reduced income thresholds to the Medicaid mandatory coverage group standards for QUEST. By August 1999, enrollment had dropped to 124,000 and a new gap group program, QUEST-NET, had been developed to offer some minimal benefits (enrollment stood at 5,000 in August 1999).
Hawaii was one of the last states to require commercial HMO certification; this mandate was enacted in the Health Maintenance Organization Act of 1995.
Who Is Overseeing?
Beginning on January 1, 1996, the Insurance Division of the Department of Commerce and Consumer Affairs was given statutory authority to license and monitor the financial practices of HMOs, including commercial HMOs providing QUEST-contracted services. The division was not assigned to any of the Med-QUEST program.
The Med-QUEST Division, within the Department of Human Services, runs the Med-QUEST program, which covers some of the state's citizens not protected by the employer mandate. Med-QUEST requires quarterly financial reports from its HMOs and has its own staff to implement a comprehensive program of quality assurance that involves gathering data and tracking complaints. The Department of Health (DOH) has no role in the oversight of managed care.
The Hawaii State Legislature (senate and house) has been active in health care reform, including creation of the 1974 Prepaid Health Care Act, SHIP, and the Med-QUEST legislation. Lawmakers conduct hearings and continuously monitor the progress of Med-QUEST.
How Are They Doing?
Solvency Oversight of the Private Market
The state's move toward managed care under Medicaid accelerated the trend in the private sector to move toward managed care. Although he has no formal oversight responsibility for HMOs, the director of DOH has observed that more large hospital-based providers have established managed care health plans, and others who had a wait-and-see attitude have formed alliances and started up health insurance managed care plans.
The insurance commissioner was authorized to oversee commercial HMO solvency in Hawaii on January 1, 1996. The division "is committed to monitoring risk-bearing entities to ensure their financial solvency," according to the insurance rate and policy analysis manager. State officials agree that Hawaii's size facilitates oversight.
Quality Oversight of the Private Market
Hawaii has strengthened the protection of consumer rights of patients receiving health care under managed care plans and from HMOs. In 1998, the legislature passed the Hawaii Patient Bill of Rights and Responsibilities Act to afford patients of managed care systems certain rights and protections. That same year, the insurance commissioner was required to convene a task force to review various laws providing protection of patient rights and responsibilities with regard to health care, especially managed care. The task force continues to meet and recommend statutory revisions to ensure the protection of consumer rights.
Medicaid Oversight
Hawaii embarked on the Med-QUEST managed care program to achieve cost control. "Under fee-for-service, the providers liked it, the patients liked it, but there was unintentional over-utilization and the costs were out of control," explains the Med-QUEST division administrator. The transition has been difficult. Initially the managed care program was "being beaten up all over the place. We had opposition from everywhere and especially the doctors," reports the administrator. Clients complained about lack of access to preferred specialists for routine care. There were problems with continuity of care as well, as some plans reached capacity and asked patients to choose new physicians. For the most part, however, implementation problems have been addressed.
There were a number of media reports about the early Med-QUEST problems. The legislature chose not to impose any legislative rules or mandates, but it met frequently with division staff. The agency agreed to regular legislative briefings and annual reports, and it recruited key legislators to join a technical advisory committee. The committee continues to discuss QUEST issues affecting providers.
Over time both Med-QUEST and the contractor HMOs have improved their responses to problems. For example, the plans have become "pretty good at negotiating patient swaps in order to maintain continuity of care," says the Med-QUEST administrator. Med-QUEST tracks patient complaints "very, very religiously"; each plan must track and log every complaint and document resolution. Division staff conduct random reviews of complaints and resolutions. The protocol calls for member grievances to be addressed by the plan first; if the resolution is unacceptable to the patient, he or she may appeal to the Med-QUEST office and, finally, to the state courts.
Med-QUEST employs a quality-control staff, with a liaison position for each HMO, three staff physicians, and six nurses. The division also regulates marketing and reviews each plan's literature. A consumer advisory board has been formed, but has met infrequently as a result of budgetary constraints. Budget and fiscal issues have considerably slowed Hawaii's efforts to expand coverage for the indigent. The state economy experienced a downturn in the early 1990s, and the fiscal situation has worsened. As employers closed businesses or laid off workers, the number of uninsured has steadily increased. Even with QUEST, which provides coverage to low-income workers and persons losing employment, the number of uninsured has grown each year. "Money will drive the process until the state is more solvent," reports one state legislator. "Anything that requires more government and more bodies is not considered. What is considered is what we need less of." He thinks that the budget crunch has also limited the state's willingness to fund community health centers; because of their patient mix and outreach activities, center costs tend to be higher than those incurred by other providers. However, some community health centers have done very well under managed care capitation.
Coordinating Oversight
State oversight of managed care is coordinated primarily by the Hawaii Patient Bill of Rights and Responsibilities Task Force. However, oversight of health plan coverage is the responsibility of the Department of Labor and Industrial Relations, the Department of Human Services, or the Hawaii Public Employees Health Fund, depending upon the population served. Legislative responsibility has been concentrated in the committees that deal with insurance and budget issues rather than being assigned to committees that deal with health care.
What Is Next for Oversight?
State finances and health care costs are pressing issues for Hawaii's health care system. The cost of the Med-QUEST program and continuing state fiscal problems may force more changes in benefits, eligibility, or co-payments. The chair of the House Health Committee reports that the legislature has been briefed about options for cutting benefits to state employees and retirees.
The Insurance Division's exercise of its responsibilities for HMO licensing and oversight and legislative proposals for patient protection are also major issues. Furthermore, the state is moving toward the concept of parity and nondiscrimination in health care for mental illnesses, and is closely monitoring the functions of the Hawaii Health Systems Corporation, the state's public hospital system, to ensure quality health care for all, including those served by small, rural hospitals. The state must seek creative solutions to the problem of achieving quality and expanded access while struggling with the problem of costs.
Additional Resources
- Division of Insurance
www.hawaii.gov/insurance- Department of Health
www.state.hi.us/health- Department of Human Services
www.state.hi.us/dhs
(Last updated August 24, 1999)
Idaho
What Is Idaho Overseeing?
HMOs cover 7.1 percent of Idaho's privately insured population; most of the enrollment came about through the extension of managed care plans operating in and around Spokane, Washington. The state enacted small-group health insurance reforms in 1993 that provided for guaranteed issue and renewal, portability of coverage, and rating restrictions; these reforms were extended to individual policies in 1994. An any-willing-provider law covering a broad array of providers was also enacted in 1994.
Idaho's Medicaid program is a fee-for-service system. A gatekeeper program operates in 28 out of its 44 counties. The state has received a 1915(b) waiver for a new program that requires certain recipients to choose a primary care physician.
Who Is Overseeing?
The Idaho Department of Insurance (DOI) is the only state agency that actively oversees managed care. It regulates risk assumption and monitors application of the any-willing-provider law.
The Idaho Division of Health (DOH) has no role in managed care. According to the director, the department has absolutely no data to oversee different systems. Idaho repealed its Certificate of Need program in 1983.
The Idaho Division of Medicaid (DOM) does not monitor managed care except as it applies to the 1915(b) waiver. Medicaid supervises health facilities through the Bureau of Facility Standards (BFS), which licenses and certifies 15 Idaho hospitals that are not accredited by the Joint Commission on the Accreditation of Healthcare Organizations (JCAHO). The Division accepts JCAHO accreditation for other hospitals in the state.
The Idaho State Legislature was not concerned with managed care issues until passage of the any-willing-provider law. A Patient Protection Act introduced in 1996 was passed in 1997.
How Are They Doing?
Solvency Oversight of the Private Market
Managed care expansion has been slow in Idaho; according to state officials, HMOs have been deterred from entering the state because it is largely rural and health care costs have traditionally been low. Two HMOs went bankrupt in the early 1980s, and, until 1995, there was little new activity. However, four new HMOs began to operate in Idaho between 1994 and 1996, and others applied for licenses during that time.
As the sole oversight agency, DOI reviews all HMOs, networks, insurance companies, and other risk-bearing entities. DOI does not have a firm policy on physician hospital organizations (PHOs) that may enter the state market, but the presumption is that, if such plans assume risk, they will be regulated.
Quality Oversight of the Private Market
DOI regulations require an "adequate quality" of care in Idaho managed care plans, but they do not specify the meaning of "adequate." No consumer complaints have been documented; however, state legislators report that advocacy groups are becoming more interested in managed care issues. The Patient Protection Act generated increased media coverage of managed care, both positive and negative.
DOI initially handles complaints that fall under the state's any-willing-provider law. The law requires HMOs to accept any provider who meets the insurer's standards and to establish a grievance procedure for terminations. The statute fails to define "insurer's standards," resulting in possible loopholes. As of mid-1996 the law had not been tested, but DOI plans to forward all unresolved complaints to the Attorney General's Office.
Medicaid Oversight
Idaho is committed to a fee-for-service Medicaid program. DOM has not had a management information system that could handle capitation. However, by December 1996, the division expected to install a new system for compiling the necessary data and enabling the introduction of capitated care for Medicaid recipients. The Medicaid administrator has no immediate plans to extend managed care beyond the existing gatekeeper model.
Medicaid's quality oversight focuses on facility certification, based on either JCAHO accreditation or BFS certification. BFS monitors the facilities and sends a "red flag" warning to DOM if it identifies a problem.
Coordinating Oversight
DOI is the most active Idaho oversight agency. The director plans to convene a group to consider changes to the insurance code as it applies to managed care. The group will consist of local attorneys, insurance carriers, HMO plans, DOH, and DOM.
The state legislature approves all new regulations and conducts a periodic review of each agency; lawmakers are thus in a position to exercise oversight and promote coordination among the agencies.
What Is Next for Oversight?
Most state officials think that Idaho's rural environment will limit the immediate expansion of managed care. Affordability of services is the most pressing health care issue for state residents. However, managed care is still viewed as a "reduced access" alternative, according to the director of DOH. However, the ranking minority member of the House Health and Welfare Committee noted that the expansion of managed care in Utah demonstrates that a rural state can support this health care delivery system. Other legislators do not agree that Utah's experience is replicable in Idaho because 85 percent of Utah's population is concentrated in four adjacent counties and is therefore much more geographically able to support managed care organizations.
DOH's director predicts that physicians and hospitals will attempt to control market changes. He notes that physicians continue to migrate to Idaho, many fleeing managed care in other states. These physicians recommend that their colleagues organize preemptively rather than waiting for insurers to enter the market. The minority member of the House Health and Welfare Committee describes the physicians as skillful lobbyists. They have set up meetings between doctors and legislators before each session and set priorities effectively. On the other hand, many large and small businesses are committed to pursuing managed care in Idaho. Despite the slow entrance of managed care into Idaho, state officials and legislators are preparing themselves to face the problems and conflicting interests that may present themselves as it gathers momentum.
Additional Resources
- Department of Insurance
www.doi.state.id.us- Department of Health and Welfare
www.state.id.us/dhw
(Last updated March 16, 1998)
Illinois
What Is Illinois Overseeing?
Illinois has 47 HMOs (of which five are licensed but have no enrollees), which enroll approximately 20 percent of its population. In 1993 Illinois enacted certain insurance reforms for small groups: guaranteed renewal, portability, credit for preexisting conditions, and rating-band limits. All sections of the act sunseted on July 1, 1998. In 1997, Illinois enacted the Illinois Health Insurance Portability and Accountability Act, which initiated reforms in the large- and small-group markets through its provisions on preexisting conditions, guaranteed renewability, and portability. The small-group market, which is defined as 2 to 50 lives, now has guaranteed availability of coverage.
The voluntary HMO program that Illinois offers to individuals who receive Temporary Assistance to Needy Families (TANF) has enrolled approximately 158,000 members in 14 plans.
In July 1994 the Department of Public Aid received a waiver for a statewide five-year mandatory managed care demonstration project, MediPlan Plus. The goal of the demonstration was to increase access and quality of health care for Medicaid beneficiaries and limit rising costs through the increased use of managed care. However, before MediPlan was implemented, the Balanced Budget Act of 1997 (BBA) was passed in the fall of 1997. At this time, the department has put implementation of MediPlan Plus on hold, as the BBA allows the department to implement a similar program without a waiver.
The department implemented the Responsible Choice program in April 1998. Individuals eligible to enroll in managed care will be expanded from TANF MAG (Medical Assistance with Grant) to also include Medicaid clients formerly categorized as AFDC (Aid to Families with Dependent Children) who only receive medical assistance (Medical Assistance No Grant, or MANG), clients eligible through medical extensions, clients eligible through the state Children and Family Assistance program and children (up to 133% of the federal poverty level [FPL]) and pregnant women (up to 200% of FPL) eligible under Phase 1 of the Children's Health Insurance Program (CHIP).
During 1996 and 1997, the state developed a new type of managed care provider––Prepaid Health Plans (PHPs). The state currently has contracts with seven PHPs with enrollment of approximately 23,300 members.
Who Is Overseeing?
The Illinois Department of Insurance (DOI) shares licensing and oversight responsibility for HMOs with the Department of Public Health (DPH). DOI oversees solvency, monitors market practice, tracks consumer complaints, and refers quality-related complaints to DPH.
The Illinois Department of Public Health focuses on quality issues like network adequacy, quality assurance procedures, and physician standards.
The Illinois Department of Public Aid (DPA) runs the Medicaid program, including a voluntary statewide HMO program, and has oversight responsibility for PHPs. DPA has negotiated contracts with new plans, expanded Cook County enrollment by 35 percent, and expanded the managed care program to downstate Illinois.
The Illinois Health Care Cost Containment Council collects billing data from hospitals, and from freestanding rehabilitation and private psychiatric facilities.
The Illinois State Legislature (general assembly) has been moderately occupied with managed care issues, producing a package of small-group insurance reforms in 1993. During the 1995 session, the legislature debated, but then rejected, a strong patient protection act. Several pieces of legislation that would have changed the regulation of managed care entities or mandated certain coverages in health benefits plans have been proposed and considered in recent sessions. During 1999, SB 251 was passed and subsequently signed by the governor. This legislation is the most encompassing managed care reform bill passed in recent years. It contains provisions that broaden the definition of managed care, stipulate measures for utilization review and grievance procedures, and address provider issues.
How Are They Doing?
Solvency Oversight of the Private Market
DOI regulates all Illinois health care plans that provide services on a per capita, prepaid basis. Capitated contracts and incentive arrangements are permitted. By statute, HMOs in Illinois must belong to the State Guarantee Association, which covers the cost of all insolvent plans. The department enforces minimum standards for contracts between HMOs and providers and also has jurisdiction over acquisitions, which staff closely review for the protection of members. However, the supervisor of DOI's HMO financial analysis unit acknowledges that "it is hard to identify an HMO's true solvency when so much risk is transferred to providers without knowing these providers financial solvency." To help address this concern, a rule change established the requirement that HMOs submit financial statements from certain capitated providers to DOI upon request.
DOI also oversees registration of preferred provider organizations (PPOs). Each PPO must provide a detailed plan of operations, biographical background on its officers and directors, copies of all agreements, and descriptions of utilization review, complaint resolution, and grievance procedures.
Quality Oversight of the Private Market
Illinois regulatory agencies handle most quality oversight by tracking and resolving complaints. DOI conducts computerized tracking and analysis and deals with most complaints itself, including denials of specialist referral. Complaints about physician behavior or network adequacy are referred to DPH, which also inspects HMO sites and their facilities.
DOI has the statutory authority to make formal inquiries into all decisions and questions relating to care of Illinois residents enrolled in HMOs. The state does not require accreditation from the National Committee for Quality Assurance (NCQA), but "business is looking to NCQA the way they used to look for federally qualified HMOs. To be competitive it's where [the plans] have to go," explains the assistant deputy director of DOI's Life, Accident, and Health Compliance Section.
Most officials in the two agencies think that managed care organizations are not undermining medically necessary treatment, although they lack sufficient information for a definitive assessment. "We don't have a fine enough regulatory environment to tell what kind of quality HMOs are providing," admits DPH's director. DOI's assistant deputy director reports that, in his view, the financial incentives in capitation have not led to undertreatment.
During the 1998 session, the Illinois legislature considered a broad array of managed care bills ranging from redefined standards for emergency to coverage, regulation of utilization review processes, and patient advocacy programs to substantial rewrites of managed health care oversight through any of a number of proposed managed care patients' rights acts.
Medicaid Oversight
DPA oversees quality through peer review and supplies an 800 number for members to report unethical or illegal marketing practices or complaints. DPA's Bureau of Medical Quality Assurance responds to quality complaints, while reports of unethical or illegal activity are investigated by the Office of the Inspector General. Medicaid staff report few quality-of-care complaints. "We don't get many complaints related to quality because, under a voluntary program, clients tend to disenroll when they are not satisfied," explains DPA's bureau chief for managed care. DPA closely monitors marketing practices of the plans and prohibits plans from conducting door-to-door marketing. For quality oversight of the managed care program, DPA plans to contract with a quality assurance organization and to integrate HEDIS and other model measures.
Coordinating Oversight
To coordinate the multifaceted HMO regulatory activities in Illinois, DOI has established, and maintains, good working relations with DPH, DPA, and Central Management Services, which purchases health care for state employees. The agencies also work well with the federal Health Care Financing Administration. There is no joint, coordinated purchasing by Medicaid and state employees.
The business community performs some cooperative evaluations of HMO quality. The Chicago Coalition, a group of blue-chip companies, is working on a report card system, and DOI's assistant deputy director reports similar initiatives by other groups.
What Is Next for Oversight?
Illinois has strong, well-coordinated oversight policies in place. The major issue for the future is further action on patient protection measures.
Additional Resources
- Department of Insurance
www.state.il.us/INS- Department of Public Health
www.idph.state.il.us- Department of Public Aid
www.state.il.us/dpa- Health Care Cost Containment Council
www.state.il.us/agency/hcccc
(Last updated September 8, 1999)
Indiana
What Is Indiana Overseeing?
HMO enrollment is growing slowly in Indiana. Its 52 HMOs, which include 13 limited-service plans, enroll only 14 percent of the insured population. The Indiana legislature enacted new reform measures in 1995, which included guaranteed one-year renewal, portability of coverage, and limitations on pre-existing condition exclusions. However, in 1996 it rejected a patient protection bill in favor of a legislative task force to investigate the alternatives; a new bill was later passed in 1998. The state also instituted an any-willing-provider law for preferred provider organizations (PPOs).
Indiana has obtained a 1915(b) waiver, designated Hoosier Healthwise, which requires recipients eligible for the program (primarily children and pregnant women who qualify for Medicaid) to select either a prepaid or a fee-for-service primary care provider. The state also began enrolling a small number of disabled recipients in one county into the program on a voluntary basis.
Who Is Overseeing?
The Indiana Department of Insurance (DOI) is the single oversight agency for commercial HMOs. DOI issues licenses; evaluates plan solvency; requires plans to institute grievance procedures and quality assurance plans; and tracks consumer complaints. However, the agency is not empowered to change treatment decisions by HMOs or to settle grievances against them.
The Indiana State Department of Health (SDH) licenses hospitals, surgery centers, and nursing homes. SDH does not directly oversee commercial HMOs. The department also acts as the leading collector of health care data.
The Indiana Family and Social Services Administration (FSSA) runs the state's Medicaid program through its Office of Medicaid Policy and Planning (OMPP). Although OMPP contracts with DOI-licensed HMO plans, it has developed its own expertise for evaluating plan performance and quality to supplement DOI oversight. OMPP relies on contractors to administer many of its programs.
Indiana has a part-time Legislature (senate and house). The legislature is a powerful player in state government, as it can override a gubernatorial veto with a simple majority vote. During the 1995 session, the legislature expanded on earlier insurance reforms by passing several measures: to limit preexisting condition exclusions; to require guaranteed renewal for one year of coverage; and to protect portability of coverage. During the 1998 session, the legislature enacted the Managed Care Consumer Protection Law. The legislature has also directed FSSA and SDH to cooperate on improving the operation of the state's Medicaid managed care program.
How Are They Doing?
Solvency Oversight of the Private Market
Even though managed care penetration is still low, Indiana's health care market is rapidly changing. Two of the state's largest hospitals merged in 1996, and other mergers are expected, which may create regulatory anomalies. Indiana's definition of a commercial HMO is straightforward. Any entity that contracts directly with an employer, even on a single service basis, is defined and regulated as an HMO. However, DOI does not oversee downstream risk contracting or capitation agreements.
Indiana is one of the few states to have enacted regulations that specifically apply to PPOs. The state's any-willing-provider statute requires PPO plans to spell out clearly the terms and conditions for providers to join the network, and it does not permit PPOs to limit provider contracts to hospitals.
Quality Oversight of the Private Market
DOI's licensure review has been the only significant form of quality oversight of private HMOs in Indiana. The Patient Protection Bill, which was considered during the 1996 session, represented a major shift in direction. That bill, which failed to pass, mandated that HMO enrollees receive direct access to a variety of specialists; required that plans offer a point-of-service option; and dealt with "gag" rules. After the bill was rejected, the legislature established a task force to explore other approaches to the problem; subsequent legislation has addressed many consumer protection issues.
The legislature did pass several measures in 1996 that dealt with HMOs, including a bill that requires the use of relevant specialist protocols for determining postpartum stays. Another bill, which was sponsored by a member of the Health and Environmental Affairs Committee, requires HMOs to allow OB/GYN physicians to serve as primary care physicians and outlaws the so-called "gag" rules. These provisions were supported by "mom and apple pie" arguments, explains DOI's deputy commissioner, who testified during the hearings on the HMO bills that she found no evidence of serious problems and that she could not cite a single case of any woman either being denied OB/GYN access or being forced to curtail her postpartum stay despite medical indications. However, supporters showed documentation that their policies did not allow OB/GYN physicians as primary care physicians. Other supporters provided anecdotal evidence, like the testimony of a woman whose baby was allergic to milk and who claimed that her child might have experienced problems had it been born in the existing health care system.
The two legislative sessions since the failure of the 1996 Patient Protection Act have altered the health insurance environment. In 1997 several laws were passed providing more protections for health insurance consumers, including the requirement that all individual and group health policies cover diabetic supplies and services. A new law on HMO grievance procedures was passed. A state version of federal mental health parity was adopted. A law restricting the use of genetic testing when making health insurance decisions is now in effect. Breast reconstruction after a mastectomy must now also be covered when mammography coverage is included in a health insurance policy.
In 1998 the legislature expanded consumer protections under HMO plans. Among other requirements, HMOs must now offer a point-of-service option to enrollees. The legislature also adopted into state law several provisions of the federal Health Insurance Portability and Accountability Act (HIPAA). Since July 1997, the DOI, as required by federal regulations has been informing consumers of their protections under HIPAA.
In the near future, Indiana will license provider sponsored organizations (PSOs) in reaction to the federal Balanced Budget Act of 1997 (BBA), which made changes to the delivery of Medicare benefits. Under an agreement with the Health Care Financing Administration (HCFA), Indiana will attempt to license PSOs before HCFA will accept a waiver of state licensure from those PSOs wishing to conduct business in Indiana. The DOI's view is that state licensure of PSOs is the best way to assure solvency and consumer protection.
Medicaid Oversight
OMPP relies heavily on contracting and market mechanisms to control costs and improve quality. The state is divided into three Medicaid regions. OMPP's goal is to award contracts with two HMOs in each of the three regions, constituting a maximum total of six HMO contracts for the entire state. In 1998, OMPP had only four contracts––two in the central Indiana region, and one each in the north and south regions. The agency intends to compare HMOs with fee-for-service plans on a service-by-service basis, using a range of consumer satisfaction surveys and other actuarial techniques.
OMPP has linked the success of the Medicaid program to its experience with contracting. Extensive use of outside contractors to monitor HMOs and perform other program functions has allowed the state to keep staff levels low––OMPP staff number only approximately 60 people for a budget of $2.5 billion. As a result, OMPP does not have a lot of state employees devoted to processing claims and other functions, and believes the office is well situated to make the transition to managed care.
Coordinating Oversight
Indiana has divided responsibility for managed care oversight between two agencies: DOI oversees the private market and FSSA is responsible for the Medicaid program. There are many providers and some members of the legislature who would like SDH to run the Medicaid program, especially in light of the advent of the federally funded Children's Health Insurance Program (CHIP). There has been no effort to coordinate purchasing between Medicaid and state employees to date.
What Is Next for Oversight?
The Indiana state health commissioner expects more market change in Indiana: more linkages and mergers, bigger physician practice groups. He believes that there will be more indigent providers connected with HMOs, although legislators from rural areas point to the lack of providers for Medicaid recipients. Despite the probability that new oversight measures will be debated by the legislature, he does not expect a lot of regulatory oversight of the market, owing to the political climate. In his opinion, the effective alternative is to gather health information and to build computer networks for dissemination, educational and data collection functions the department has performed since it came into existence. ISDH is moving away from direct provision of health services, partly because of costs but also because other providers are capable of providing efficient services. The department is looking into working with managed care on community health initiatives and data collection, and it would like to move in the direction of developing a consumer guide to clinical quality and services in cooperation with the managed care industry.
The challenges for Indiana in the future will be to optimize its health data collection and to develop an effective quality oversight policy for managed care that will be acceptable to providers, consumers, legislators, and regulators.
Additional Resources
- Department of Insurance
www.state.in.us/idoi- Department of Health
www.state.in.us/isdh- Family and Social Services Administration
www.state.in.us/fssa
(Last updated April 6, 1998)
Iowa
What Is Iowa Overseeing?
There are 12 HMOs licensed in Iowa, but estimates of the exact level of penetration differ. One member of the Iowa Senate Human Resources Committee, a vice president for Blue Cross/Blue Shield, estimates that less than 11 percent of the insured population is in a managed care plan. However, the insurance commissioner points out that Iowa has a variety of health plans that manage care in arrangements other than closed panels typical of HMOs and ODSs (provider-run organized delivery systems). A number of Iowans are insured through preferred provider organizations (PPOs), or through traditional insurance plans that rely on utilization review and other managed care concepts.
The Iowa legislature passed a series of important reforms several years ago, which were intended to improve access to insurance; to encourage the expansion of managed care; and to promote the collection and dissemination of data. The reforms included the development of health insurance purchasing alliances (HIPCs); the authorization of organized delivery systems (ODSs), to be regulated by the state's Department of Public Health; and the creation of a centralized health data repository, the Community Health Management Information System (CHMIS), which has since been repealed.
In May 1994, the governor adopted the recommendation of the Iowa Health Reform Council and created the Health Reform Transition Team to coordinate the implementation of the various ongoing health care reforms. The transition team completed its work and disbanded in October 1995, after recommending a full review of the state's regulatory structure; this review was being carried out by an interagency task force.
The Iowa Medicaid Department operates MediPASS, a primary care case management program in 84 of the state's 99 counties. The state Medicaid office also contracts with five HMOs in 51 counties and has carved out two capitated prepaid health plans (PHPs) for mental health and substance abuse. Medicaid managed care will continue to expand until it becomes statewide.
Who Is Overseeing?
The Iowa Division of Insurance (DOI) is the sole state agency responsible for licensing HMOs. The division monitors solvency and marketing practice, the organizational structure of plans, and quality of care. The data collection issue still must be addressed, since CHMIS continues to falter. In fact, the General Assembly approved a sunset date of February 28, 1999, for CHMIS, after a final report from the CHMIS board.
The division uses an outside nonprofit auditor, the Iowa Foundation for Medical Care (IFMC), to review HMO quality of care. The foundation also audits Medicaid managed care contracts for the Department of Human Services.
The Department of Public Health (DPH) licenses and oversees the new, provider-based ODSs, whose regulatory and quality requirements will differ from those of private HMOs. DOI and the DPH are discussing long-term strategies for improving health care access and quality.
The Iowa Department of Human Services (DHS) operates the states Medicaid program. The department oversees a primary care case management program, MediPASS, in 84 counties; contracts with HMOs in 51 counties; and monitors the quality and solvency of the mental health and substance abuse PHPs. Medicaid officials plan to contract with the ODS plans as well after federal reforms have been enacted.
The Iowa Legislature (senate and house) has worked actively on issues of health care, including individual and small group insurance reform, delivery systems, data collection, and quality of care.
How Are They Doing?
Solvency Oversight of the Private Market
DOI licenses and monitors all commercial HMOs in Iowa and is empowered to consider a broad range of criteria in its oversight. Before issuing a license, the division reviews capitalization requirements and also looks at various organizational components: the corporate structure of the HMO; provider contracting practices; and enrollee participation on the board of directors.
DPH is responsible for licensure and oversight of ODSs; there are two ODSs in the state, although the director of public health reports that there have been several other inquiries. ODS plans must comply with most regulations applicable to HMOs, including federal Health Insurance Portability and Accountability Act and state group insurance reform laws. DPH has contracted out responsibility for evaluating ODS solvency to DOI. DOI and DPH officials meet regularly to discuss issues of common interest.
DOI is closely following the recommendations of the National Association of Insurance Commissioners' Health Plan Accountability Working Groups. Insurance officials also work with the Iowa Coalition for Quality Health Care, a coalition of providers, insurers, and employer groups interested in managed care. The coalition has been actively studying policy issues related to managed care, including the provider selection process and disclosure guidelines. The insurance commissioner points out that this working relationship is a good example of cooperation between the public and private sectors in Iowa.
Quality Oversight of the Private Market
In licensing an Iowa HMO, DOI reviews several quality factors: access to providers, grievance procedures, quality assurance systems, and consumer complaints. For example, the agency requires that providers in a licensed HMO be located within 30 miles of the enrolled population. The division requires that all insurers and HMOs doing utilization review follow the guidelines established by the Utilization Review Accreditation Commission.
DOI uses IFMC for much of its quality oversight. The foundation audits each HMO every two years, more frequently if the commissioner deems it necessary. IFMC reviews medical files and minutes from quality assurance, credentialing, grievance and other committee meetings, and reports its findings to DOI.
The division itself responds to complaints about HMO coverage and service. The insurance commissioner says she deals with them "in the same manner as other insurance complaints." The division tracks complaints about particular plans and reviews the number and pattern of complaints during the regular financial audit. In addition, IFMC reviews division complaint records and HMO complaint files during its biennial quality-of-care audit.
DPH plans to monitor ODS quality differently, according to the director. DPH will employ health outcome measures, relying partially on HEDIS criteria and partially on internally developed standards. The director points out, however, that the state of the art for outcome measurement is limited.
Medicaid Oversight
Iowa's Department of Human Services Medicaid program operates four managed care programs: MediPASS; HMO contracts for managed care; and two prepaid health plans for mental health and substance abuse. Under MediPASS, physicians apply to the state to act as a patient manager and are paid a small monthly fee. All treatment is provided on a fee-for-service basis. The Medicaid agency relies on a peer evaluation review committee to produce a quarterly profile on each doctor's record of utilization and quality.
The Medicaid program contracts with licensed HMOs in the 44 counties where they exist, using a capitation arrangement. The department has hired a consultant to assist in creating a more efficient rate mechanism and has developed a reduced capitation rate schedule. DHS relies on the DOI to oversee the solvency of HMOs. Program officials responsible for the prepaid health plans do their own contracting and solvency oversight. For quality oversight of both HMOs and PHPs, the department uses customer satisfaction surveys, reviews by the University of Iowa, and reviews by IFMC.
Coordinating Oversight
The various Iowa health care agencies maintain good relations both with each other and with providers and consumers. The Iowa Coalition for Quality Health Care and the Health Reform Transition Team are examples of such collaboration. DOI and DPH meet regularly to discuss common concerns related to access, quality, and affordability. DOI oversees the solvency of HMOs, and all the agencies depend on the nonprofit IFMC to monitor quality, thereby ensuring continuous coordination of oversight.
A critical element of coordination is the maintenance of accurate, reliable information systems, but two attempts to improve information quality and access encountered problems. In order to promote increased access to insurance coverage, the legislature authorized the formation of health care purchasing alliances (HIPCs). The law required HIPCs to produce report cards on various insurers and relay this information to the public. Only a single HIPC was formed; this entity, which included 600 businesses and covered 4,550 employees and dependents, has since merged with Blue Cross/Blue Shield. According to the director of public health, as of mid-1996, there were no independent HIPCs in Iowa. The single HIPC was not successful, and no other HIPCs have been attempted.
What Is Next for Oversight?
The Iowa Medicaid program is committed to expanding its capitated managed care program. Human Services' Medicaid director says the state is becoming more concerned about the rising costs. The plan is to "see how much money we really free up" by using HMOs. He would like to use some of the savings to cover more of the indigent uninsured.
Many in the state have high expectations for the new ODS plans. HMOs offer services in only 51 of 99 counties, and the Medicaid program is counting on ODS development so that Iowa can expand its capitated program to cover the entire state. The director reports that provider groups are also eager to "cut out the middleman," the HMO, and contract directly with the state. He acknowledges, however, that the state may face a "greater element of risk" in contracting with these entities because the providers lack experience in calculating and assuming risk.
Iowa's director of public health is more cautious about the potential for ODS expansion. There are only two licensed ODSs, and other potential groups are taking a "wait and see attitude to see how the market will evolve." It is not clear what Medicaid will do if the ODS plans fail to develop as expected. Despite many creative and positive initiatives, it is still unclear how health reform will develop in Iowa.
Additional Resources
- Division of Insurance
www.state.ia.us/government/com/ins- Department of Public Health
www.idph.state.ia.us- Department of Human Services
www.dhs.state.ia.us
(Last updated August 9, 1999)
Kansas
What Is Kansas Overseeing?
Kansas was engaged in a major overhaul of HMO and managed care regulation in 1996, acting on recommendations for reform from three commissions. The Insurance Commissioner's Task Force released a report in January of that year, proposing changes in the states HMO statutes, which were originally passed in 1974; the state legislature subsequently introduced and approved a major solvency oversight reform bill. The Health Care Reform Legislative Oversight Committee was established in 1994 to carry out changes in state laws and regulations and changes necessitated by federal law. The Managed Care Implementation Committee, appointed by the secretary of Social and Rehabilitative Services and reporting to the Legislative Oversight Committee, recommended changes in the Medicaid managed care program.
In 1992, the legislature created a high-risk pool and passed a reform package to extend portability of coverage and provide for guaranteed issue and renewal in the small-group market. These reforms were refined in 1994.
Kansas has enrolled 82 percent of its eligible Medicaid beneficiaries in two managed care plans under 1915(b) waivers: Health Connect, a primary care case management (PCCM) program operating in 105 counties, serves 72,000 clients; PrimeCare Kansas contracts with licensed HMOs to provide care for 10,000 recipients in 67 counties.
Who Is Overseeing?
Kansas's Insurance Commissioner is an elected position. The Kansas Department of Insurance (DOI) is responsible for state regulation and oversight of the commercial HMO market, and it monitors solvency and responds to consumer complaints. Recently passed legislation, based on the recommendations of the Commissioner's Task Force, revised the HMO statutes and increased the departments oversight of HMO capital requirements, stock offerings, internal grievance procedures, and disclosure of financial arrangements. The commissioner also has oversight responsibility for all risk-bearing managed care organizations.
The Kansas Department of Social and Rehabilitative Services (DSRS) oversees the state Medicaid program, including the 1915(b) waiver managed care programs, Health Connect and PrimeCare Kansas. The department has contracted with DOI to monitor the solvency of Medicaid managed care contractor plans and will use HEDIS measures as the basis for quality assurance.
The Kansas Department of Health and Environment (DHE) does not directly supervise managed care or integrated delivery systems. DHE focuses on public health issues like immunization; tracks health indicators for the state at large and for subpopulations; and oversees the development of data collection. Department staff also participated in the Medicaid Managed Care Implementation Task Force.
The Kansas State Legislature has worked actively to reform health care. Lawmakers passed a package of small-group reforms in 1992, which was expanded in 1994: the legislation created a seven-member health care data governing board to expand and systematize health care data collection; directed DSRS to begin pilot projects for Medicaid managed care programs; and mandated statewide implementation of Medicaid managed care by July 1997. During the 1996 session, the legislature passed bills to amend the state's HMO laws, strengthen DOI oversight authority, extend enrollment for some individual insurance products, and prohibit drive-through deliveries (postpartum length-of-stay restrictions).
How Are They Doing?
Solvency Oversight of the Private Market
The Kansas HMO legislative reform initiative is a response to consumer and health plan concerns about the adequacy of a 1974 law in the 1990s health care market. The insurance commissioner points out that the new kinds of risk-bearing organizations, like preferred provider organizations (PPOs) and point-of-service (POS) plans, were not even contemplated when the legislation was originally written. The commissioner appointed an advisory task force comprising the Kansas Hospital Association, Blue Cross plans, the Kansas Medical Society, representatives from managed care associations, key legislators, and consumers. The recommended bill, passed by the legislature in 1996, extends DOI authority and provides for increased financial oversight. It was modeled on legislation pioneered by the National Association of Insurance Commissioners (NAIC) and on reform measures enacted in New Jersey, Ohio, Minnesota, and Wisconsin.
Quality Oversight of the Private Market
The new HMO reform act in Kansas also attempts to strengthen consumer protection by clarifying emergency room reimbursement policies, introducing continuity-of-care language, and requiring HMO plans to disclose aspects of their contracts with providers. The original bill was softened in the legislature to limit the insurance commissioner's authority to determine what material should be disclosed, in keeping with Kansas policymakers' view that a proper balance should be maintained between fair market forces and regulatory consumer protection. The chair of the Legislative Oversight Committee explains: "We are in a mode of letting the market work, but still providing protections."
Medicaid Oversight
The goal of statewide managed care, either PCCM or capitated HMO-type, is attainable. The secretary of DSRS has established the Managed Care Implementation Committee, which consists of primary care physicians, providers, insurers, key state agencies, and advocacy groups, to advise the department on the transition. The team leader for the DSRS Managed Care Project considers that the state's diversity poses critical problems in developing Medicaid managed care. Kansas has both urban areas and very sparsely populated farming regions, each requiring different strategies. The department relies on two different plan designs: Health Connect, the PCCM program, and PrimeCare Kansas, the HMO contract component. The team leader thinks that DSRS has developed good informal ties with the Health Department and the Insurance Commission, and that the Implementation Committee has strongly influenced the shape of the managed care programs: "There have been many times we have said, 'Do things this way,' and they have said, 'You've got to be kidding,' and we've drawn back."
Coordinating Oversight
The legislative reform project has helped to strengthen and reinforce coordination between the legislature and the Kansas state agencies that regulate health care. The Insurance Commission, the Legislative Oversight Committee, and the Managed Care Implementation Committee have all been instrumental in devising common strategies for financial oversight, quality assurance, and Medicaid managed care.
What Is Next for Oversight?
Kansas policymakers expect to continue expanding state oversight of managed care. The insurance commissioner is developing support regulations, particularly in the area of disclosure of HMO financial arrangements. She also intends to propose legislation that would establish state oversight over PPOs and POS plans.
Several officials are interested in improving state agencies' ability to evaluate health delivery system quality. Quality issues are high on the insurance commissioner's list, although she acknowledges that her office has done "very little" in this area to date. The department has been consulting with experts in quality assessment, including the National Committee for Quality Assurance (NCQA) and the Kansas Foundation for Medical Care. "Once there is agreement on standards," explains the commissioner, "the task will be to incorporate the new upgraded standards into the enforcement process."
The public health director wants to expand data collection and analysis. While serving on the Managed Care Implementation Committee, he urged DSRS to develop concrete quality standards, such as immunization rates, and to offer incentives to plans that meet predetermined goals. The Health Department plans to take advantage of the opportunity created by the expansion of integrated delivery systems in the state to improve collection of health care data: "The hope is that data would go through a central data collection system, which only happens when there are large providers." The new system would provide comparative data on specific delivery systems, and thus might require a change in the existing statute, which prohibits the naming of individual providers. The Health Department will also monitor the success of managed care in Kansas's rural areas.
The first part of the Kansas reform program appears to have succeeded, leaving state officials with a good working basis for addressing financial disclosure, quality assurance, data collection, and Medicaid managed care expansion.
Additional Resources
- Department of Insurance
www.ink.org/public/kid- Department of Social and Rehabilitative Services
www.ink.org.org/public/srs- Health Care Data Governing Board
www.ink.org/public/hcdgh
(Last updated March 27, 1998)
Kentucky
What Is Kentucky Overseeing?
Managed care is developing slowly in Kentucky, where HMOs enroll an estimated 12 percent of the insured population. Under Governor Brereton Jones, the General Assembly passed the Health Care Reform Act of 1994, which was designed to increase health care access, provide insurance reform, and move Medicaid recipients into managed care. However, many in Kentucky believed that the reforms were too extensive; by 1996, state officials started slowing down the pace of implementation and eventually passed legislation for major revisions to the program.
The Health Reform Act of 1994 established the Kentucky Health Policy Board, which was given broad oversight and policymaking authority, and the Kentucky Health Purchasing Alliance, which purchased coverage for state employees and allowed small businesses and individuals to participate on a voluntary basis. The 1996 law abolished the Kentucky Health Policy Board, transferring its duties to various state agencies, and attached the Purchasing Alliance to the Department of Insurance.
In 1998, the legislature passed health reform legislation that further weakened the ambitious plan passed in 1994. The law abolished the Purchasing Alliance. It repealed previous benefit and rating requirements in an effort to encourage competition in the health insurance market, but it preserved guaranteed issue and renewability. It created the Guaranteed Acceptance Program (GAP), which guarantees coverage for individuals with specific high-cost conditions who would otherwise be excluded from coverage. Insurance carriers providing this coverage are reimbursed by the state for their losses on GAP participants.
The commonwealth has a broad any-willing-provider law, which is largely untested.
KenPAC, a fee-for-service case management program for primary care, is the second oldest such program geared to Medicaid enrollees in the country. The Health Care Financing Administration (HCFA) approved Kentucky's 1115 waiver to expand Medicaid coverage to 100 percent of the population below poverty and to move recipients into mandatory capitated managed care, but the state has since amended the waiver because of disagreements between the executive branch and the legislature over its design and implementation. The Medicaid Department has promulgated a regulation to establish the Partnership program, a new initiative for Medicaid managed care.
Who Is Overseeing?
In the fall of 1996, the legislature abolished the Kentucky Health Policy Board and transferred the duties connected with health data collection and Certificate of Need to the Cabinet for Health Services, which has promulgated an administrative regulation that sets standards for health data collection.
The Department of Insurance (DOI) licenses HMOs and oversees solvency for most risk-bearing entities in the commonwealth. The 1996 legislation transferred to DOI all health insurance responsibilities that once belonged to the Health Policy Board, such as granting the required Certificate of Filing to provider-sponsored, integrated health delivery networks. All 24-hour health coverage pilot projects were assigned to DOI oversight as well. The 1996 law established a seven-member Health Insurance Advisory Council to advise the insurance commissioner on any issues that affect the provision of health insurance.
The DOI commissioner is chair of the Advisory Council. The Advisory Council has specific duties to review and recommend proposed changes in standard benefit and supplemental plans, in the rate-filing process for all health benefit plans, and in the definition of high-risk conditions. The 1996 law also established definitive requirements for the filing of health insurance rates by the insurance commissioner. The DOI commissioner reviews these rates and offers refunds in some cases.
The Cabinet for Health Services, formerly the Cabinet for Human Services, also inherited many duties from the former Health Policy Board. The 1996 law transferred all data collection responsibilities to the Cabinet for Health Services and created a permanent advisory committee to define quality outcome measurements and advise the Cabinet for Health Services on data interpretation and publication. The 1996 law also transferred administration of the Certificate of Need program back to the Cabinet for Health Services.
The Kentucky Department of Public Health does not oversee managed care or integrated delivery systems, but it does monitor traditional public health areas, such as the control of infectious diseases.
The Kentucky Legislature has vigorously tackled health care issues. In 1994, under the leadership of Governor Jones, it passed the Health Reform Act, establishing the Kentucky Health Purchasing Alliance and the Health Policy Board. However, because of concern within the commonwealth that the 1994 reforms were too far reaching, major revisions to the 1994 act were enacted once Jones left office in 1995. Further health reform revisions were enacted in 1998.
The legislature's refusal to approve Governor Jones's request for $290 million to fund the conversion of Medicaid to mandatory managed care led to the state's withdrawal of the original 1115 waiver. In order to realize savings from KenPAC, the legislature passed legislation in 1996 that increased the managed care component of KenPAC, provided for HMO participation, and detailed other managed care requirements for Medicaid.
How Are They Doing?
Solvency Oversight of the Private Market
Insurers claim that the policies of the former Health Policy Board and the Health Purchasing Alliance led to higher rates. However, an Attorney General's report states that 83 percent of rate filings were below the statutory rate index. Some officials think that the industry is trying to manipulate rates to force the dissolution of the Alliance. One legislative health policy advisor cited the examples of an insurer who offered Alliance and non-Alliance purchasers different rates for the same benefit package, and of another that sent out letters canceling coverage just before the legislature went into session.
The 1994 Health Reform Act authorized the Health Policy Board to set capitalization levels and to approve the operation of all entities that sold health coverage to the Alliance; DOI retained authority over those outside the Alliance. The 1996 revisions transferred all these functions to DOI.
The 1996 Act permits the creation of provider-sponsored networks (PSNs), which are required to obtain a Certificate of Filing from the commissioner of insurance. DOI has established financial solvency requirements for provider-sponsored networks, by regulation. Health benefit plans issued by a provider-sponsored network will be required to comply with all health insurance reforms.
Quality Oversight of the Private Market
Although the 1996 revisions abolished the Health Policy Board, the mandate once assigned to the board––to collect health costs and quality data from providers, hospitals, and health facilities––was retained. Data now goes to the Cabinet for Health Services, which maintains a permanent committee to advise on the interpretation and publication of the data and defines quality outcome measurements.
The 1998 health reform law includes consumer protection provisions for enrollees in managed care plans. Plans are required to apply the "prudent layperson standard" for use of emergency services, disclose adequately the terms of coverage, provide adequate choice of providers and specialists, not include "gag" clauses in provider contracts, and recognize a patient's right of privacy.
Medicaid Oversight
The new administration is still committed to increasing Kentucky's reliance on managed care for its Medicaid population by the year 2000, but will move more slowly, completing one region at a time. The commonwealth amended its 1115 waiver in order to break the state into eight regional managed care partnerships, each comprising a lead agency and provider partners. Each region can choose to establish its own provider network through partnerships licensed as an HMO or a PSN, or a partnership that contains a licensed entity. As of April 1998, the plan had been implemented in the Lexington and Louisville Regions, with the goal of phasing it into the remaining six regions by the end of that year.
Coordinating Oversight
Before the Health Policy Board was abolished, the general counsel for DOI described his department as "working closely for a timely and smooth implementation of the 1994 Health Reform Act" in tandem with the board. The 1996 legislation transferred many functions that were once supervised by the board to different agencies; therefore, it is difficult to determine how oversight will be coordinated.
What Is Next for Oversight?
Kentucky's Medicaid program plans to move ahead with the conversion to capitated managed care, but at a gradual pace. The drastic changes in 1996 to the original Health Reform Act resulted in a challenge to Kentucky to build on the remaining beneficial components, to implement the 1996 revisions, and to plan effectively for future programs.
Additional Resources
- Cabinet for Health Services
cfc-chs.chr.state.ky.us- Department of Insurance
www.doi.state.ky.us
(Last updated May 22, 1998)
Louisiana
What Is Louisiana Overseeing?
Louisiana has 22 HMOs, which control 12 percent of the health care market. The state has enacted small-group insurance reforms requiring guaranteed issue and renewal and portability of coverage; it has also created a high-risk pool.
Louisiana's Medicaid program began implementing a 1902(b) waiver in the southern part of Louisiana in 1998. The program is also implementing a number of pilot service-delivery programs to control costs and maintain benefit levels. The program currently covers approximately 600,000 people.
Who Is Overseeing?
The Louisiana Department of Insurance (DOI), led by an elected commissioner, is the sole licensing agency for HMOs in the state. DOI oversees plan solvency, grievance procedures, and quality assurance plans; responds to consumer complaints; and monitors market practices. The commissioner has established an Office of Health Insurance within the department; Louisiana is one of six states that has established such an office.
The Louisiana Department of Health and Hospitals houses many state health agencies, including the Office of Public Health (OPH) and the Bureau of Health Services Financing (BHSF), which is within the Office of Management and Finance. BHSF oversees the state's fee-for-service Medicaid program. OPH does not have an oversight role for managed care.
The Louisiana State Legislature created the Louisiana Health Care Commission in 1992 to study and report on a variety of health care reform topics, including uniform licensing standards, practice liability, and consumer protection issues, and extended the commission's charge until 1999. The 1997 report of the Louisiana Health Care Commission made recommendations on regulations for utilization review, on provider credentialling, and on consumer protection issues; these proposals were debated during the 1999 regular session of the legislature, which adopted health care reform legislation that protects patients' access to covered medical care under their health benefit plan. This legislation was supported by consumer organizations, health care provider organizations, insurance companies, HMOs, and business organizations representing employers.
How Are They Doing?
Solvency Oversight of the Private Market
DOI oversight focuses on the assumption of risk: any Louisiana entity that contracts directly with employers or enrollees to provide health care services must be licensed as an HMO. Physician hospital organizations (PHOs) that contract with HMOs have not been required to apply for licensure. Many PHOs have been formed in all areas of the state; however, according to the director for the Louisiana Health Care Commission, the commission has decided to consider whether and how these entities should be regulated.
Quality Oversight of the Private Market
Quality assurance oversight of HMOs is under review at DOI and by the Louisiana Health Care Commission. Although the department requires HMOs to have grievance procedures and quality assurance plans in place, it will regulate how these procedures will operate.
Medicaid Oversight
Louisiana's Medicaid program attempted to implement a 1915(b) waiver for a managed care pilot project in Region 3, one of the state's nine regions, a seven-parish area located in southeastern Louisiana. Participation was to have been mandatory for all families receiving benefits from Aid to Families with Dependent Children (AFDC). Only state and federally qualified HMOs were able to bid to enroll members, and DHH was able to negotiate rates with only one qualified HMO rather than the required two. As a result, the program was suspended. New legislation in 1999 permits DHH to pursue implementation of the pilot program in other regions.
Coordinating Oversight
Coordination is a prominent feature of Louisiana's health care oversight. The department's health care advisory board, LHCC, maintains six subcommittees, which work on health care costs, insurance reform, regulation for provider-sponsored networks, HMO regulation, federal initiatives, and coordination of Medicaid operations.
What Is Next for Oversight?
The 1999 report of the Louisiana Health Care Commission makes recommendations to examine the rising cost of health care in the state, including, but not limited to, the cost of administrative duplication, the cost associated with excess capacity and duplication of medical services, and the cost of medical malpractice and liability. It also plans to examine the adequacy of consumer protection as well as the formation and implementation of insurance pools that better assure citizens the ability to obtain health insurance at affordable cost and that encourage employers to obtain health care benefits for their employees. Another key development has been the implementation of the Children's Health Insurance Program through DHH; DOI, with DHH, still has the option to further expand this program in the private market.
Additional Resources
- Department of Insurance
wwwldi.ldi.state.la.us- Department of Health and Hospitals
www.dhh.state.la.us
(Last updated September, 9 1999)
Maine
What Is Maine Overseeing?
Managed care has been introduced gradually into Maine, which now has seven HMOs that enroll 24 percent of its insured population. Maine was one of the first states to assure portability of insurance coverage and to institute a community rating system; the enactment of these two initiatives allowed the state to phase out its high-risk pool.
Maine filed and obtained approval of a 1915(b) waiver to implement a capitated managed care program for Medicaid clients. The state had planned to move 100,000 of its 165,000 Medicaid recipients into mandatory managed care by the end of 1997. With this goal in mind, the state bid the HMO contract in the spring of 1996 and again in August. None of the bids received could be accepted, however, because the provider networks were inadequate. The Department of Human Services has elected to pursue a primary care case management (PCCM) model to enroll Medicaid clients.
Who Is Overseeing?
The Maine Bureau of Insurance (BOI) is the licensing agent for HMOs and preferred provider organizations (PPOs) in the state. BOI oversees insurance carrier solvency; tracks and resolves consumer complaints; and assists the Department of Human Services in reviewing quality of care for commercial HMOs.
The Maine Department of Human Services (DHS) runs the state's Medicaid program. DHS has begun voluntary enrollment of its client population in managed care, while planning to develop a primary case management system. The department also reviews and oversees cooperative agreements between hospitals' other providers under its Certificate of Need authority and is responsible for aspects of quality oversight.
The Maine Bureau of Health (BOH) is responsible for health services to the indigent and for preventing communicable diseases. The bureau has suffered extensive cutbacks during the states economic recession and has little involvement in managed care issues.
The Maine Health Care Finance Commission (MHCFC) has been eliminated. The Maine Health Data Organization (MHDO) was formed to take over the hospital discharge data set that was developed by the MHCFC. The MHDO is charged with collecting health data from a variety of health care providers.
Managed care and integrated health care delivery dominated the agenda of the Maine State Legislature in 1996. After much debate on a proposed any-willing-provider bill, lawmakers approved several of its provisions: prohibiting "gag" rules for providers who advocated on behalf of patients; enabling the formation of private purchasing alliances; and establishing a framework so that BOI could set standards for accessibility, grievance procedures, and complaint protocols.
Legislation conforming Maine law to the federal Health Care Portability and Accountability Act of 1996 (HIPAA) was easily passed in 1997 because many of HIPAA's provisions relating to guaranteed issuance, guaranteed renewal, and preexisting condition limitations already were part of Maine's small-group insurance market laws. One of the main provisions expanded the definition of the small group from up to 24 employees to up to 50 employees.
In 1997 the legislature also addressed the regulatory oversight of health carriers by implementing requirements for health care plans that addressed accessibility, grievance and complaint procedures, and coverage for emergency room services. Additional resources were allocated to the BOI for consumer education and assistance with the establishment of a Consumer Health Care Division. The three-member division was hired in 1999 to provide information regarding health plan options and obtaining health care coverage and services and assist consumers in resolving problems with the health care delivery system.
Issues related to mandatory health insurance benefits have continued to come before the legislature. Laws were enacted requiring carriers to provide coverage for certain services, including mandatory coverage of in-patient hospital stays following a mastectomy or lumpectomy for the treatment of breast cancer; coverage for annual mammograms for women age 40 and older; coverage for prostate cancer screening services; and coverage for off-label prescription drugs for the treatment of cancer, HIV, or AIDS. New laws effective in 1999 include Public Law 341, which requires health plans that cover prescription drugs to include coverage of contraceptives. Public Law 396 allows nurse practitioners to serve as primary care providers in managed care plans. Public Law 256 makes HMOs subject to the requirement to pay interest on delayed claim payments and the law prohibiting unfair claims practices.
How Are They Doing?
Solvency Oversight of the Private Market
HMO penetration has grown significantly in Maine's health care market. The state has increased its oversight activity of quality services delivered by Maine's licensed HMOs.
Contracting strategies and cooperative alliances constitute a significant area of activity. BOI has just begun to develop a regulatory plan to evaluate the solvency and assess the risk of various contracting arrangements. The bureau holds that a hospital or health care organization entering into a capitated contract must be the ultimate provider of the service, but it is also evaluating the difficulties that might arise should a provider enter into a global capitation arrangement and subcontract some of the services for which it has assumed risk. BOI submitted a bill addressing downstream risk in the 1998-1999 legislative session but it was held over until the 1999-2000 session.
DHS is authorized to approve cooperative agreements, which have traditionally involved ancillary services like joint hospital purchasing of laundry services. The commissioner reports that, despite an increasing number of hospital mergers, unless capital expansion is involved, there is little formal review of them. Two of Maine's tertiary hospitals have joined a partnership with Blue Cross/Blue Shield of Maine to develop and operate two HMOs. The consolidation among health carriers has seen CIGNA's purchase of Maine Healthsource and Aetna's purchase of Maine NYLCare. BOI has recently been apprised that Anthem is seeking to purchase Maine Blue Cross/Blue Shield. The review of this transaction will involve the formation of a charitable trust.
Quality Oversight of the Private Market
BOI and DHS have developed a memorandum of understanding and a working protocol and have formed an Interagency Task Force on the Quality Oversight of Commercial HMOs. DHS is in the process of proposing rules related to this quality initiative. Data collection tools and protocols have been developed with assistance from university and National Committee for Quality Assurance (NCQA) qualified reviewers to parallel the NCQA review process and look at quality requirements specific to Maine statutes.
BOI tracks consumer complaints and the new Consumer Health Division has been working with carriers to improve their complaint processes.
Medicaid Oversight
Since 1997, in the absence of any acceptable bids for a contract to provide Medicaid managed care services, Maine is providing health care to Medicaid clients through a PCCM mode. Only one of the 42 hospitals in the state is for-profit, and indigent residents rely heavily on Medicaid-supported clinics and on an extensive system of charity care.
Coordinating Oversight
BOI assists other Maine agencies with several health care issues. For example, the bureau continues to assist DHS with the quality oversight initiative. BOI also assists a Maine business group that is examining how best to collect information on service utilization in determining what data are needed and how the information could be used to control health care expenditures.
What Is Next for Oversight?
Maine's Medicaid program is likely to change dramatically over the next few years. The program has had significant success with the implementation of the PCCM system for Medicaid enrollees.
BOI intends to improve quality oversight in response to state legislators' desire for a better sense of the type and source of consumer complaints. The bureau is in the process of upgrading its licensing system. BOI is also developing regulations for legislative approval to address performance standards for health plan accreditation. As Medicaid primary care case management establishes itself in the state, and with the prospect of new health care mergers and alliances, Maine officials are working to improve their oversight structure.
Additional Resources
- Bureau of Insurance
www.state.me.us/pfr/ins/inshome2.htm- Department of Human Services
www.janus.state.me.us/dhs/welcome.htm
(Last updated September 2, 1999)
Maryland
What Is Maryland Overseeing?
Managed care penetration is high in Maryland, as evidenced by its enrollment of more than 40 percent of the insured population under age 65 in its 19 HMOs. The predominant HMO model in the state is the individual practice association (IPA), although group and staff models exist as well.
Effective June 2, 1997, Maryland implemented its 1115 waiver for increased Medicaid Managed Care and as of March 1998, more than 305,000, three-quarters of the state Medicaid population, were enrolled in one of the nine managed care organizations (MCOs) participating in Maryland's HealthChoice Program. MCOs include both state-licensed HMOs (4 MCOs) and Medicaid-only organizations (5 MCOs) that meet requirements similar to those for HMOs. The remaining quarter of the Medicaid population who are not in managed care are either dually eligible (Medicare/Medicaid), institutionalized, short-term eligibles, or in special waiver programs.
It is not surprising that managed care issues have been high on the state legislature's agenda. The Maryland Health Insurance Reform Act, passed in 1993, created a seven-member Health Care Access and Cost Commission (HCACC), and directed the commission to develop a guaranteed-issue comprehensive standard benefit plan for the small-group insurance market. The Reform Act also contained other provisions: it empowered the legislature to alter the benefits in the standard benefit plan if the average price of the package exceeds 12 percent of the average annual wage in the state; it eliminated preexisting condition limitations; it required guaranteed renewal; and it authorized adjusted community rating in the small-group market within narrow rating bands. Legislation approved in 1995 included the Patient Access Act, which requires HMOs to offer a point-of-service plan to group members if a closed-panel HMO is the only choice offered by group insurers; an extension of the small-group reforms to self-employed individuals, effective July 1, 1996, was passed as well. In April 1996, the Maryland legislature approved the form for the 1115 waiver request, which was approved by the Health Care Financing Administration (HCFA); it also passed legislation to outlaw "gag" rules and a 48-hour maternity length-of-stay bill.
Who Is Overseeing?
The Maryland Insurance Administration (MIA) is one of the two main oversight agencies in the state. All HMOs operating in Maryland must receive a certificate of authority from the Insurance Administration. MIA oversees financial solvency, reviews rates and contracts, regulates market conduct, and responds to consumer complaints.
The Maryland Department of Health and Mental Hygiene (DHMH), the second key agency, shares regulatory oversight of HMOs with MIA. The department is responsible for a number of managed care issues but concentrates its efforts on quality of care. DHMH also manages the state's Medicaid program.
There are three independent regulatory commissions: the Health Services Cost Review Commission (HSCRC), the Health Resources Planning Commission, and the Health Care Access and Cost Commission (HCACC). HCACC develops and oversees reform proposals for the small group insurance market and is working to establish a medical care database and to issue public "report cards" on HMO performance.
HSCRC is responsible for the country's only all-payer hospital rate-setting system, which operates under a federal waiver. HSCRC sets hospital rates for all payers and must approve any discounts extended to particular payers.
The Maryland Health Resources Planning Commission is responsible for developing the State Health Plan and operating the state's Certificate of Need program.
A Memorandum of Understanding (MOU) drawn up by MIA, DHMH, and the three independent agencies defines the division and coordination of responsibilities among them.
The Maryland Legislature (general assembly) has been very active in health care issues. Lawmakers passed reform legislation in 1993, 1995, and 1996, including the HCACC Act in 1993 and the Patient Access Act in 1995.
The legislature completed the spring 1996 session by voting down a bill that would have allowed community health networks (CHNs) (provider-sponsored, non-HMO/noninsurance networks, such as physician-hospital organizations) to contract directly with employer groups after receiving a joint certificate of authority from the MIA and DHMH and to assume financial risk without meeting the solvency requirements that are imposed on HMOs and insurance carriers.
How Are They Doing?
Solvency Oversight of the Private Market
Although there is significant HMO penetration of the Maryland market, the public is still skeptical, according to the deputy secretary for public health services. The growth of managed care plans, integrated delivery systems, and capitation has spurred the legislature and regulatory agencies to develop new approaches to oversight. The Patient Access Act of 1995 has an "anti-HMO feeling," reports the commissioner of the Maryland Insurance Administration. Among other provisions, the act requires HMOs to offer a point-of-service option and prohibits them from withholding payments to providers who decrease their utilization.
The HSCRC sets hospital rates for all payers and must approve discounting of rates to managed care plans. HMOs and other plans are best able to reduce their hospital payments and maintain solvency by effective management of care. Under this system, Maryland has enjoyed low hospital costs and charges.
During the 1996 session, the Maryland general assembly considered and rejected a major reform bill that would have created a regulatory structure for provider-sponsored community health networks. Under the proposed legislation, the CHNs could have contracted directly with employers and would have been subject to different solvency requirements than HMOs, based on a different level of risk assumption. Although the bill was defeated, the 1115 waiver bill, which was passed, allows Maryland's Medicaid program to contract directly with non-HMO entities.
Quality Oversight of the Private Market
DHMH handles ongoing quality oversight in Maryland, although MIA responds to complaints about denial of coverage, which may involve quality issues. The department has a broad mandate to establish rules governing practices and procedures that affect quality, including medical protocols, and is developing more elaborate quality measures. The general assembly has mandated a variety of insurance benefits; according to its insurance commissioner, Maryland ranks high among the states in legislatively mandated benefits and in comprehensiveness of health coverage. During the 1996 session the assembly mandated three new benefits, including a 48-hour maternity length-of-stay.
Medicaid Oversight
Maryland's Medicaid program operates within DHMH. The federal 1115 waiver to operate the HealthChoice program was granted on October 30, 1996. State regulations to operate HealthChoice were approved on November 8, 1996, and the program began operating on July 1, 1997. Among the provisions of HealthChoice are prospective, concurrent, and retrospective oversight activities:
- Prospective: Any organization seeking to become an MCO must submit a detailed application to DHMH. The application is reviewed by DHMH for system adequacy and MIA for financial solvency.
- Concurrent: The state contracts with local health departments to serve as ombudsmen for HealthChoice recipients. In this role, the local departments work closely with Medicaid recipients, the MCOs, and DHMH to resolve significant issues regarding access to care, coordination of care, and quality.
- Retrospective: The state contracts with an external quality review organization (EQRO) to conduct retrospective reviews of MCO performance. The purpose of the audit is to ensure that each MCO has the appropriate systems in place to provide quality care to its enrollees. The department conducts an annual satisfaction survey for HealthChoice recipients, using the nationally recognized Consumer Assessment of Health Plans Study (CAHPS) instrument. The department is collecting HEDIS performance measures for all MCOs; the MCOs are required to submit complete encounter data on a quarterly basis. This data will be used to evaluate performance of MCOs and provide overall program evaluation.
Coordinating Oversight
Already possessed of one of the most coordinated systems of health care oversight in the country through its Memorandum of Understanding, the state further consolidated the health care regulatory functions of two independent commissions into the new Maryland Health Care Foundation through regulatory reform legislation passed during the 1999 legislative session. In addition, HCACC released report cards in the fall of 1998 and 1999.
What Is Next for Oversight?
DHMH's deputy secretary for public health services has great expectations for the quality oversight of the MCOs. She believes that "the public health principles that have been built in as quality measures will raise the bar for quality of care in managed care organizations. Our success regarding oversight in our Medicaid MCOs may someday be replicable in the private sector."
The department has received a $100,000 grant from the Robert Wood Johnson Foundation's Medicaid Managed Care Program to establish an education and training program for MCOs and their providers in the HealthChoice program. This grant will assist DHMH to improve the ability of HealthChoice MCOs and their providers to document and report their patient care activity.
The education and training program will concentrate on improving MCO reporting of medical record documentation and retrieval and provider reporting to MCOs. The program will also augment a general patient satisfaction survey with a survey targeted specifically to the parents of special needs children.
Additional Resources
- Insurance Administration
www.mia.state.md.us- Department of Health and Mental Hygiene
www.dhmh.state.md.us- Health Services Cost Review Commission
www.hscrc.state.md.us- Health Resources Planning Commission
www.mhrpc.state.md.us- Health Care Access and Cost Commission
www.hcacc.state.md.us- Center for Health Program Development and Management
www.research.umbc.edu/chpdm/
(Last updated October 7, 1999)
Massachusetts
What Is Massachusetts Overseeing?
Massachusetts has one of the most developed managed care markets in the country, with 18 licensed HMOs enrolling more than 40 percent of its population. The commonwealth has been a leader in several critical health care policy areas. In 1988, Massachusetts pioneered the play-or-pay strategy with its Health Security Act, which required employers either to insure workers or to pay a tax for a state insurance program. However, the legislature postponed implementation of this plan four times, finally repealing it in July 1996, one month before the last scheduled launching date. The Health Security Act included other provisions like insurance for the unemployed, many of which have been implemented. The unemployed insurance program was a model for President Clinton's subsequent national proposal.
The state has an active Medicaid managed care program with 460,000 enrollees; one-fifth of these are in capitated HMO plans, and the other 80 percent are in a primary care case management system (PCCM) administered through the Division of Medical Assistance. Massachusetts obtained an 1115 waiver from the Health Care Financing Administration (HCFA) in 1995 to expand eligibility for Medicaid to 133 percent of poverty for adults and children. The legislature authorized implementation of the waiver in a comprehensive health reform act passed in July 1996.
Massachusetts has been a national leader in the use of its role as a purchaser of health care to improve quality and influence the market. The state Medicaid office and the state employees' insurance plan have united with other large purchasers to increase their leverage in negotiating with carriers for reduced premiums.
Who Is Overseeing?
The Massachusetts Division of Insurance (DOI) is the sole licensing agency for HMOs in the commonwealth. It is responsible for granting licenses to HMOs that have met the organizational, financial, utilization review, marketing, and other standards defined by law. It also evaluates solvency; performs market conduct reviews; evaluates all consumer documents and evidence of coverage; and responds to consumer complaints. DOI develops consumer-oriented documents about carriers and files information for public review.
The Division of Medical Assistance (DMA) manages the state's Medicaid program. DMA oversees the primary care case management program, the capitated HMO plan, and a capitated mental health and substance abuse plan; in 1996, the agency began to implement the 1115 expansion waiver. The division also manages much of the health-care -related purchasing for the Executive Office of Health and Human Services (EOHHS). DMA uses a wide variety of purchasing standards, incentive devices, and contract monitoring techniques to improve the quality of care for its enrollees.
The Massachusetts Department of Public Health's (DPH) formal oversight duties for managed care and integrated delivery systems consist of reviews for the Determination of Need process and the approval of all transfers of hospital ownership. However, the present commissioner has been active in persuading health plans, hospitals, and other providers to devote resources to public health goals, like the prevention and treatment of communicable diseases. DPH also administers the Children's Medical Security Plan, which provides free or subsidized health care benefits to eligible children from birth to age 17.
The Attorney General's Office (AGO) has recently begun to review the transition of nonprofit insurers and hospitals to for-profit status, a new phenomenon in Massachusetts. The AGO has also developed community benefit requirements for HMOs.
The Massachusetts State Legislature (house and senate) has worked actively on issues related to integrated delivery systems, as well as the play-or-pay debates and implementation of the 1115 Medicaid waiver. During the 1996 session, the legislature considered a bill requiring HMOs to disclose more information and held hearings on legislation to prohibit the purchase of nonprofit hospitals by for-profit institutions. The Joint Health Care Committee reported favorably on a bill that would allow the conversion of nonprofit HMOs and acute care hospitals to for-profit organizations, but only under specific requirements. The committee also established a working group to undertake a comprehensive review of needed further managed care legislation. Past legislatures have enacted medical protocol mandates and other reform measures.
How Are They Doing?
Solvency Oversight of the Private Market
DOI monitors the solvency of all Massachusetts HMOs and in 1998 received full reaccreditation from the National Association of Insurance Commissioners (NAIC) for its financial surveillance of Massachusetts' domestic insurers. In 1999, Governor Argeo Paul Cellucci filed legislation that would make health maintenance organizations subject to state receivership as other insurers currently are. This pro-consumer legislation is intended to protect HMO members by allowing the commissioner of insurance to put an HMO into receivership and enroll members in other insured plans. With passage of this legislation and the ongoing development by NAIC of better risk-based standards for setting capital requirements, insurance regulators in Massachusetts will have stronger tools with which to protect HMO members from insolvency.
Changes in the Massachusetts health care market are moving faster than reforms within the state's oversight apparatus. "What's new," explains the former house chairman of the Joint Committee on Health Care, "is the entry of for-profit, shareholder-owned HMOs and hospital chains that are starting to move aggressively in the market. . . . There is a great fear out in the land about capitation and capitated contracts and about what it means for getting medically necessary care." The chairman acknowledges that problems related to for-profit HMOs are "more perceived than real at this point . . . more speculation than absolute reality."
Quality Oversight of the Private Market
Apprehensions and misperceptions may be fueled by the fact that Massachusetts has not installed strong mechanisms for quality oversight. DOI is the main recipient of consumer complaints, but its authority to act is limited. The commissioner of public health, the house chairman of the Joint Health Care Committee, and the commissioner of DOI agree that many aspects of quality review are not part of the division's mandate. For example, DOI cannot respond to complaints about ERISA-exempt plans, which the commissioner estimates constitute more than half of the health plan market.
Most quality complaints stem from cases where a patient is denied either coverage for a particular procedure or access to a specialist. Unless a health plan's decision represents an egregious violation of its own contract, the patient's only recourse in most instances is the plan's internal grievance procedure. The public health commissioner believes that many people are not happy with the internal procedures. The state has only two laws mandating medical protocols. These laws give Massachusetts consumers the right to seek DPH review if a health plan does not approve an autologous bone marrow transplant to treat metastatic breast cancer, or if it does not offer 48-hour postpartum hospital care.
Market changes have also affected health care access for the uninsured poor. The DPH's commissioner notes that often HMOs do not contract with health care providers serving indigent areas because it is more profitable for them to concentrate their networks in higher-income neighborhoods. The commissioner relies both on friendly persuasion and on his regulatory authority over Determination of Need review and hospital ownership transfers to persuade HMOs to offer services to the indigent and other special needs groups. Using the Determination of Need process, the commonwealth can require specific amounts of money to be set aside for such services. Its formal authority over the hospital transfer of ownership process is weaker, but the department will forcefully request the new owner to maintain the level of care for the poor. The commissioner notes, however, that the effective power is "in the hands of the insurers, not the doctors or hospitals, and our influence is with the [medical] institutions."
DMA staff point out that some HMOs have contracted with inner-city health care providers, such as community health centers, as evidence that the situation may be improving. For example, the Boston City Hospital Neighborhood Health Plan, an HMO, has created a network of providers that includes many community health centers.
Another mechanism for care of the uninsured is the commonwealth's uncompensated care pool, which is funded under statutory requirement by commercial market "purchasers and third party payers" of hospital services; the pool reimburses hospitals $315 million annually for uncompensated care.
Medicaid Oversight
One-quarter of the eligible Medicaid population in Massachusetts is enrolled in capitated HMO plans. DMA has actively monitored managed care and has used the Massachusetts Health Care Purchasing Group to work out agreements with other state social service agencies that establish and enforce joint purchasing standards for health care services and with other large employers.
The division contracts directly with 3,000 primary care physicians for the majority of the Medicaid enrollees. The PCCM manager and DMA staff monitor quality indices and contract with a utilization review firm for cost and quality control. DMA chose the PCCM system initially because the commonwealth wanted to move a large number of enrollees into managed care, and the division doubted that HMOs could handle the volume or meet the needs of low-income patients.
However, the agency has successfully used its purchasing power to ensure quality care for its HMO enrollees. DMA uses between 20 and 30 performance measures, well in excess of HEDIS standards, and conducts annual initiatives to improve performance on targeted goals. The performance measure approach has been very effective, and DMA's commissioner reports that HMO response to new initiatives has been better than that of primary care physicians. The commissioner says the costs of the two systems are similar, but no comprehensive study, factoring in administrative costs and rate differentials, has been done to support this claim.
The commissioner credits several factors for his division's successful use of managed care contracting. First, the very high level of managed care penetration in Massachusetts and the existence of a large and diverse provider community create a good market environment for the contracting strategy. Second, the Weld administration was very market oriented and championed privatization and deregulation in health care, as it did in other areas. Finally, the commonwealth has had a dynamic secretary of human services, who has prodded the various divisions to use cooperative purchasing.
DMA demonstrated the potential in contracting by successfully capitating the mental health and substance abuse program for Medicaid. "Everyone thought it would be slash and burn under a contracting regime," the commissioner remembers. Instead, the division reduced costs by $47 million, and a Brandeis University evaluation showed no decrease in quality of care.
Coordinating Oversight
Massachusetts has a strong program to coordinate health care purchasing. DMA coordinates much of the health-care-related purchasing for EOHHS and has also joined the Massachusetts Health Care Purchasing Group, a coalition of 35 large employers that work together to establish joint contracting standards. Each purchaser negotiates its own rates with insurers, but the group coordinates contract negotiations based on clinical indicators. The group has made a public declaration that it will not accept large increases in health care rates and is planning its first attempt at group purchasing in 1998.
Coordination of HMO solvency and quality oversight activities are less well organized, as of mid-1996.
What Is Next for Oversight?
Massachusetts continues to explore reforms to improve quality oversight of health delivery. The co-chair of the legislature's Health Care and Insurance Committees has developed omnibus managed care reform and accountability legislation as has the chair of the Senate Ways and Means Committee. Both of these bills are under review by the House Ways and Means Committee. The Senate Ways and Means proposal would assign some formal oversight authority for quality of care to DPH. The commissioner of DPH envisions a carefully designed state-sponsored appeal system that would handle a broad range of consumer complaints, modeled on the existing process for medical protocols. He is willing to accept the responsibility for developing and maintaining the system if his department is given additional resources. The Senate Ways and Means plan would also require HMOs to disclose their provider reimbursement and termination policies and set new requirements for conversions of HMOs and acute-care hospitals from nonprofit to for-profit status.
Governor Cellucci has also filed separate legislation that would regulate all managed care activity through a board composed of the heads of six state agencies that oversee certain aspects of health systems in Massachusetts. The governor's managed care bill would create an external appeals system that would ensure HMO members of impartial appeal of claim denials. In the interim, the governor signed Executive Order 405 in May 1998, creating the Office of the Managed Care Ombudsman. This office maintains a toll-free number to assist HMO members in understanding their rights and the processes available to them under their managed care organization's internal grievance procedures. Where necessary, the ombudsman's office may assist HMO members in using an HMO's internal review mechanism for clinical and administrative decisions.
The problem of care for the uninsured indigent population remains open. The new 1115 Medicaid waiver will expand eligibility levels, paying for the increase through redirected state and federal revenues and a tax on cigarettes rather than drawing from the state's indigent care pool. DMA meanwhile is considering enrolling more recipients in capitated programs, which will require a modification of the state's 1915(b) waiver.
The next few years should see debate on these and other measures, as Massachusetts builds on its present success and works to improve quality oversight and coverage for the uninsured.
Additional Resources
- Division of Insurance
www.state.ma.us/doi- Division of Medical Assistance
www.state.ma.us/dma- Department of Public Health
www.state.ma.us/dph- Division of Health Care Finance and Policy
www.magnet.state.ma.us/dhcfp/index.htm
(Last updated October 4, 1999)
Michigan
What Is Michigan Overseeing?
In Michigan 21 licensed HMOs (as of August 1999) enroll approximately 23 percent of the insured population. Although HMO penetration is relatively high, the market still continues to grow steadily. Michigan is one of a handful of states that has not enacted any individual or small group insurance reforms.
In Michigan all eligible recipients of Temporary Assistance for Needy Families (TANF) and Supplemental Security Income (SSI) are required to enroll in one of the state's Medicaid Qualified Health Plans. As of July 1999, 750,620 Medicaid beneficiaries were enrolled either in full- or shared-risk health plans. The total number of Medicaid beneficiaries at that time was approximately 1.1 million. Michigan has contracted with an enrollment services contractor, MAXIMUS, INC., to provide beneficiary contact, managed care education, and enrollment services to Medicaid Qualified Health Plans.
Who Is Overseeing?
The Michigan Insurance Bureau (MIB), within the Department of Consumer and Industry Services, oversees HMO licensure in conjunction with the Department of Community Health (DCH). Michigan's HMO statute requires regulation of any entity that assumes risk from purchasers and provides, and arranges for provision of, health care services. MIB oversees HMO business and financial operations while DCH regulates managed care quality and responds to member appeals.
The Michigan Department of Community Health (DCH) was created on April 1, 1996, by Governor Engler, incorporating into a single agency the Department of Public Health, the Department of Mental Health, and the Medical Services Administration (MSA), which runs the state Medicaid program. As noted above, DCH shares responsibility with MIB for licensure and oversight of commercial HMOs, and it evaluates HMO networks and responds to quality-of-care complaints. The department works with business, labor, and local communities to coordinate state, private, and local health care purchasing.
The Michigan State Legislature has enacted several pieces of legislation regarding managed care. These include a patient bill of rights, pain management legislation, prohibition of "gag" clauses, and direct access to OB-GYNs.
How Are They Doing?
Solvency Oversight of the Private Market
Michigan's HMO market has been at a steady but undramatic pace. Several state officials point out that nonprofits and local plans dominate the market and that out-of-state firms have only begun to apply for licensure. Michigan's HMO statutes date back to 1974, but MIB's deputy commissioner considers the design of the oversight structure adequate for ensuring solvency. MIB monitors integrated delivery systems or contracting relations, only to the extent that these arrangements transfer risk. Providers that accept risk directly are regulated as HMOs. As long as providers accept capitation from HMOs rather than directly from employers or enrollees, there is no direct state oversight.
Quality Oversight of the Private Market
There is generalized concern about managed care quality in Michigan, but respondents are not certain that real problems exist. "If you polled people, you'd find some concern, but it's mostly fueled by national stories," comments one DCH official. A member of the Senate Committee on Health Policy and Senior Citizens, who is also a practicing physician, is more uncomfortable with managed care. "What I've seen is the Clinton plan back-doored by large corporations," he comments, adding that most consumers are unaware of the problems inherent in managed care.
HMO plans are required to establish procedures for resolving internal grievances. DCH also requires plans to report on the number and resolution of complaints, and it maintains a task force that reviews all grievances filed with the state. This task force that hears unresolved consumer complaints and is authorized to order plans to change their decisions. The department has instituted an internal process to monitor inquiries and complaints from Medicaid beneficiaries. This process includes those inquiries and complaints raised to the enrollment broker.
According to a DCH official, there has been some increase in the number of consumer complaints reaching the department as the market has grown. She estimates that the task force reviews 15 to 25 appeals a year on topics ranging from disputes over out-of-network services, to the medical necessity of particular treatments and the coverage of experimental services. She adds that the issues are particularly complicated "when there is not a consensus within the medical community about what constitutes 'appropriate' treatment."
Medicaid Oversight
DCH's chief executive officer for the Medical Services Administration (MSA) reports that enrollments in the Medicaid program's Qualified Health Plans passed the 750,000 mark in July 1999. This process is at least partially responsible for the dramatic decline in Michigan Medicaid's expenditure growth. The total increase in FY 95 through FY 97 averaged 3.2 percent per year and even lower growth was expected in FY 98 and FY 99. This contrasts with an average increase over 10 percent per year in FY 91 through FY 94.
DCH developed five separate initiatives to achieve this goal. The first step was to solicit competitive bids from plans to offer basic Medicaid services to all enrollees in a risk-based managed care program. The other initiatives address the problems of special needs groups: long-term-care patients, children with special health care needs, persons with developmental disabilities, and behavioral health services recipients. DCH intends to develop a long-term-care program that is modeled on Arizona's but that takes advantage of the home and community service industry in Michigan emerging as a result of the expansion of the state's 1915(c) waiver program. The department intends to "stimulate a continuum of support services as an alternative to nursing homes."
DCH has also developed plans to increase the capacity of the HMO industry to deal with special needs populations (like children and persons with disabilities) and to offer services beyond standard care. Finally, the agency has developed a carve-out program for services to persons with developmental disabilities and for behavioral health services.
Coordinating Oversight
The Department of Community Health represents the commitment of Michigan's present administration to improving coordination of health delivery oversight. The reorganization combined the Departments of Public Health and Mental Health and the Medicaid program into a single agency with a budget of $8 billion. "What we have done," explains a DCH official, "is create a more focused approach to health care." MIB continues to oversee solvency, while DCH continues to monitor HMO quality. MIB and DCH will work together in the oversight of plans that contract with Medicaid, as all of these plans must ultimately become licensed HMOs.
DCH officials are also very interested in promoting regionally based purchasing alliances. "The community may be a better place to make decisions about resource allocations than at higher levels of government," says MSA's chief executive officer.
What Is Next for Oversight?
Michigan policymakers find it difficult to predict future changes in oversight of the commercial market. The CEO of MSA describes the state's regulatory approach as "reasonably successful" and does not think there are "many political pressures to make changes." Both the legislature and the governor are Republican, and they generally agree on managed care issues.
Michigan's critical Medicaid initiative to expand the mandatory capitated HMO program began in 1997, and state agencies will be challenged by the task of integrating special needs populations. DCH will be implementing its joint-purchasing strategies and appears well positioned to achieve its goals. The next few years should see the changes mapped out in 1996 taking form.
Additional Resources
- Insurance Bureau
www.cis.state.mi.us/ins- Department of Community Health
www.mdch.state.mi.us
(Last updated September 24, 1999)
Minnesota
What Is Minnesota Overseeing?
About 33 percent of the insured population in Minnesota is enrolled in one of the state's 10 nonprofit HMOs. HMOs are required by state law to be locally based, nonprofit organizations; Minnesota is the only state with this requirement. In addition, there are a significant number of health plans that are self-insured under ERISA; these organizations contract with HMOs or directly with provider care systems for health care but are technically fee-for-service plans.
Minnesota operates an 1115 waiver program for Medicaid recipients, known as the Minnesota Prepaid Medical Assistance Program (PMAP), in 54 counties. The state has several times expanded publicly subsidized coverage for indigent uninsured residents (MinnesotaCare). The most recent expansion occurred through an amendment to Minnesota's 1115 waiver, which achieves the following: it expands Medicaid eligibility for children between the ages of one and two whose family income does not exceed 275 percent of poverty; it incorporates MinnesotaCare families and children into Medicaid and moves them into managed care; and it expands PMAP, which by August 1999 had an enrollment of 264,000. The ultimate goal is to provide managed care coverage to the entire state. The state has also been authorized by the Health Care Financing Administration (HCFA) under a separate 1115 waiver to implement a demonstration project, Minnesota Senior Health Options, for Medicare recipients who are also eligible for Medicaid as well. The program combines Medicare and Medicaid funding. Voluntary enrollment for this project began in February 1997 for two counties and will be expanding in additional counties as health plans finalize their networks. Enrollment in 1999 was 3,000 elderly people.
Who Is Overseeing?
The Minnesota Department of Health (MDH) is the primary regulatory entity for private-sector managed care. MDH oversees HMO solvency and quality issues; approves licenses; sets both minimum and maximum capitalization requirements; audits HMOs and their providers for compliance with quality and access standards; tracks and responds to consumer complaints; and uses a database of HMO health performance measures.
The Department of Commerce, which includes the Insurance Commission, oversees all indemnity insurance including PPOs (preferred provider organizations) and Blue Cross/Blue Shield, but it has no regulatory responsibilities for the HMO market.
The Minnesota Department of Human Services (DHS) oversees the Medicaid program, which consists of the following: PMAP for categorically eligible recipients; MinnesotaCare for low-income uninsured families and children; and Minnesota Senior Health Options for dually eligible Medicare clients. PMAP enrollment services are provided through the counties. DHS manages the health plan contracts; sets standards for access and quality; and handles consumer complaints. There is no direct marketing of health plans to Medicaid and MinnesotaCare recipients.
The Minnesota State Legislature (house and senate) has been extremely active in the managed care and the provision of subsidized care for the indigent. The MinnesotaCare plan, passed in 1992, was revised and extended in every session since it was created. Eligibility for MinnesotaCare was expanded to include adults without children with incomes up to 175 percent of poverty. The legislature also has passed a comprehensive managed care consumer protection act.
How Are They Doing?
Solvency Oversight of the Private Market
Minnesota's health commissioner reports that the public is deeply concerned about the dominance of three major health plans, which together enroll more than 60 percent of the market. Two of the three, Health Partners and Allina, are HMOs; the total membership of the third, Blue Cross/Blue Shield, is 1.4 million, of which 5 percent is in the Blues' HMO and 69 percent is in one of several PPOs. The media and advocacy groups have treated the imbalance as a major issue. As the former commissioner of the Commerce Department noted, "Mergers have happened and government does not have rules in place to respond. It is open to debate how we should respond."
Quality Oversight of the Private Market
Although competition is still strong in Minnesota, there are concerns that the stream of mergers has limited consumer choice. DOH thinks that the mergers have created an image problem but have not undermined actual care. DOH tracks a number of health status indicators and believes the plans are doing well on these measures.
Medicaid Oversight
Minnesota has been among the nation's leaders in Medicaid managed care programs and has pursued their implementation steadily but gradually. The incremental expansion of the program has allowed Minnesota to avoid the problems that other states have encountered, according to the Medicaid director. The highly developed market familiarized recipients with the nature of managed care before Medicaid began enrolling them in capitated plans.
Enrollment is an ongoing process. Participants in most counties have four or five plans to choose from, and the program relies on county workers to advise the enrollees. The department is debating the possibility of enrollment without personal contact. Face-to-face pre-enrollment educational presentations to all populations are expensive, and the director is exploring alternative ways to inform and enroll participants.
County officials are worried that capitation is leading HMOs to deny payment for certain public health and social services, thus shifting the burden to the county public health services; they have asked for more control over the capitated Medicaid program.
The 1997 legislature authorized the development of county-based purchasing, a new system in which counties, singly or in groups, would provide or contract with health care providers for Medicaid services. Counties would receive a capitated payment from the state agency, and would be at risk for costs over that amount.
The Medicaid program promotes quality through several devices, employing internal plan grievance procedures, county advocates, and the state ombudsman's office. Minnesota requires the plan to notify both the enrollee and the state every time coverage is denied. Enrollees may then appeal directly to the plan; if that fails, they may bring their case first to the county advocate and then to the state PMAP ombudsman. Fewer than ten appeals reach the ombudsman each quarter.
The advocacy and grievance process has highlighted mistakes and indicated areas for improvement. Program officials "want to focus on outcome measures" rather than rely on individual case review, according to the Medicaid director, but they have not yet undertaken such a program. The program also uses quality assurance review initiative (QARI) measures, and it worked with other public and private purchasers of health services to complete a detailed consumer satisfaction survey. The state is now implementing Medicaid HEDIS, which became available in 1996.
The Medicaid director sees contracting and purchasing services as important strategies for oversight. She thinks it important not to "take your savings out of the state administrative area. If you do that, you will see your expertise on the other side of the table." She adds that contract negotiations should be an agency, not a legislative, responsibility. "Give staff parameters and then let them do their job."
Coordinating Oversight
Minnesota is trying to improve managed care performance by developing connections between different forms of contracting. The Department of Employee Relations, which manages state employee health care purchasing, has allied with the Buyers Health Care Action Group (BHCAG), which comprises the 24 largest employers in the Twin Cities. According to the director of Managed Care Programs for the Minnesota Department of Human Resources, BHCAG has had "a significant impact" on contracting between purchasers and health plans. The Department of Employee Relations has an affiliated seat on BHCAG and participated in the development of its Request for Proposals but so far has not participated in actual purchasing.
Contract negotiation teams for the Department of Employee Relations and Medicaid managed care participate in each other's meetings with health plans but have not pooled their purchasing power.
What Is Next for Oversight?
Managed care quality concerns have prompted several new reform proposals in Minnesota. One measure was the Patient Protection Act of 1997, which seeks to prevent health plans from interfering with the doctor-patient relationship and to provide patients with accurate information about the financial relationship between their health care providers and health plan companies. Doctors and nurses will also be free to discuss, without fear of retaliation, diagnostic, treatment, or referral options not covered or limited by the health plan company.
The Medicaid program intends to continue to use contracting to improve managed care performance, to refine its purchasing strategies, and to use financial incentives to encourage plans to submit new ideas for better delivery of care. Officials from the Medicaid managed care program and the Department of Employee Relations are working on similar data systems and procedures for network data analysis, although they expect to keep their contracting function separate for at least the next several contract rounds.
Minnesota is also in the early stages of developing long-term care delivery system models. Minnesota Senior Health Options began providing long-term care under HMO contracting arrangements in 1997.
Additional Resources
- Department of Health
www.health.state.mn.us- Department of Health, Managed Care Systems
www.health.state.mn.us/divs/hpsc/mcs/mcshome.htm- Department of Commerce, Insurance Division
www.commerce.state.mn.us/mainin.htm- Department of Human Services
www.dhs.state.mn.us- Minnesota Health Data Institute
www.mhdi.org
(Last updated August 30, 1999)
Mississippi
What Is Mississippi Overseeing?
Only five of Mississippi's 13 licensed HMO plans are actively operating, and they enroll just 0.3 percent of the insured population. Although managed care penetration is currently low, the state anticipated its expansion and passed an HMO Act in 1995, based on model legislation devised by the National Association of Insurance Commissioners (NAIC). The act gave the insurance commissioner the power to regulate HMO solvency; mandated certain patient protections; and included an any-willing-provider clause, which applies both to pharmacies and to physicians.
Under a program initiated by the Department of Finance and Administration in 1993, seven preferred provider organizations (PPOs) deliver health services to state employees under contract with the State and Public School Employees Health Insurance Plans. Mississippi received a 1915(b) waiver in 1993 for HealthMACS, a primary care case management (PCCM) program for Medicaid clients. HealthMACS, launched in a single county in October 1993, was operating in 14 counties as of mid-1996; by March 1998 it had reached statewide operation. In 1995, the state developed a plan for capitated Medicaid managed-care pilot projects, which was approved by the Health Care Financing Administration (HCFA) in February 1996. Enrollment in the pilot, which began in the fall of 1996, is based on capitation contracts with licensed HMOs and on voluntary participation by Medicaid participants, thereby eliminating the requirement for an 1115 waiver. Mississippi plans eventually to enroll 40,000 of its 550,000 state Medicaid recipients in a managed care program.
Who Is Overseeing?
The Insurance Commissioner is an elected office in Mississippi. The 1995 HMO Act gives the commissioner oversight over HMOs, PPOs, and other prepaid plans. The commissioner regulates solvency and requires the registration and certification of utilization review agents.
The Mississippi Public Health Department (PHD) is responsible in principle for monitoring the quality of HMOs, but these duties are not yet defined. The department is now primarily engaged in traditional public health concerns, like primary care prevention services.
The Mississippi Division of Medicaid (DOM) is implementing the 1915(b) waiver program and the managed care pilot projects. The Medicaid program will use HEDIS and EPSDT measures to evaluate HMO performance and has hired a contractor to handle enrollment. DOM also manages HealthMACS, the primary care case management program. By 1998, DOM was monitoring the activities of five HMOs operating in six counties; other HMOs are in operation, but do not participate in Medicaid.
The Mississippi Department of Finance and Administration (DFA) administers the State and Public School Employees Health Insurance Plans and monitors PPOs that contract with the plans, particularly services that are provided under the contract. Any PPO that offers a capitated payment plan must be certified as an HMO; however, DFA is unable to contract with HMOs unless special legislative authority is received.
In 1993, DFA issued a Request for Qualifications to determine if there was any interest in developing PPOs to contract with the plans; after receiving a positive response, it asked for competitive bids by issuing a Request for Proposals (RFP). Of the 15 PPOs that bid on the RFP, many of them formed for that purpose, DFA selected four qualified networks and awarded contracts with the State and Public School Employees Plans in 1994. The following year, DFA contracted with seven PPOs to operate under the Plans.
The Mississippi State Legislature has strong budget and oversight responsibilities for all areas of government. In 1995 lawmakers passed the HMO Act and directed the DOM to develop the Medicaid managed care pilot projects.
In addition to legislative monitoring, the state constitution permits Mississippi's governor to appoint boards to oversee many state agencies, including the Health Department.
How Are They Doing?
Solvency Oversight of the Private Market
Prior to the 1995 HMO act, Mississippi did not regulate the solvency of prepaid plans. Thus, it is too early to measure the full impact of the new oversight reform program and of managed care on the state's health service system. An Insurance Commission consultant, who is a former deputy commissioner, states that solvency regulation is the linchpin of the 1995 act: "There is no difference between regulating HMOs and indemnity insurance." The consultant explains that President Clinton's proposed reforms sparked changes, and he says that in many ways state oversight is further developed than the HMO market. The 1995 Act includes patient protection measures, but the consultant notes that the legislation avoided more onerous provisions. For example, the Insurance Commission is not authorized to regulate rates or benefit packages: "If the employer is the one dealing with the HMO, then they will get the best deal for their employees."
Quality Oversight of the Private Market
Mississippi's state health officer is responsible for HMO quality issues like network adequacy, but the health officer reported in 1996 that his department's managed care oversight program was too new to evaluate. Only a few staff had been assigned, and duties had not been defined.
DFA ensures that the PPOs contracting with the State Health Insurance Plans meet the following requirements: a sound credentialling process; adequate customer service; maintenance of sufficient insurance coverage; and completion of patient satisfaction surveys.
DFA also monitors utilization and payments by the networks and surveys plan members on their satisfaction with the chosen benefit option. The PPOs have begun developing other products like point-of-service plans and contingency reserve arrangements.
Medicaid Oversight
DOM created an advisory committee comprising health plans, providers, and consumer groups to develop a Medicaid managed care program in Mississippi. However, DOM's executive director recalls that the committee was of limited value because "they didn't put their cards on the table and debate as honestly as I thought they would." Debate over the managed care proposal was muted until the legislature came back into session; providers then complained to lawmakers "that they will be annihilated if they have to join an HMO." DOM nevertheless persevered with legislative support. In developing its pilot project, the division studied the work of nearby states. The Request for Information is based on the model used in Texas, and the contract resembles the one used by Georgia.
Coordinating Oversight
The primary coordinating mechanism for health market regulation in Mississippi has been its strong legislative oversight. New strategies may be developed as the managed care programs for Medicaid clients and the State and Public School Employees Health Insurance Plans expand and as the PHD begins to exercise its authority over quality assurance.
What Is Next for Oversight?
The Medicaid managed care pilot program was likely to be a prominent factor in the changing nature of health care delivery in Mississippi as it took shape during 1997. At that time, DOM's director was not sure how implementation would proceed. "There are a lot of unanswered questions. In six months, we will have more experience," she admitted. She thought that Medicaid would need more administrative staff to oversee the capitated managed care program.
The public health officer has a number of concerns about the impact of Medicaid managed care on the maintenance of public health. The health officer points out that in Mississippi, as in many other southern states, the public health department is the main provider of certain Medicaid services like prenatal care and childhood screening. The nurses and doctors funded by Medicaid reimbursements perform many other public health functions like tuberculosis diagnosis and tracing sexually transmitted disease contacts. In managed care environments, there is often a shift away from public health to other services. "This is a good thing [for containing costs]," says the public health officer. "But . . . Public Health has gotten used to funding from Medicaid, and as a result states have not maintained public funding for those activities that piggyback on Medicaid. . . . [The shift] will reveal the inadequate funding in basic public health."
Oversight of the private sector for solvency or quality is not likely to be a major issue in the near future. The insurance commissioner does not envision any significant changes. "There is nothing really on the agenda," according to the insurance consultant. State officials expect that the main focus of attention in Mississippi will be Medicaid managed care and its impact on costs, access, and public health services.
Additional Resources
- Department of Insurance
www.doi.state.ms.us
- Department of Health
www.msdh.state.ms.us- Division of Medicaid
www.dom.state.ms.us- Department of Finance and Administration
www.dfa.state.ms.us
(Last updated August 23, 1999)
Missouri
What Is Missouri Overseeing?
HMO enrollment in Missouri increased 70 percent between 1994 and 1996. A Missouri Department of Insurance (DOI) analyst estimated statewide penetration of managed care in mid-1996 at approximately 30 percent, with more than 42 percent penetration in the St. Louis area. Membership is expected to continue to grow as officials and employers seek ways to control health care costs.
The Missouri Division of Medical Services (DMS) has been actively enrolling Medicaid clients in MC+, a managed care program, under a 1915(b) waiver. As of December 31, 1998, Missouri had approximately 135,000 MC+ recipients enrolled in five HMOs in the five-county St. Louis (Eastern) MC+ region, almost 31,000 MC+ recipients enrolled in four HMOs in an 18-county Central Missouri MC+ region, and approximately 71,000 MC+ recipients enrolled in four HMOs in the seven-county Kansas City (Western) MC+ region.
The Division of Medical Services submitted an 1115 demonstration waiver to the Health Care Financing Administration (HCFA) in June 1994. An amendment to the 1115 demonstration waiver was submitted to HCFA on August 26, 1997. The 1115 demonstration waiver, as amended, was approved by HCFA on April 28, 1998. The waiver amendment constitutes Missouri's commitment to improving medical care to low-income children and supports families moving from welfare into jobs. The MC+ For Kids program was implemented on September 1, 1998. As of December 31, 1998, there were 10,500 children enrolled in the MC+ For Kids program in managed care areas. Of these, approximately 4,000 children were enrolled in three HMOs in the five-county St. Louis (Eastern) MC+ region, 2,400 children were enrolled in the three HMOs in the 18-county Central MC+ region, and approximately 4,075 children were enrolled in three HMOs in the seven-county Kansas City (Western) MC+ region. MC+ For Kids children receive services through the fee-for-service program in non-managed care areas.
The Missouri Consolidated Health Care Plan (MCHCP), created by statute in 1992, is a state-sponsored health insurance purchasing alliance for employees of state and local governmental agencies. MCHCP began offering health insurance options to non-state governments, including HMO plans, in 1995. Within a year, 75 percent of the MCHCP's members had enrolled in an HMO or POS. Currently 95 percent of all of its members are enrolled in one of these options.
The 1994 Show-Me initiative recommended five "foundation" reforms: revising health insurance; instituting Medicaid managed care; improving the public health infrastructure; creating an effective primary care system; and installing a health care information system that would reach consumers at all levels. The legislature has enacted several reforms: Medical Savings Accounts; the Small Employer Health Insurance Availability Act; and the Missouri "Hi-Risk" Health Insurance Pool.
Who Is Overseeing?
The Missouri Department of Insurance (DOI) is the licensing agent for HMOs in Missouri. It oversees solvency, responds to consumer complaints, reviews HMO forms and contracts, and is responsible for approving HMO mergers and conversions from nonprofit to for-profit status. However, the division does not oversee preferred provider organizations (PPOs), because they entail a different assumption of risk. However, if the PPO is assuming financial insurance risk their plans are reviewed by the DOI to determine the insurance authorities or licenses that may be required. In some situations such as the PPO accepting monetary risk by capitation, the DOI would advise the PPO on how to obtain HMO licensure.
During the summer of 1996, the legislative leadership appointed an interim, bipartisan Joint Legislative Committee on Managed Care. More than 200 persons testified, including consumers, consumer advocates, health care professionals, state officials, health care providers, business and government purchasers of managed care, and representative from the managed care industry. As a result of these managed care public hearings, the 89th General Assembly of Missouri overwhelmingly passed House Bill 335, which was signed into law by Governor Carnahan in August 1997. This comprehensive bill extended consumer protections in such areas as utilization review, emergency coverage, provider network adequacy, disclosure statements to an enrollee or potential enrollee, how the enrollee may file a grievance, establishment of a binding grievance review by a peer review committee, and the publication in some HMO forms and documents of the DOI's consumer complaint hotline telephone number.
The Missouri Division of Medical Services (DMS) within the Department of Social Services contracts only with state-licensed HMOs for its Medicaid managed care. At the end of 1998, DMS had approximately 277,000 recipients enrolled in the MC+ program.
The Missouri Department of Health (DOH) licenses hospitals, hospices, and home health agencies. As a result of the 1997 managed care legislation, HMOs are required to provide data regarding the quality of care, access to care, member satisfaction, and member health status to DOH. The department will be publishing an annual consumer guide based on this information.
The Missouri State Legislature (senate and general assembly) has been active in health care reform. The Joint Interim Committee on Managed Care began meeting in late 1996, which resulted in the comprehensive managed care legislation passed in 1997 as outlined above. Other health-related legislation passed in 1997 included bills mandating insurance coverage for reconstructive surgery after a mastectomy, diabetes treatment, and formulas for patients with phenylketonuria (PKU) or any inherited disease of amino and organic acids.
How Are They Doing?
Solvency Oversight of the Private Market
A DOI planner describes Missouri's solvency oversight programs as strong, including the department's recovery program, which assists financially vulnerable HMOs in the transition to solvency. DOI performs market conduct and solvency examinations of each HMO every three years. Agency staff analyze quarterly and annual reports carefully for solvency issues, track all consumer complaints, and publish a report. Most complaints to the DOI Consumer Affairs Department about HMOs relate either to denial of treatment or to billing problems. If a particular plan receives a large number of complaints, it can trigger an earlier review.
Missouri has taken "a cautious approach" to managed care oversight, according to a member of the state legislature who is active in health care issues. The state made a conscious decision to take a market-oriented approach to health delivery regulation. The legislator notes that the Missouri health care market has been turbulent, as the state has seen many mergers and acquisitions and has instituted very few "rules" of operation. The DOI planner agrees that mergers are a significant factor in Missouri, citing two in 1995-96. The DOI must approve all HMO mergers; however, the department negotiates its concerns with the parties, as it did in the 1995 United Healthcare Corporation (UHC) acquisition of MetLife, rather than disallow the contract. According to a senior DOI spokesman, virtually all approvals are tied to special conditions or divestiture requirements because of the increasing concentration in the managed care market.
The DOI has been reviewing the proposed conversions of Blue Cross/Blue Shield of Missouri and Blue Cross/Blue Shield of Kansas City from nonprofit to for-profit entities. The MDI is concerned about the Blues' abandonment of their charitable responsibilities to the public after they have enjoyed nonprofit status for more than 60 years.
DOI does not oversee or collect data on PPOs, which are a large component of managed care in the state, because these organizations normally do not accept the monetary risk required by capitation.
Quality Oversight of the Private Market
Quality oversight of Missouri's private market has received more attention as a result of the 1997 managed care legislation. HMOs are required to provide data regarding the quality of care, access to care, member satisfaction, and member health status to DOH. The department will use this information to publish an annual consumer guide. The DOI Consumer Affairs Department does not report a high volume of quality-of-care complaints from enrollees.
Medicaid Oversight
The Missouri Department of Social Services, through the Division of Medical Services (DMS), is undertaking the development of a coordinated care system for Medicaid-eligible and physically disabled beneficiaries. Coordinated care is an integrated health care system, the goal of which is to monitor and coordinate the health care needs of an individual in an effort to obtain high-quality, cost-effective services that are rendered in the most appropriate settings.
Missouri has developed a Program of All-Inclusive Care for the Elderly (PACE), which is a comprehensive service delivery system and finance model for the frail elderly that replicates the original model pioneered at the San Francisco On Lok site in the early 1980s. PACE is an integrated service system that includes primary care, restorative therapy, transportation, home health care, inpatient acute care, and even long-term care in a nursing facility when home and community-based services are no longer appropriate. The Health Care Options Plus (HCO+) Program is still in the development stage.
Coordinating Oversight
The Missouri Consolidated Health Care Plan, the Gateway Purchasing Association, and the Department of Health have collaborated on quality indicators. The Departments of Health and Social Services also work closely together to develop and monitor quality indicators for the Medicaid population.
What Is Next for Oversight?
With the implementation of MC+, the Missouri Medicaid managed care program, the Division of Medical Services (DMS) developed a Quality Assessment and Improvement (QA&I) plan for the purpose of oversight. The QA&I plan includes on-site audits of health plans' operations, collection, and analysis of utilization and health indicator data, annual member satisfaction surveys, and an annual independent external review. An integral part of the QA&I plan is the Consumer Advisory Group, which provides recommendations for the improvement of the quality of services that are available through the MC+ program.
Health reform and managed care oversight issues will continue to be high profile issues in Missouri as legislators and state officials balance consumer protection and the delivery of quality care against both costs and provider and insurers interests. More time is needed to evaluate the impact of the provisions contained in the 1997 managed care legislation.
Insurance reform is another important area. A Missouri Department of Health report shows an estimated 755,000 citizens had no health coverage during 1995. This represents an increase of non-elderly uninsured from 1993, when there were an estimated 630,000 uninsured. Total health care charges for uninsured non-elderly Missourians increased from $1 billion in 1993 to $1.3 billion in 1995. A bill to allow small employers to obtain medical coverage through MCHCP was introduced in the 1998 legislative session.
Additional Resources
- Department of Insurance
www.insurance.state.mo.us- Department of Social Services, Division of Medical Services
www.dss.state.mo.us/dms- Department of Health
www.health.state.mo.us
(Last updated August 23, 1999)
Montana
What Is Montana Overseeing?
The Montana health insurance market is dominated by plans offered by Blue Cross/Blue Shield (BCBS) of Montana, which enrolls 45 percent of the insured population. Managed care penetration in this large but sparsely populated state is still less than 10 percent of the population, but growing. BCBS has expanded their HMO line of business, organizing HMOs in the central and western thirds of the state. BCBS has acquired 50 percent ownership of Yellowstone Community Health Plan, an HMO in Billings, which is available in many counties in the eastern third of Montana. New West Health Plan, licensed since October 1997, does business in the Billings, Missoula, Havre, and Helena areas. An HMO in Kalispell canceled its license due to a lack of business.
Of Montana's 80,000 Medicaid-eligible residents, 45,000 receive services through a primary care case management plan. The state began a capitated Medicaid program, under a 1915(b) waiver, and had 3,000 clients enrolled by the end of 1998. Montana requested an 1115 waiver to carve out a capitated mental health program and expand coverage to residents with incomes below 200 percent of federal poverty guidelines, but the waiver was denied by the Health Care Financing Administration (HCFA). Medicaid officials have now developed an alternative plan, funded entirely through the state budget, which will serve people with severe mental illness whose incomes are below 200 percent the federal poverty level (FPL). The contract for mental health managed care was terminated in May 1999 and the state is now operating a fee-for-service-based system with utilization controls. Eligibility for non-Medicaid eligibles was reduced to 150 percent of FPL.
Who Is Overseeing?
The State Auditor's Office houses the Montana Insurance Department (MID). MID is the primary regulatory agency for the private managed care market. The office regulates all insurers but has no authority to regulate providers unless they assume risk.
The Department of Public Health and Human Services (DPHHS) houses public Health Programs and Medicaid. In 1997 the legislature approved regulation of managed care, establishing network adequacy and quality assurance standards to be enforced by DPHHS. DPHHS established rules for the law, which is scheduled to be fully implemented by October 1, 1999. Primary care case management and the new capitation plan are under the Medicaid program, which relies upon a set of modified HEDIS standards to measure quality. Having had a bad experience in contracting out managed care for indigent residents with severe mental illness, DPHHS has reassumed the risk and is exploring managed care options with consumers and legislative committees.
The Montana State Legislature, by law, meets for 90 days every other year, although there have been special sessions in the off years between 1983 and 1993. The 1995 legislature created the Montana Health Care Advisory Council (HCAC), which includes membership from the public and four legislators. HCAC issued its report, recommending several initiatives, in October 1996, but funding was not approved by the legislature. However, HCAC itself was extended through June 2000.
How Are They Doing?
Solvency Oversight of the Private Market
Before mid-1996 there had been only limited HMO activity in Montana, because the state is very rural and sparsely populated. HMOs must apply to the Insurance Department for licensure and meet all state standards; also, all health insurers must submit utilization review procedures to MID.
Quality Oversight of the Private Market
MID has a staff of eight to deal with consumer complaints related to extent of coverage, claims processing, and other insurance problems; quality assessment and network adequacy laws and rules are enforce by DPHHS.
Medicaid Oversight
Montana's capitated Medicaid managed care program began in 1996. Medicaid contracts with the managed care plans require them to pay for emergency room use, and for family planning services, immunizations, and sexually transmitted disease treatment, which will be provided by local public health clinics. Program officials plan to use a modified HEDIS evaluation with four to five measures for quality assessment; they will also be monitoring provider capacity and client access to services.
What Is Next for Oversight?
At the end of 1997, 19.5 percent of the state's population remained uninsured. A state legislator commented that the "whole issue of the uninsured won't go away."
Montana officials have learned from experiences in other areas and intend to be prepared for the expansion of the managed care market in their rural state.
Additional Resources
- Insurance Division
www.state.mt.us/sao/insdiv.htm- Department of Public Health and Human Services
www.dphhs.state.mt.us
(Last updated September 8, 1999)
Nebraska
What Is Nebraska Overseeing?
Nebraska's HMO market is still young, with five HMOs enrolling less than 10 percent of the insured population. Omaha has the highest managed care penetration in the state. A policy advisor to the Health and Human Services System (HHSS, formerly the Department of Health) thinks that every primary health care provider in the city has contracted with one of the plans. However, the state is heavily rural, and networks have not spread widely elsewhere.
Nebraska began implementation of a 1915(b) waiver for Medicaid managed care in July 1995. The medical-surgical component of the program was implemented in Douglas, Sarpy, and Lancaster Counties only. A fully capitated mental health contract was implemented on a statewide basis.
Who Is Overseeing?
The Nebraska Department of Insurance (DOI) regulates HMO solvency. The department's "market conduct" group monitors claims handling, oversees timely resolution of complaints, and reviews terminations of insurance.
The Health and Human Services System (HHSS) has the authority to oversee HMO quality assurance and has received grants and seed money from the Robert Wood Johnson Foundation to help develop managed care networks for rural areas. The department uses informal methods to monitor changes in managed care penetration.
The former Department of Social Services (now part of the HHSS), which manages the Medicaid program, implemented the transition to managed care.
Oversight by Nebraska's unicameral Legislature has been limited. The chairman of the Health and Services Committee, which handles all issues related to health and human services, reports that managed care takes only a fraction of his attention. The legislature set up a Managed Care Commission to oversee the transition to Medicaid managed care, chaired by the director of the former DOH. The commission was advisory only and did not write rules and regulations. The Commission's authority sunseted in the spring of 1997.
The DOI continues to regulate HMO solvency. During the summer of 1997, a task force conduced a study of the regulation of managed care. This task force included the DOI, HHSS, the offices of Senator David Landis and Senator Don Wesely, domestic insurers, and representatives of hospitals and medical professionals. As a result of the study, a bill, LB 1162, was introduced in the legislature in the 1998 session that adopts the following five National Association of Insurance Commissioner (NAIC) model acts: (1) Health Care Professional Credentialing Verification Act; (2) Managed Care Plan Network Adequacy Act; (3) Quality Assessment and Improvement Act; (4) Health Carrier Grievance Procedure Act; and (5) Utilization Review Certification Act.
How Are They Doing?
Solvency Oversight of the Private Market
DOI is the Nebraska state agency for oversight of the private market and is primarily concerned with solvency issues. Provider Sponsored Organizations (PSOs) that assume risk in Nebraska must be licensed either as HMOs or insurers. PSOs that contract with HMOs and insurers and do not themselves assume risk are not seen as a problem. This situation could change in light of the Balanced Budget Act of 1997, which allows PSOs to assume risk for Madicare + Choice products and to obtain a waiver from the Health Care Financing Administration (HCFA) from state regulation.
Quality Oversight of the Private Market
Quality oversight of HMOs has not been a major issue of concern in Nebraska. DOI receives all complaints, including issues of access to care and quality of care. Although these may be referred to HHSS for investigation, the department reports it has received only minor problems not requiring specialist review.
Medicaid Oversight
In 1993 Nebraska's governor and legislature directed the former Department of Social Services to implement the managed care program as quickly as possible. The managed care program for the general Medicaid population has been successful. The two HMOs offering services have "really done an outstanding job," reports the Medicaid director. The department developed contracting standards and procedures, relied on private sector contractors, and hired personnel with private sector experience. Staff also talked to Medicaid officials in states and worked with HCFA personnel.
Coordinating Oversight
Nebraska has completed a merger of its health-related programs, including health, mental health, and social services, into a new agency, whose three divisions will oversee service delivery, quality monitoring and regulation, and finance and support services. The merger strategy is designed to achieve three goals: better coordination of policy, greater administrative control over programs funded through block grants, and streamlining of state government. The partnering entities make up the HHSS, which combines the former agencies of Social Services, Health, Public Institutions, Aging, and Juvenile Justice.
There has not been much state effort to coordinate health care purchasing activities.
What Is Next for Oversight?
Although plans are in progress to enroll rural Medicaid clients in managed care, Nebraska's rural market is not ideal for capitated managed care. However, there is slowly evolving interest in forming integrated health organizations to provide services in rural Nebraska.
Officials think that concern about the quality of HMO care will grow. As penetration increases, people will demand more oversight from a quality assurance standpoint. Enactment of effective quality regulation will continue to be the result of pressure from the bottom up, based on public response rather than agency initiative.
The planned merger of health care agencies will have a major impact on Nebraska's efforts to extend managed care coverage, control costs, and ensure quality, but consequences of these mergers are not yet clear.
Additional Resources
- Department of Insurance
www.nol.org/home/NDOI- Health and Human Services System
www.hhs.state.ne.us
(Last updated March 27, 1998)
Nevada
What Is Nevada Overseeing?
The level of HMO penetration doubled in Nevada from 1994 to 1997; the number of licensed HMOs increased from 6 to 13, and enrollment rose to 21.5 percent of the insured population. In light of these changes, a Division of Insurance task force began drafting new regulations on solvency requirements and quality oversight, which were released in the fall of 1996, and the state legislature passed several important reform measures.
Medicaid began a voluntary HMO program in April 1997 for recipients in Clark and Washoe Counties. The state began enrolling Clark County recipients in a mandatory HMO program in December 1998.
Who Is Overseeing?
The Nevada Division of Insurance (DOI) is responsible for overseeing the solvency of HMOs; it shares licensing authority with the Division of Health (DOH). DOI assembled a task force, which developed new solvency standards for HMOs in the growing market. By the end of 1997 the number of HMOs had increased to 13 and market penetration grew to 21.5 percent.
Nevada's Department of Human Resources houses the Medicaid Program, now part of the new Division of Health Care Financing and Policy (DHCFP). The Medicaid program implemented the voluntary HMO program in April 1997. Medicaid monitors quality of care provided by HMOs contracted to serve Medicaid recipients. DOH oversees HMO quality assurance procedures and is responsible for carrying out general health policy, especially when it relates to issues that affect special needs groups.
The Nevada State Board of Health, acting in an advisory capacity to the department, developed regulatory amendments, adopted November 1, 1995, to improve quality-of-care oversight.
The Nevada State Legislature (senate and assembly) meets every two years and is heavily occupied with budgetary and fiscal matters, including those related to health care. The 1997 Nevada Legislature was successful in enacting laws to protect Nevadans. Among these reforms, the legislature:
- strengthened the licensing requirements to protect residents of facilities that provide residential care to people who are dependent on others for some aspect of their personal care
- reformed the laws that regulate physician malpractice
- restructured involuntary commitment laws to protect patients and family members
- established protections to prevent abuse by providers in billing practices and protections for consumers regarding their managed care plans
- required contractors for a Medicaid managed care plan to negotiate "in good faith" with Federally Qualified Health Centers, the University Medical Center in Las Vegas, and the University of Nevada School of Medicine, thereby ensuring that a portion of the "safety net" is retained for people who are traditional users of this aspect of care
- established guidelines for adopting a pharmaceutical program in Medicaid that ensures access to federally approved prescription drugs and that protects patients from fraud and from potential drug interaction problems
In the period preceding the 1999 legislative session, the Nevada Legislative Committee on Health Care (Nevada Revised Statutes 439B 200) undertook a survey of the prevalence of health insurance in Nevada. Survey findings assisted the committee in drafting legislation and making recommendations to the legislature.
How Are They Doing?
Solvency Oversight of the Private Market
The Nevada HMO market is in a period of rapid growth, spurred by the in-migration of California residents, who have positive expectations of HMO care, and by a high rate of overall population growth. With an estimated annual growth rate of 4 percent, Nevada in mid-1996 was the fastest growing state in the country, and, as such, has attracted interest from national health care organizations.
In this growth market, the DOI has focused on improving HMO solvency. Two plans went bankrupt in the late 1980s, when Nevada's requirement that HMOs have only $250,000 in reserve was the lowest in the nation. DOI's commissioner established a broad-based advisory task force of insurers, HMOs, doctors, and consumer advocates to recommend new solvency requirements and regulations for independent practice associations (IPAs). The makeup of the task force was designed to encourage acceptance of the reform.
The new regulations, which became effective on October 19, 1996, established a minimum net worth requirement of $1.5 million for HMOs. HMOs already operating in Nevada will be allowed to satisfy the new requirement in steps, reaching full compliance no later than December 31, 1998. Another regulation established standards for contracts between HMOs and other health care delivery systems; adopted early in 1998, it facilitates risk assumption by a delivery service intermediary.
Quality Oversight of the Private Market
The Division of Health (DOH) reviews the quality assurance procedures and networks for each Nevada HMO during licensure. Its ongoing oversight authority was substantially increased by the Board of Health's amendments to the state Administrative Code, which became effective in 1995. Under these new regulations, an HMO must have in place a quality assurance committee, a system for data collection, and written guidelines for remedial action; report all provider complaints to the board; include specific quality performance data in its annual report; and submit to triennial quality reviews by the Joint Commission on Accreditation of Healthcare Organizations (JCAHO) or the National Committee for Quality Assurance (NCQA). Non-federally-qualified HMOs will be reviewed for adherence to state standards.
Despite the dramatic changes in the HMO market, policymakers do not report significantly more consumer complaints or increased public concern about quality of care. DOI has not received complaints about the imposition of "gag" orders on physicians or reductions in medically necessary treatment. There has been some interest in any-willing-provider laws and patient protection legislation; medical society officials have testified on these issues.
Medicaid Oversight
Nevada's Medicaid costs increased by $223.5 million from 1994 to 1996. The Medicaid program has been the "big news story" because of the need to curtail this spending, according to the chair of the assembly's Health and Human Service Committee. The Medicaid program initiated a voluntary HMO program for recipients of Temporary Assistance for Needy Families (TANF) and of Child Health Assistance Program (CHAP) benefits in April 1997. Medicaid has developed a reporting system that can track a number of quality-of-care indicators and accounting measures including HMO profits, and has also developed an information system that can be adapted to new demands.
Health care costs are a significant concern in Nevada, where they are among the highest in the nation. The Health and Human Services chair notes that Nevada has a high incidence of "risky behavior such as smoking, drinking, and teen pregnancy." An estimated 18 to 24 percent of the state's population has no insurance coverage, leaving county hospitals to carry the burden of care for the indigent. The chair is concerned that as Medicaid moves away from fee-for-service to managed care, funding for local hospitals will drop and the medical safety net will unravel. Medicaid's chief of managed care acknowledged that this constitutes a potential problem; however, no studies have yet been done on this topic.
Coordinating Oversight
Coordination of oversight in Nevada is channeled through Medicaid. The Medicaid program has developed new financial requirements for HMOs that will be Medicaid contractors. In addition to quality oversight, DOH considers policy issues related to the effects of Medicaid managed care on special needs populations. In particular, DOH has been exploring the impact of managed care on rural health, on non-English-speaking populations, and on the disabled.
What Is Next for Oversight?
A health resource analyst in the Bureau of Health Planning and Statistics thinks that the market will soon stabilize as new multistate HMOs entering Nevada merge or acquire existing plans and as established HMOs "expand product lines and geographic areas of service to meet demand." She also anticipates that the Board of Health will require HMOs to provide more complete member and provider complaint data and more information on selected HEDIS measures.
The new Medicaid program will be assessed and evaluated, particularly for its success in reducing costs and its impact on special needs populations and uninsured indigents.
The DOI task force's new regulations for Nevada HMOs became effective in October 1996. Future oversight initiatives will depend on the impact of these new regulations and the rate of expansion of the managed care market.
Additional Resources
- Division of Insurance
www.state.nv.us/b&i.id- Department of Human Resources
www.state.nv.us/hr- Division of Health
www.state.nv.us/health- Division of Health Care Financing and Policy
www.state.nv.us/dhcfp
(Last updated August 19, 1999)
New Hampshire
What Is New Hampshire Overseeing?
HMOs have enrolled 17 percent of New Hampshire's insured population, with two plans accounting for 90 percent of that market. HMO penetration is almost exclusively held to the southern tier (about one-third) of the state. The state has been very active in insurance reform. In 1992 the legislature passed a package of small-group insurance reforms; these reforms increased portability of coverage and ensured guaranteed renewal. A 1993 amendment limited exclusions for preexisting conditions; in 1994 reforms were extended to the individual market, and allowable exceptions to community rating requirements were specified. New Hampshire also has an any-willing-provider law for pharmacies in place.
The state is in the process of weighing options for ensuring access to quality health care for Medicaid clients. Options include implementing a primary care case management (PCCM) program.
The 1999 legislative session highlighted a number of health care issues. Senate Bill 183 became a catchall for these new provisions. Passed on July 1, 1999, the bill includes a mandate for the Department of Health and Human Services (DHHS) to make a biennial report on the health status of New Hampshire residents; pharmaceutical rates for cities, towns, and counties will not exceed the rate paid by DHHS; DHHS will conduct a study regarding transitional health care for disabled persons; and a subcommittee will research and develop options for affordable health insurance for low-income working adults.
The 1999 legislature also enacted a new law requiring health care charitable trusts to articulate and measure the value of the benefits they provide in exchange for the privilege of tax exemption. Beginning in 2000, hospitals and other large health care charitable trusts are required to conduct periodic assessments of community needs, develop community benefits plans, and make annual reports to the Attorney General.
In 1999, DHHS began to implement a state health plan called The New Hampshire Health Care System: Guidelines for Change. The Guidelines were developed with the participation of more than 1,200 New Hampshire citizens. A Robert Wood Johnson Foundation State Initiatives grant is funding the implementation of several key Guidelines recommendations. These include: (1) an assessment of current health care market conditions; (2) collection, analysis, and distribution of information that will aid in monitoring the market and in making recommendations regarding market interventions; and (3) assistance to employers to obtain better cost and quality in purchasing health insurance. This work is being implemented through an interagency workgroup that includes the Department of Health and Human Services, the Department of Insurance, and the Office of the Attorney General.
Who Is Overseeing?
The New Hampshire Department of Insurance (DOI) is the sole licensing agency for HMOs in the state. DOI oversees HMO solvency, reviews HMO buyouts and mergers, tracks consumer complaints, and has responsibility for quality-of-care issues.
The Department of Health and Human Services (DHHS), which has been recently reorganized, houses the Office of Community and Public Health (OCPH), which administers the state's Medicaid program. It also carries out the functions of the former Division of Public Health. OCPH has long provided care for indigent clients and traditional public health services. Eight community health centers and 23 public health categorical agencies provide care for more than 50,000 indigent clients each year.
Active in health care matters, the New Hampshire State Legislature passed and extended the state's package of small-group insurance reforms. In 1994 lawmakers considered a bill to create a single consolidated state agency to be known as the New Hampshire Health Care Authority. The authority's proposed responsibilities included development of a plan for universal coverage by 1997, creation of a purchasing alliance, management of the Certificate of Need program, and development of a health care database. The legislature rejected this bill but then created the Health Care Reform Coordinating Committee to make recommendations for health care legislation. During the 1996 session, the legislature considered a bill to eliminate restrictive contracting practices.
In 1998, New Hampshire created a market subsidy mechanism to help stabilize the individual market. Assessments collected from group market participants are used to make subsidies available to individual market participants. The New Hampshire Blue Cross/Blue Shield plan recently reentered the individual market after leaving in 1997. Three health plans are now actively participating in the individual market. The Individual Health Benefit Plan Association, which administers the subsidy mechanism, is expected soon to offer further refinements.
How Are They Doing?
Solvency Oversight of the Private Market
The key managed care issue in New Hampshire is the exclusive HMO contract; providers are offered bonus capitation rates to sign it. The health plans argue that exclusive contracts give them more control over provider quality and costs, but policymakers are concerned that exclusive contracts could prevent the entry and free competition of other HMOs, thus creating a de facto monopoly. A bill calling for a total ban on exclusive contracts passed both houses of the legislature in 1996.
The main focus of DOI's oversight is ensuring HMO solvency. "New Hampshire regulations say that plans must have $6 million in capital reserves," explained a former insurance commissioner. "We want to make sure on the last day, when the last person comes to the ticket window, there is something there for them." However, with two plans dominating the HMO market, the state is also interested in increasing competition. DOI has explored ways to allow alternative providers, such as physician hospital organizations (PHOs), to enter the market with assurance of continued solvency. One tactic is to place a valuation on medical assets, so that PHOs can use these non-cash assets to satisfy part of the reserve requirement.
Quality Oversight of the Private Market
New Hampshire has a well-developed approach to quality oversight. DOI uses a National Association of Insurance Commissioners (NAIC) model regulatory approach, which is based on tracking consumer complaints, and employs a state ombudsman to review those complaints that have not been resolved by internal grievance procedures. The agency is moving toward developing the capacity to perform systematic analysis of complaints. In 1999, DOI established the new position of Health Insurance Consumer Assistant to assist health plan enrollees in understanding their rights and responsibilities and in resolving grievances and grievance appeals. The Consumer Assistant will also collect data and report on common problems and patterns of problems.
The state has also developed its own approach to the issue of postpartum hospital stays. Rather than setting a mandatory length of stay, New Hampshire's system allows doctors and patients to make individual decisions, based on standards set by the relevant specialist boards.
State policymakers are considering how to address quality assurance and whether or not to require HMOs to obtain accreditation. One proposed legislative initiative, the Patient Protection Act, which created a new regulatory structure to evaluate and resolve quality issues, failed to pass.
In 1999 there were two HMO accountability bills, House Bill 640 and Senate Bill 199. SB 199 was the governor's bill and received strong support from the advocate community. The bill provided for an external grievance procedure for consumers and also required the medical directors to be licensed New Hampshire physicians. The medical director provisions were interpreted as being able to hold the physician liable in the practice of medicine. There was strong opposition from the HMO lobby. Complicating the picture was HB 640, which had similar but at times conflicting language. In the end HB 640 was re-referred and there was nonconcurrence on SB 199. The senate will take up HB 640 in the 2000 legislative session so there is a chance that some of the SB 199 provisions will appear.
In addition to public-sector oversight of quality, the New Hampshire Health Care Purchasers Roundtable, a partnership of public and private health care purchasers representing more than 325,000 covered lives in New Hampshire, has issued an annual report card of health plan performance and quality for the past two years.
Medicaid Oversight
In June 1996, DHHS formally submitted an 1115 waiver for New Hampshire's mandatory managed care Medicaid program. During a period of ongoing negotiations with the Health Care Financing Administration (HCFA) regarding programming and financial neutrality, the Title XXI Children's Health Insurance Program (CHIP) was signed into law. New Hampshire's CHIP program was implemented in May 1998. With the creation of new access for health insurance coverage, the state is exploring options to further its goals of providing health care to its residents. Those options include implementing a primary care case management program. Since the passage of the Balanced Budget Act of 1997, which provides states with the flexibility to implement a managed care program for some of its clients, the 1115b Waiver Proposal has not been readdressed with HCFA.
Coordinating Oversight
DHHS has completed the majority of an extensive reorganization intended to increase budgetary control and improve policy coordination, which will significantly improve oversight of New Hampshire Medicaid. DOI has sole responsibility for private market oversight, and coordination is not considered necessary. There are no current efforts to coordinate purchasing efforts between Medicaid and other agencies, although this is being explored.
What Is Next for Oversight?
DOI officials have confidence in New Hampshire's strong oversight process but continue to study improvements, such as required National Committee for Quality Assurance (NCQA) accreditation for HMOs and valuation of medical assets for PHOs. The Medicaid program is a major focus of activity at present, and DHHS expects to improve oversight as implementation reveals potential problems and as agency reorganization progresses. New Hampshire officials also expect to make needed changes to conform with New England regional standards for Medicaid oversight, once these have been developed, building on the state's already solid oversight policies.
Additional Resources
- Department of Insurance
www.state.nh.us/insurance- Department of Health and Human Services
www.dhhs.state.nh.us
(Last updated September 29, 1999)
New Jersey
What Is New Jersey Overseeing?
Managed care continues to grow at a rapid rate in New Jersey. By the end of 1997 more than 2.3 million of New Jersey's 7.7 million residents were enrolled in HMOs, and it is estimated that another 1 million were enrolled in other forms of managed care.
The state's Medicaid program has moved aggressively into managed care. Using a 1915(b) waiver and building on its very successful voluntary program, New Jersey in 1997 completed enrollment in a statewide mandatory managed care program for clients meeting the eligibility criteria for the former Aid to Families with Dependent Children (AFDC) program. As of August 1998, more than 93 percent of eligible AFDC/TANF (Temporary Assistance to Needy Families) individuals were enrolled. Because of the Medicaid program's intensive attention to client education during the process of selecting a managed care plan, New Jersey experiences one of the nation's lowest default assignment rates, as well as remarkably low disenrollment rates.
New Jersey has introduced several programs to expand access to insurance coverage, including one for small companies, the Small Employer Health Benefits Program (SEH), and one for workers without access to insurance through their employer, the self-employed, and the unemployed, the Individual Health Coverage (IHC) program. Both include elements of guaranteed issue and renewal, standard plans, minimum loss ratios, and portability. In 1995, the state introduced Health Access New Jersey, a program to provide financial assistance to uninsured, low-income residents in purchasing health insurance in the individual market. In 1997, the state redirected its focus to expanding insurance coverage for uninsured, low-income children. NJ KidCare, a subsidized children's insurance program, began operations in February 1998.
Who Is Overseeing?
The New Jersey Department of Health and Senior Services (DHSS) is one of two state agencies responsible for licensing HMOs. In 1997, comprehensive new HMO regulations were adopted articulating extensive consumer rights, including an independent medical necessity appeals system. Subsequently, the legislature passed the Health Care Quality Act (HCQA), which expanded and extended these consumer protections to other insurers offering comprehensive managed care plans (e.g., preferred provider networks). As a result, for all forms of comprehensive managed care, the department handles quality assessment, focusing on network adequacy, performance reporting, and complaint resolution. In addition, the new law extends the independent medical necessity appeals system to any insurer that engages in utilization review.
The department also administers the state's charity care program, which reimburses hospitals for services provided to low-income uninsured people. As directed by a 1996 state law, the department developed a program for incorporating managed care principles into the delivery of charity care, and secured the approval of the Health Care Financing Administration (HCFA) in February 1998. Under the 1996 law, hospital participation in the charity care managed care program was to be mandatory, and the program was to be statewide. However, in June 1998, legislation was enacted eliminating the prior program and creating a two-year voluntary pilot project to test the use of hospital-based coordinated care networks. Since then, the state has explored models for hospital-based health care programs for the low-income uninsured, and is submitting such a model to HCFA for review.
The New Jersey Department of Banking and Insurance (DBI) holds joint responsibility for licensing HMOs and sole responsibility for licensing other insurance carriers, oversees insurer and HMO solvency, and works with DHSS to track consumer complaints. HCQA required DBI and DHSS to make recommendations to the legislature by February 1999 on whether and how to license other types of managed care entities that are interested in assuming insurance risk, such as provider-sponsored organizations. In addition, the SEH and IHC programs are administered by independent boards housed within DBI.
The Department of Human Services (DHS) manages the state Medicaid program for all services except long-term care, manages the NJ KidCare program, contracts with licensed HMOs for Medicaid and NJ KidCare managed care, and collects information related to a variety of quality measures. New Jersey plans to expand its mandatory Medicaid managed care program to the SSI population, as well as to behavioral health care services, starting in 2000. DHS also administers NJ KidCare. When fully implemented it should provide coverage to more than 100,000 uninsured children from low-income families. Children in families up to 350 percent of the federal poverty level are eligible for NJ KidCare. An interagency task force led by the governor's office is exploring ways to make affordable health insurance available to uninsured children and families in a cooperative effort with employers.
The New Jersey State Legislature (assembly and senate) has been active in reforming New Jersey's insurance system and extending access to coverage, beginning in 1992 with the IHC program, which offers insurance to the self-employed, the unemployed, and others who cannot get coverage through the workplace; and with the SEH, which assists businesses with two to fifty employees to obtain insurance. These programs are characterized by guaranteed issue, portability of coverage, minimum medical loss ratios, pure (IHC) and modified (SEH) community rating, and standardized plans (although the SEH also allows considerable room for variation. In 1997 lawmakers passed the Health Care Quality Act, which expands and extends managed care consumer protections beyond HMOs. It also required the commissioners of DHSS and DBI to make recommendations to the legislature on the regulation of all risk-bearing entities, including PSOs. Legislators also renewed and increased funding for the charity care program, enacting a doubling of the tobacco tax as one of several ongoing sources of funding. Finally, they enacted legislation creating NJ KidCare and authorized up to $47 million per year in charity care funding to match federal funds available through the new Children's Health Insurance Program.
Legislative oversight of the Medicaid program has focused on budgetary review. While the program remains within budget, lawmakers have left the operational management to DHS.
How Are They Doing?
Solvency Oversight of the Private Market
The market-driven hospital environment continues to promote integration of the delivery system, with operational models ranging from loose affiliations to integrated corporate structures. Concomitant growth in managed care has increased downstream risk assumption by providers. The HMO regulations adopted in 1997 allow HMOs to contract for the delivery of health care services with an entity that is not licensed to assume risk under certain circumstances. Pending legislation would allow "organized delivery systems" to become licensed by DBI and accept financial risk. Provider-sponsored systems also are seeking changes in state law that would allow them to engage in direct insurance contracting, subject to market entry and asset valuation standards that are different than those applying to HMOs. Currently such systems must obtain an HMO license in order to engage in direct contracting.
Under the Medicare + Choice provisions of the federal Balanced Budget Act of 1997, provider-sponsored organizations that are unable to obtain state certification to accept insurance risk have the opportunity of operating Medicare-only managed plans for three years under a federal waiver. There appears to be interest in pursuing such waivers by some New Jersey integrated systems.
In the fall of 1997, DBI and DHSS urged HMOs to enter into a voluntary agreement with state agencies to follow the same provider prompt payment guidelines that apply to indemnity insurers: payment of clean claims within 60 days, with a 10 percent interest penalty when exceeding the target. The agencies undertook this initiative as a result of mounting complaints by providers of excessive delays by managed care plans in paying claims. Independent agency review confirmed that significant problems existed. All major HMOs signed the voluntary agreements, and the agencies continue to monitor the situation. Regulations were adopted in 1998 to make prompt payment a requirement for all HMOs. Subsequently the legislature passed Health Information Network Technology (HINT), making the time frame even more stringent.
Amendments to HMO regulations, adopted in March 1997, established new financial reserve, deposit, and net worth requirements, giving DBI effective tools to monitor solvency. These regulations were tightened in June 1999. Included in the regulations is a requirement that an HMO undergo a preoperational audit before being issued a certificate of authority.
Quality Oversight of the Private Market
The former DHSS commissioner put together a broad advisory panel that helped him develop comprehensive new HMO quality standards, which were adopted as regulations in 1997. The revised rules constitute an HMO consumer "bill of rights," including such provisions as having access to a primary care provider or back-up 24 hours a day; choice among specialists following a referral; referral to a specialist with appropriate experience for consumers with chronic disabilities; requiring that a physician makes any decisions on behalf of the HMO to deny or limit coverage; coverage for emergency screening without prior approval; prohibition on provider gag rules; access to information on how the HMO pays its doctors; and, finally, the right to appeal a decision to deny or limit covered health care services. In the case of coverage appeals, the recommendation of the outside independent utilization review panel is advisory only. Early evidence indicated, however, that HMOs are willing to abide by such recommendations. Moreover, the commissioner has the power to monitor an HMO's compliance with the recommendations and to take other action, short of compelling payment by the HMO, when inappropriate trends are noted.
The new regulations also require HMOs to undergo an external quality audit as part of a comprehensive assessment review and to submit data to DHSS to allow quality performance measurement. Using these data, as well as an independent survey of HMO consumer satisfaction, in November 1997 DHSS issued the first of its annual HMO performance report cards comparing health plans to each other on a number of key measures. The consumer satisfaction portion of the survey represented the first statewide use of the Consumer Assessment of Health Plans (CAHPS) survey instrument. The HMO report, available in both print and on the department's Web site (www.state.nj.us/health), has been the most popular department publication in recent years.
The HCQA, which went into effect in February 1998, extends the consumer protections found in the new HMO regulations to all forms of comprehensive managed care. It also created new protections for providers applying to be included in a managed care plan's network, and for providers being terminated by the HMO. In addition, the act contains an explicit prohibition against financial incentives to providers for withholding services. It extends coverage appeals requirements to all carriers employing utilization review and establishes the right of DHSS to sanction carriers exhibiting a pattern of noncompliance with the outside review panel's recommendations. HCQA requires every managed care plan to offer a point-of-service (POS) option to contract holders (typically employers). Finally, the law substantially increases penalties for violations of these provisions by managed care plans, to up to $10,000 per violation.
In January 1998, DHSS began a highly publicized investigation into the activities of an HMO that appeared to be redirecting subscribers scheduled for operations away from participating hospitals because of contract disputes with anesthesiologists at those hospitals. The department found this to be a violation of the HMO regulations concerning provider networks, and proposed significant penalties. DHSS intends to continue its vigorous enforcement of consumer quality protections.
Medicaid Oversight
DHS is rapidly expanding New Jersey's Medicaid managed care program. The director of Medical Assistance and Health Services states that the goals are to provide better access and save money through managed care; her office is convinced that prudent purchasing will help to promote better health outcomes. The director considers the current program successful; as of August 1999 there were 400,596 Medicaid and New Jersey KidCare enrollees in the mandatory plan. The Medicaid program contracts only with HMOs licensed by DHSS and DBI; handles on-site assessment and annual monitoring with its own staff; and has developed multiple quality assessments of each plan's network. The director feels that the plan's development and implementation has benefited from the discretionary freedom granted by the legislature to DHS.
The department conducts ongoing discussions on policies and procedures with its contractor HMO plans. "We hope that by talking with the industry early, it will prevent problems," explains the director of Medicaid services.
Coordinating Oversight
There is tight coordination among the New Jersey agencies involved in managed care oversight. DHSS and DBI worked closely together on the panel that developed the revised HMO regulations and are cooperating closely in the implementation of the HCQA. Both agencies have worked with DHS in its implementation of Medicaid managed care. DHSS and DHS have worked very closely in the design and development of NJ KidCare.
What Is Next for Oversight?
New Jersey will continue to pursue a managed care regulatory strategy that balances market competition with appropriate consumer protections, placing particular emphasis on providing purchasers and consumers with sound data on the performance of health care plans. If additional resources become available, DHSS would also like to expand the HMO performance report card to include information pertinent to particular subgroups, such as people with chronic conditions and the collection of performance data will be extended to PPOs and other forms of managed care.
The DHSS is particularly concerned that, as hospital merger and integration activity continues, the providers who give the most services to the poor be included in the evolving systems. To facilitate such relationships, the DHSS established regulatory requirements in mid-1998 for a cardiac surgery satellite demonstration program. This demonstration allows a suburban hospital that is part of a system including an urban hospital licensed to perform cardiac surgery also to perform such surgery with the urban hospital holding the license. The suburban hospital must share all of its surgery revenues exceeding expenses with its urban partner and the urban surgery program must not be adversely affected. One site was selected for the demonstration program.
The administration and the legislature will be addressing the issue of licensing managed care entities, both PSOs and limited purpose plans. Although it is too early to speculate what action will be taken, this is sure to be a major force of oversight effort in the coming years. Regardless of what actions the state takes with respect to licensing these entities, the state expects some integrated delivery systems to pursue federal waivers to offer Medicare-only managed care plans. DHSS and DBI are very interested in the impact this development will have on delivery systems and markets.
In working to meet these challenges, New Jersey can build on its successful history of expanding access and on its well-coordinated agency structure.
Additional Resources
- Department of Health and Senior Services
www.state.nj.us/health- Department of Human Services
www.state.nj.us/humanservices- Department of Banking and Insurance, Office of Life and Health
www.naic.org/nj/life.htm- Health Reform Insurance Information
www.naic.org/nj/reform.htm
(Last updated October 4, 1999)
New Mexico
What Is New Mexico Overseeing?
There are six HMOs in New Mexico, which provide coverage for 17 percent of the insured population. The State Health Policy calls for accessible, available, and culturally appropriate basic health care services for all New Mexicans, regardless of their financial status.
In 1994 the legislature passed the Health Insurance Alliance (HIA) Act, which created a single statewide health alliance for insurers and provided for guaranteed issue and renewal, portability of coverage, and maximum rate schedules. All insurers are required to belong to the HIA, and insurance entities that submit a bid to provide health insurance to employees of the state, municipalities, counties, or school districts must offer at least one approved plan. Modified community rating was approved in 1995, and as of July 1, 1998, small employers are offered a straight community-rating plan.
The year 1994 also saw the enactment of legislation directing the Human Services Department to design a statewide cost-effective managed care system to provide preventive, primary, and acute services for Medicaid recipients by July 1, 1995. The department developed a mandatory HMO program under a 1915(b) waiver, which began in July 1997 and was implemented statewide by June 1998.
Who Is Overseeing?
The New Mexico Department of Insurance (DOI) is the principal oversight agency for private-market HMOs. DOI oversees HMO solvency and tracks consumer complaints. The agency has done work on reforms to strengthen the regulatory process and to clarify oversight requirements for non-HMO organizations.
The New Mexico Department of Health (DOH) has responsibility for health data collection and has no direct involvement for HMO oversight but may assess quality-of-care issues at the request of the superintendent of insurance.
The New Mexico Health Policy Commission (HPC) is attached to the Department of Finance and Administration. HPC is responsible for developing state health policy, for administrating the Health Information System (HIS) Act, and for monitoring the implementation of the state health policy. HPC conducts analysis and formulates recommendations for executing the state health policy; addresses specific health care system issues as requested; and serves as a neutral forum for discussion of complex health care issues.
The HIS Act provides for the collection of a wide variety of data pertaining to health and the health care delivery system, including the Hospital Discharge Database, and for the development of standards and benchmarks to be used to improve health care quality. HPC maintains the database and has a legislative mandate to develop and disseminate information regarding health plan and provider quality to consumers.
New Mexico's Medicaid program is under the Medical Assistance Division of the Human Services Department (HSD). Benefits, eligibility, and program structure for Medicaid operations, including the mandatory managed care program, are developed by HSD and enacted through regulations, requiring only budget approval from the legislature.
The New Mexico State Legislature is active in health care reform; lawmakers have directed the Medicaid program to implement managed care, passed the HIA Act and a series of insurance reforms, and in 1998 passed the "Patient Protection Act," which was signed by the governor in March of that year.
The legislative leadership created the Legislative Health Care Reform Committee to conduct ongoing oversight of health care after an earlier Health Care Task Force had been disbanded in December 1995. The responsibilities of the committee mirror those of the Task Force: (1) to coordinate the various groups working on health care reform; (2) to investigate health care delivery and financing proposals; (3) to provide legislative oversight on implementation of health care reform measures; and (4) to recommend legislation during the session.
How Are They Doing?
Solvency Oversight of the Private Market
In 1997 New Mexico overhauled its HMO regulations. DOI's superintendent promulgated regulations mandating certain consumer and provider rights in managed care. Also, DOI's superintendent has asked for a general update of the HMO Act, which was originally written in the early 1980s, to make it consistent with subsequent legislation, to expand DOI's regulatory authority over HMO-provider relationships, and to enhance quality oversight and patient protection regulation for managed care entities. In particular, the superintendent wants to clarify the status of physician hospital organizations (PHOs) and other alternative delivery systems, and to introduce different regulatory criteria, such as regional location, size, and service for these non-HMO entities. According to him, these provider organizations cannot take on risk under existing rules without applying for licensure as HMOs.
Quality Oversight of the Private Market
Quality oversight has become a major issue in New Mexico. The legislature passed the "Patient Protection Act" in 1998, and DOI's superintendent is planning to revisit DOI's year-old quarterly assurance. Current oversight policy requires health plans to have grievance procedures in place at licensure and to file annual reports with DOI describing the resolution of all complaints. DOI sought ideas from other states in preparing its new regulations, explains the superintendent.
Even though DOI has received relatively few complaints about HMO quality, there is still pressure for reform. The impetus for increased oversight "comes from reports from other states and news shows like 20/20. It's hard to turn on the TV without seeing something," says the superintendent. New Mexico policymakers want to stay ahead of the curve and head off problems.
Medicaid Oversight
The state implemented a fully prepaid managed care program for its Medicaid population by June 1998. HSD has extensive quality assurance and provider enrollment regulations to monitor the Medicaid HMOs.
HSD began implementation of the new Medicaid managed care program in July 1997 in the largest metropolitan area; the last statewide geographic phase was implemented in the state's frontier counties in June 1998. Most Medicaid clients, including disabled clients receiving long-term care services in the community, are required to enroll with one of the three HMOs selected by HSD to participate in the program. HSD executed contracts with three of the four HMOs that submitted competitive bids to its Request for Proposals. Under the terms of the contract, the HMOs were required to partner with a behavioral health organization with expertise in managing behavioral health care services. This hybrid model was designed to ensure that a single entity (the HMO) had overall responsibility for coordination of physical and behavioral care services and that management and payment for behavioral health services were identified and tracked separately. The contract requires the HMOs to submit HEDIS, MSHIP, and encounter data and other clinical and financial information. These tools are used by the HSD and its external quality review contractor to assess and monitor the performance of the HMOs and their behavioral health care subcontractors. HSD, in collaboration with the Department of Health and the Children, Youth, and Families Department, developed a comprehensive set of quality standards that were included in the RFP and incorporated into the managed care contract. The standards include provisions delineating consumer rights and responsibilities; access to emergency, urgent, and routine care; preventative services; provider credentialing; network development; and other clinical and administrative requirements.
Coordinating Oversight
There is not a great deal of coordinated oversight at the agency level in New Mexico. DOI has exclusive oversight for the private market, and HSD has sole responsibility for Medicaid. There has been some discussion about coordination of state health care purchasing but, according to HSD these efforts are not yet far enough developed to be meaningful. HPC is involved in all areas of health policy, but its primary functions are to respond to requests for information and to make policy recommendations. The legislature has been active in monitoring all oversight activities through the Health Care Task Force and Health Care Reform Committee.
What Is Next for Oversight?
New Mexico had two important managed care issues on its 1998 agenda. First, DOI was to develop criteria for "provider service networks," which were authorized by the 1997 legislature. Second, HSD needed to decide whether to renew its contracts with the three Medicaid HMOs. HSD ultimately did extend these contracts for an additional year, until June 30, 2000.
Additional Resources
- Department of Health
www.health.state.nm.us- Health Policy Commission
www.hpc.state.nm.us- Human Services Department, Medical Assistance Division
www.state.nm.us/hsd/mad.html
(Last updated August 16, 1999)
New York
What Is New York Overseeing?
New York has 55 managed care organizations, which enroll close to 40 percent of the state's insured population; the Department of Insurance reports rapid growth since early 1995.
The New York state legislature has been actively working on managed care issues; the 1996 session witnessed intense debates among lawmakers. The major achievement of the session, the Health Care Reform Act of 1996, abolished state-set hospital rates and converted New York to a free-market health care system on January 1, 1997. The Act also included a provision for integrated delivery systems (IDS), authorizing health care providers to form integrated delivery networks that, like HMOs and third-party insurers, will assume the financial risk of providing a wide range of health care services directly to enrollees. The IDS rules were established by guidelines jointly issued by the Department of Insurance and the Department of Health after both departments agreed on a Memorandum of Understanding (MOU) between the two regulators. The goal of the Senate Health Committee chair is that the IDS plans will qualify for an HMO license at a lower capitalization rate than is required of standard plans because their internal service capabilities will substitute for part of the capital requirement. They may sell capitated care to HMO plans and to the Medicaid program.
On the last day of the 1996 session, the legislature passed two other important bills: the Consumer Managed Care Bill and the Medicaid Managed Care Bill. Since 1995, the state has required insurers to offer comprehensive coverage to individuals; earlier, in 1992, New York passed one of the strongest community rating laws in the country; the state has also mandated guaranteed issue and portability of coverage.
Since 1991, counties have been able to enroll Medicaid recipients in managed care programs. The state applied to the Health Care Financing Administration (HCFA) for an 1115 waiver that phases in mandatory HMO enrollment of Medicaid recipients over three years; under this plan, Medicaid enrollment increased from 500,000 to 650,000 by 1998. HCFA approved the 1115 waiver on July 15, 1997. Since then, Albany, Rensselaer, Columbia, Saratoga, Green, Westchester, Monroe, Erie, Broome, Onandaga, Oswego, Ontario, and Niagara counties along with southwest Brooklyn have begun mandatory enrollment.
New York has argued successfully that imposing a surcharge on hospital bills to finance health care for the uninsured does not violate ERISA, winning its case unanimously before the U.S. Supreme Court (New York Conference of Blue Cross and Blue Shield Plans v. Travellers Insurance Company 115 S. Ct. at 1691 [1995]). A provision of the Health Care Reform Act placing a surcharge on a wide variety of medical services and transactions in order to raise the revenue to fund "public goods" like indigent care was enacted in 1996.
Who Is Overseeing?
The New York State Department of Insurance (DOI) shares licensing and oversight responsibility with the Department of Health, including oversight of the IDS plans described in the Health Care Reform Act of 1996. DOI oversees solvency of managed care plans, monitors market practice, and tracks consumer complaints.
The New York State Department of Health (DOH) is responsible for overseeing quality of care; it evaluates network adequacy, grievance, and quality assurance procedures; and it tracks complaints related to quality. The major responsibility for the management of the Medicaid program, including all information systems, was transferred in 1996 from the New York Department of Social Services (DSS) to DOH under an administrative reorganization plan. DSS, now called the Office of Temporary and Disability Assistance, retained control over eligibility certification and program auditing.
The New York State Legislature (senate and assembly) has been actively working on managed care issues. Lawmakers have enacted full community rating for the individual and small-group market (less than 50), guarantee issue, and portability statutes, and they proposed significant additional reforms in the 1994, 1995, and 1996 sessions. In 1995, the legislature enacted a law requiring all HMOs in the state to offer two benefit packages to individuals. Both products are comprehensive and include prescription drug coverage, and one package, known as the point-of-service (POS) product, allows consumers to seek care outside of an HMO network. The standardized nature of the products prevents HMOs from avoiding risk through benefit design and eases consumer comparison shopping. The 1996 session produced three major pieces of legislation: the Consumer and Medicaid Managed Care Bills, and the Health Care Reform Act of 1996, which deregulated hospital rates and authorized a new category of integrated health plan, known as Integrated Delivery Systems (IDS).
How Are They Doing?
Solvency Oversight of the Private Market
Published figures put HMO penetration at 38 percent at the end of 1998. The first deputy superintendent of DOI states: "We have a managed care system that is evolving at an accelerated pace. We are seeing a rather compacted approach to market changes." He anticipates more hospital mergers and contractions in the next several years.
DOI's charge is to monitor and regulate the financial viability of any entity that assumes risk by contracting directly with employers or enrollees on a prepaid basis. The department may also review private provider contracts; if the staff determines that the providers are incurring risk for a significant package of care, they may invoke oversight authority and require the group to apply for an HMO license. However, DOI does not review the terms of contracts between licensed HMOs and providers; this function is performed by DOH.
Quality Oversight of the Private Market
HMO quality has undergone serious scrutiny in New York, sparking several legislative reforms in the 1996 session. The chair of the Assembly Health Committee observes: "Complaints and interest in reform have increased as managed care penetration has increased." Providers have become more interested in reforms as employees are increasingly compelling employees to join managed care plans and as HMO patients constitute larger shares of physician practices. In addition, media reports about instances of poor quality care in HMOs or problems encountered by special needs groups in receiving appropriate treatment have heightened legislator and consumer concern.
There are serious disagreements, particularly between the state assembly and the administration of Governor George Pataki, about the proper role of government in quality oversight. Many legislators support aggressive oversight and state intervention. The initial version of the Consumer Managed Care Bill, as twice passed by the assembly, required HMOs to disclose an array of information relating to coverage policies, financial arrangements with providers, and specific physicians within their networks. The assembly's bill required HMOs to have open criteria for selection and termination of physicians and created an external review process to evaluate consumer complaints of treatment denial.
The Pataki administration took the position that media reports and consumer complaints about HMO plans, while worthy of attention, did not present a complete picture of HMO quality. They argued that many of the problems could be worked out through market adjustments and that too much government intervention would be counterproductive. "There are pockets of problems," notes the first deputy superintendent of DOI. "The features in the assembly bill are very prescriptive," the health commissioner contends, "and come close to 'any-willing-provider.' It could impede the development of managed care in the state." The chair of the Senate Health Committee supported the administration's position, while adding this caveat: "When considering requirements and protections, one must be careful not to be so burdensome that insurance and HMO entities choose to become self-insured as a means of escaping any state oversight." He continues: "Health care premiums are driven up unnecessarily due to state requirements, forcing small businesses to drop coverage and increasing the number of uninsured." The administration and senate set up a collaborative process of the providers, HMOs, and consumer groups carrying out joint negotiations that ultimately led to the agreed-upon legislation.
The compromise legislation, passed at the end of the 1996 session, includes protective measures for both consumers and providers. In its final form, the Consumer Managed Care Bill establishes standing referral to specialists for patients with chronic illnesses; ensures patient access to certain out-of-network specialists, for example, at cancer treatment centers; enacts a prohibition on "gag" rules; and requires HMOs to disclose financial relations with providers. In response to concerns of health care professionals, the bill requires HMOs to offer an explanation and a hearing in the event of termination. Dropped from the compromise legislation were provision for an external grievance review process, a coverage mandate for experimental treatment, and a requirement that HMOs incur liability for damages when medically necessary treatment is denied. The chair of the Senate Health Committee contends that the final bill strikes a balance between the need to protect consumers and the risk of raising health care costs through onerous regulation.
Medicaid Oversight
Since the transfer of Medicaid to DOH, DOH has created the Office of Continuing Care to coordinate long-term care activities under one umbrella. In addition, during the 1997 legislative session the legislature enacted the Long Term Care Integration and Finance Act, which includes integrating long-term care services through capitated managed care models to serve up to 50,000 voluntary chronically ill and Medicaid recipients.
The move toward mandatory managed care under the 1115 waiver has been controversial, particularly because it might lead to exclusion of traditional New York providers of health care to the poor. The chair of the Assembly Health Committee expressed concern that neighborhood health centers might be left out of HMO networks, thus jeopardizing care for the uninsured. He was particularly frustrated because DOH would not reveal the particulars of its HMO selection process, although the department claims to award selection "points" to plans that contract with traditional service providers. The Pataki administration argued, however, that requiring plans to contract with particular providers would be overly restrictive.
The Medicaid Managed Care Bill, passed in 1996, attempts to deal with these concerns, and it also provides for the implementation of the mandatory program. Rather than requiring HMOs to contract with specific providers, the final compromise version of the bill awarded three-year enrollment advantages to prepaid health service plans (PHSPs), which are Medicaid-only plans often sponsored by hospitals or community health centers with long traditions of service to the indigent and uninsured. In year 1, PHSPs will automatically be allocated 25 percent of enrollees who do not select a specific plan. In year 2, the allocation will be reduced to 22.5 percent; and in year 3, to 20 percent. Thereafter PHSPs will receive a proportionate share of available enrollees. DOH has also said that it will continue to give additional selection points to HMOs that contract with traditional indigent providers. During the 1997-98 legislative session, the final budget allowed for a $120 million rate increase to managed care providers participating in Medicaid effective January 1, 1997.
The assembly's bill also included protections for special needs groups like AIDS patients and persons with mental illness, and it imposed restrictions on plan-marketing practices designed to counteract past abuses like the solicitation of enrollees with gifts. The final bill increases enrollment marketing protections but allows direct marketing to continue. The consumer and provider protections of the Consumer Managed Care Bill apply to Medicaid recipients and providers where appropriate. The bill establishes special needs plans (SNPs) for two populations: those who are HIV-positive and persons with mental illness. Finally, special-needs groups will not be included in the mandatory program until their particular service providers are ready to participate fully.
Coordinating Oversight
Oversight of complaint investigation is coordinated among local social services districts, DOH, DOI, and the Attorney General's Office. The new external appeal program is coordinated between DOI and DOH. These two departments also coordinate oversight of plan solvency.
What Is Next for Oversight?
Negotiations on renewing or replacing the Medicaid Managed Care Act of 1996 will be ongoing over the coming year. In addition, Congress continues to debate federal legislation to create a managed care "patients' bill of rights," which includes health care plan liability.
Additional Resources
- Department of Insurance
www.ins.state.ny.us- Department of Health
www.health.state.ny.us
(Last updated September 24, 1999)
North Carolina
What Is North Carolina Overseeing?
The number of persons receiving managed care through HMOs (including HMO-POS) in North Carolina was 1.3 million as of March 31, 1999. These clients were enrolled in 18 licensed HMOs, one of which has since left the market. Another 1.2 million are estimated to be covered under an insured PPO plan. For three years, from 1993 to 1995, North Carolina's Department of Insurance (DOI) attempted to overhaul the state's HMO laws, but was unsuccessful. In 1996 it issued new regulations that expanded oversight and mandated new HMO responsibilities within the existing statutory framework. In 1997, new legislation was passed; effective January 1, 1998, the law requires health plans to submit annual reports to the DOI; establishes requirements for health insurer and HMO provider networks, including special provisions addressing when insured persons must be allowed to use out-of-network providers at the in-network levels of coverage and prohibiting discrimination against high-risk populations through systematic exclusion of their health care providers from the network; rewrites current Preferred Provider Organization (PPO) laws to clarify the requirements for health insurers selling PPO benefit plans; and strengthens current requirements for systems that health insurers use to perform utilization review. In 1999, managed care "protections," including access to non-formulary prescription drugs and extended/standing referrals to specialists, were enacted, while others, such as continuity of care when a patient leaves a network, were not.
North Carolina operates a primary care case management program (PCCM), Carolina ACCESS, for its Medicaid population, in 99 counties. The Medicaid program has begun a mandatory capitated managed care program, under a 1915(b) waiver, in one county, which will cover 30,000 of the state's 800,000 recipients.
Who Is Overseeing?
The North Carolina Department of Insurance (DOI) has an elected commissioner. As the single state agency responsible for licensing HMOs, DOI reviews provider form contracts, products, and rates; oversees plan solvency; tracks consumer complaints; reviews company operations; and performs market conduct exams, which include review of provider networks, credentialing processes, quality assurance, and utilization management in addition to scrutiny of advertising material and claims payment procedures. These same functions are performed for indemnity insurers' PPO plan operations. DOI also had responsibility for the Medical Database Commission until 1995.
The North Carolina Department of Environment, Health and Natural Resources (DEHNR) has no formal oversight role for managed care. The agency oversees environmental health issues; delivers public health services and care for the indigent; and maintains, via the State Center for Health Statistics, a statewide health information database.
The North Carolina Division of Medical Assistance (DMA) manages the state Medicaid program, including the PCCM component and the new mandatory capitated managed care program, which was implemented in June 1996. Under legislation passed in 1997, DMA, rather than DOI, was given authority to license and regulate PSOs engaged in Medicare only, although no such entities are yet in existence.
A part-time citizen legislature, the North Carolina State Legislature has expanded access to care through several initiatives, such as Medicaid eligibility expansion. In 1997, the legislature passed significant legislation to reform the state's HMO laws, including improved data reporting from HMOs to the DOI and provision of information to plan participants and increased enforcement authority over HMOs by the insurance commissioner.
How Are They Doing?
Solvency Oversight of the Private Market
Managed care has been slow to penetrate North Carolina, a state with a thinly spread population and few large areas of dense concentration. The number of licensed full-service HMOs remained unchanged at 10 from 1987 to 1994, but 14 new plans were licensed between 1995 and 1997. Since 1997, only one new HMO was licensed and several others were lost to consolidations. One HMO withdrew from North Carolina and another is in the process of selling its members to existing HMOs. As of August 1999, there were 21 licensed HMOs, 17 of which are active and have members. Enrollment trends show a similar pattern, with slow growth through the 1980s and early 1990s and very rapid growth in the mid-1990s, at a rate of 153 percent from the end of 1993 through June 1997. Between June 1997 and December 1998, HMO enrollment grew by 18 percent.
Solvency issues had not been a significant concern in North Carolina for much of the 1990s, but poor overall financial performance in 1997 and 1998 renewed the need for vigilant oversight to catch problems early and required an infusion of capital to protect plans and policyholders. DOI reviews HMO and indemnity premiums for all plans to ensure that collected revenues will cover projected liabilities and holds HMOs accountable for risk. Only since 1994 have state HMOs begun using capitation to control provider costs. DOI has the power to disallow payment to any provider who receives a bonus or other compensation for denial of care.
DOI first requested a major legislative overhaul of the HMO laws in 1993, in advance of the growth spurt. This legislation, and subsequent revisions, failed three times in 1993-1996, but legislation was passed in 1997, as described above. Some additional laws were created in 1999, but there were no further comprehensive changes.
Quality Oversight of the Private Market
HMO quality is also not considered a serious problem in North Carolina. DOI reports that the volume of consumer complaints is not high. Early on, a commission proposed health plan report cards, but this reform has not been enacted. The 1997 legislation required HMOs to provide information to the insurance commissioner regarding their provider networks, quality assurance programs, and utilization review programs and to report HEDIS data; it also improved the commissioner's enforcement authority over HMOs. DOI has produced consumer publications presenting this data, but not in the form of "report cards."
Medicaid Oversight
North Carolina's scattered population has slowed attempts to enroll Medicaid recipients in managed care. There are 800,000 eligible recipients in the state, but no one county has more than 41,000 persons eligible for enrollment. DMA first instituted a PCCM program in 1991, with an option for HMOs to participate, but only one plan applied. The division obtained a 1915(b) waiver from the Health Care Financing Administration (HCFA), hoping to increase HMO participation, and received several applications for a mandatory, fully capitated, managed care program for Medicaid clients in the state's largest county.
The new program began enrollment in June 1996. DMA has persuaded plans to include traditional Medicaid providers in health plan networks and resisted pressure for service carve-outs, except for pharmacies. In evaluating proposals, the Medicaid agency found it "hard to evaluate bidders," admits the assistant director for administrative and regulatory affairs. "The quality of proposals does not correlate well with [the plan's] reputation. We had one great proposal, but another state [which had experience with that HMO] said they were 'sleazy.'"
Coordinating Oversight
There is no connection between state oversight of public and commercial care in North Carolina (although DMA contracts only with HMOs that are commercially licensed). The governor is averse to undertaking the major state government reorganization to combine all such activities into one cabinet department. Although there has been little coordination between DEHNR and DOI on managed care oversight, the state health director reports active ongoing consultations between DMA and DEHNR on the development of the Medicaid HMO program.
What Is Next for Oversight?
DMA does not plan rapid expansion of the managed care Medicaid program. The major area of future concern for several officials is the impact of managed care on traditional services to the indigent. "We see everybody [for medical care]," says the state health director. "The reason we can is [that] we get reimbursed from Medicaid and cost shift." However, cost shifting is more difficult under the tighter managed care incentives. DMA's director of administrative and regulatory affairs agrees that there will be less cost shifting and reports preliminary talks within her office about what steps are required to address the problem.
Additional Resources
- Department of Insurance
www.ncdoi.com- Department of Health & Human Services, Division of Medical Assistance
www.dhhs.state.nc.us/dma
(Last updated August 23, 1999)
North Dakota
What Is North Dakota Overseeing?
Managed care has barely penetrated the state of North Dakota: its only two HMOs enroll 3 percent of the insured population. The state legislature passed an incremental, but wide-ranging, health insurance reform package in 1995. This act mandates portability of coverage, guarantees issue and renewal of small group insurance, establishes standard and basic health plans, and limits exclusions based on preexisting conditions. As of January 1997, this law prohibits gender-based rating in group and individual health plans.
The reform bill expanded Medicaid coverage to include children aged 13 through 17. North Dakota has implemented a statewide primary care case management (PCCM) program for Medicaid clients and is developing an HMO pilot project in one county under a 1915(b) waiver.
Who Is Overseeing?
The position of commissioner of the North Dakota Department of Insurance (DOI) is an elected one. DOI is the sole agency responsible for licensing all commercial HMOs, and for overseeing their solvency, market practices, and quality.
The North Dakota Department of Health (DOH) has no formal oversight responsibility for private market HMOs, but it consults with the Department of Human Services regarding Medicaid managed care and with DOI when assessing the quality of care of commercial HMOs.
The Department of Human Services (DHS) manages all Medicaid programs, including the HMO pilot project and the PCCM program. The HMO pilot will provide coverage for 2,000 residents in one county. The PCCM, implemented statewide in January 1994, covers approximately 27,000 of the 47,000 Medicaid-eligible recipients in the state.
The North Dakota State Legislature (senate and house) meets every other year. Although lawmakers have not been actively involved in managed care oversight since they passed the comprehensive health care reform bill in 1995, the legislature's Human Services Committees continue to receive reports on the implementation of the Medicaid pilot project and other managed care programs.
How Are They Doing?
Solvency Oversight of the Private Market
If managed care is defined as coverage through an HMO, North Dakota's managed care enrollment is among the lowest in the nation. The DOI's life and health actuary says that managed care is not a major state issue and that DOI receives few inquiries from new plans seeking licensure in the state. The state health officer (SHO), however, points to a significant level of concentration that could facilitate the future growth of managed care. Eight hundred of the 1,100 physicians in the state belong to one of the seven medical groups that are responsible for 85 percent of all hospital admissions.
While North Dakota's small, low-density population (fewer than 1 million people, with only 9 people per square mile) has created only two home-grown HMOs, a large portion of the population covered under a group health plan receives care through an exclusive provider organization (EPO) or a preferred provider organization (PPO). In some large group health plans, up to 80 percent of the plan members receive care within a provider network offering lower co-payments and deductibles.
Under a program to increase access in rural areas, health care providers who set up cooperative ventures may request state certificates of public advantage, which protect them from antitrust laws; no group has yet taken advantage of this option. According to the SHO, providers may be establishing, acquiring, or entering into agreements to manage rural health care facilities instead of launching cooperative ventures, thereby avoiding antitrust problems altogether.
Quality Oversight of the Private Market
DOI has been given statutory responsibility for oversight of HMO quality of care in North Dakota. National attention to quality issues has prompted DOI and legislative activity, although no such problems have been reported within the state. The minority leader cites inappropriate 24-hour postpartum discharge as one issue, although statistical evidence in North Dakota does not support the assertion that early postpartum discharges are a problem. The department has commissioned an independent study by experts who will recommend strategies for improving oversight. The legislature has considered both patient protection and any-willing-provider bills but has not yet passed either measure.
Medicaid Oversight
North Dakota's Medicaid director explains that the prepaid pilot program "will go very slowly," as it is an open question whether HMOs can be successful in a rural state: "We would like to determine if a true capitated system can work in North Dakota." Medicaid officials and HMO representatives began to negotiate the design of the program and the contract in mid-1996. Although the pilot project will cover only 2,000 people, it has attracted the attention of many providers. The director comments: "We have received many inquiries . . . asking if managed care will result in reduced services to recipients." The SHO is also determined that managed care include measures ensuring quality oversight and coverage of special groups.
Coordinating Oversight
The DHS Medicaid program will likely coordinate oversight with DOI, DOH, and local North Dakota health agencies. The Medicaid director thinks it important to work closely with the county offices that administer Medicaid eligibility: "Local control matters in North Dakota. . . . We have a good working relationship with all agencies." The SHO, however, comments that the pilot project "is not as coordinated as I would like. . . . We've encouraged them to have per-visit indicators, National Committee for Quality Assurance (NCQA) accreditation, HEDIS, and to make sure special groups get care. They are considering these requests." The Medicaid director responds that the contract has not yet been written, but that these provisions are being considered for inclusion.
Because DOI is solely responsible for overseeing commercial HMOs, it has not had to coordinate any activities, other than data collection, with other agencies.
DOH has begun to collect extensive health data. Third-party payers supply claims abstracts, which are integrated into a database of information on every office visit made by an insured patient. The SHO plans to classify the information by region, county, and zip code to show the extent of access and utilization.
What Is Next for Oversight?
Important health care initiatives in North Dakota came to fruition in 1997. The Medicaid program planned to complete negotiations for the HMO pilot project and then to implement it. DOI will have considered the quality oversight recommendations that emerged from the independent study and will have decided what actions to take. DOH continues the long-term development of its data collection system. These programs will provide an important foundation for oversight if managed care plays a larger part in North Dakota's health delivery system.
Additional Resources
- Department of Insurance
www.state.nd.us/ndins- Department of Human Services
www.state.nd.us/humanservices
(Last updated September 1, 1999)
Ohio
What Is Ohio Overseeing?
Ohio's licensed HMOs cover an estimated 20 percent of the insured population. The state's Medicaid program, OhioCare, is expanding its reliance on managed care and expected to implement mandatory HMO coverage for 60 percent of Ohio's population receiving benefits from Aid to Families with Dependent Children (AFDC) and Health Start Medicaid, in all of the state's 88 counties by the end of fiscal 1997. As of mid-1996, 18 counties had HMO Medicaid plans either in place or starting up. Ohio received an 1115 waiver from the Health Care Financing Administration (HCFA) to implement OhioCare but was phasing it in incrementally because of uncertainties about federal changes in Medicaid. The eventual goal is to expand eligibility to 500,000 people below the poverty line who are not covered by Medicaid and Medicare.
Who Is Overseeing?
The Ohio Department of Insurance (DOI) shares HMO oversight responsibility with the Department of Health. DOI licenses plans, oversees solvency, tracks consumer complaints, and sends complaints about quality and access to the Department of Health.
The Ohio Department of Health (DOH) oversees HMO access and quality of care. DOH reviews grievance procedures, evaluates quality assurance protocols, and investigates unresolved grievances referred by DOI. DOH cannot require HMO plans to change decisions, but it relies on discussion and persuasion.
The Ohio Department of Human Services (DHS) runs Ohio's Medicaid program and the OhioCare managed care component, which it plans to expand to 60 percent of its client population. DHS is also mounting a campaign to collect encounter data from HMOs and to evaluate medical care and outcomes for populations served by HMOs and by fee-for-service (FFS) care.
In 1992, the Ohio State Legislature (senate and house) enacted the Small Employer Health Care Plan. Designed to improve access to coverage by small businesses and groups, this package of insurance reforms included these measures: mandated whole group underwriting and limited rate variation for small groups; provided for limited portability of coverage; imposed uniform exclusionary periods for preexisting conditions on small-group and individual coverage; prohibited the use of small-group riders and amendments; and limited the latitude of employers to require waiting periods for coverage. Legislators also helped to design the 1115 Medicaid waiver. In 1995, they voted to phase out the Certificate of Need program for all facilities except long-term care by 1997, and in 1996 they passed a 48-hour postpartum bill. Legislation passed in 1997 included bills for uniform licensure in managed care, for the implementation of the federal Health Insurance Portability and Accountability Act of 1996 (HIPAA), and the Physician Health Plan Partnership Act. In 1999 the legislature passed a patient protection plan.
How Are They Doing?
Solvency Oversight of the Private Market
Ohio's HMO law, passed in 1976, cites risk assumption as one criterion for regulation but was unclear about state oversight authority over non-HMO plans. In July 1994, DOI issued an important ruling requiring two physician hospital organizations (PHOs) that accept capitation directly from employers to apply for HMO licenses. In 1997, the legislature passed Senate Bill 67, establishing uniform licensure for all provider entities that accept insurance risk and specifying that, like HMOs, they will be regulated as health insuring corporations.
Quality Oversight of the Private Market
DOH reviews each HMO every three years; evaluates quality assurance, grievance procedures, and access; and follows up on consumer complaints. DOH has not taken any legal action against plans for medical and treatment decisions. "Generally, they [the HMOs] listen to what we have to say rather than risk bad publicity," explains DOH's chief of managed care. The department conducts computer pattern analysis but lacks the capacity to track quality complaints by type; the staff plans to use the new Medicaid database to compare managed care service with FFS performance. Ohio's HMO law prevents plans from using payment systems that reward the denial of "medically necessary care," but infringements of this rule are not frequent and thus do not figure largely in DOH oversight of incentive plans.
The expansion of managed care has generated more complaints and grievances about HMO care. However, officials do not believe that these necessarily indicate serious quality problems, and they take a cautious approach to major reforms. DOH's chief of health policy says: "There is no way to tell what is really happening. . . . It is all pretty anecdotal. There are more complaints, but there are more people in [HMO] coverage . . . people tend to forget about fee-for-service complaints." The legislature approved 48-hour coverage for postpartum care; and in 1999 passed House Bill 4, the Patient Protection Act, which includes expanded utilization review criteria and the right to independent review of denials of payment based a decision that the procedure is not medically necessary when the charge is over $500.
Medicaid Oversight
Ohio has been contracting with HMOs to provide Medicaid services for about 20 years and planned to increase managed care enrollment from 300,000 to 500,000. As of mid-1996, mandatory HMO plans for Medicaid recipients were operating in two counties and were starting up in five; voluntary plans can be found in 11 counties. The legislature rejected a proposal for DHS to contract with Medicaid-only plans but has otherwise given DHS discretionary authority in designing the HMO program. The decision to enroll AFDC and Health Start recipients first, before extending coverage to additional populations, has probably reduced legislative anxiety, according to the DHS chief of managed care.
Medicaid is committed to the use of purchasing and contracting tools in a way that ensures the best value for its money. DHS has chosen not to set arbitrary limits on the number of eligible contractors but rather to rely on the market and on recipient choice. In the first round of contracts, DHS has accepted any plan that meets the basic standards of price, access, and benefits described in the contract; in the next round, however, only plans that capture at least 15 percent of the market will be allowed to participate. Medicaid officials feared that a limited contract policy might prompt either legislative pressures to reconsider or lawsuits from excluded health plans. Enrollment information centers (EICs) have been established in all mandatory counties, and DHS does not allow direct marketing by plans in EIC counties.
The department uses several quality oversight tools. Its strong consumer satisfaction survey program requires each plan to conduct a survey of its Medicaid enrollees and supplements these with its own surveys. DHS also has an aggressive health data outcomes component, which recently compared fee-for-service (FFS) and HMO health status indicators and demonstrated that HMO enrollees were healthier. Finally, the department has been compiling information on Medicaid FFS recipients who are enrolling in HMO plans in order to evaluate the impact of HMO membership on health status.
Coordinating Oversight
Ohio agencies work in several ways to coordinate managed care oversight. DOI and DOH are cooperating in oversight of commercial plans and have collaborated in drafting the new HMO law. In 1996, DOH was writing a white paper that explores policy options for coordinating public health initiatives under managed care. The governor's health-related cabinet agencies are jointly developing contracting strategies for special-needs groups. There is no plan to coordinate state employee and Medicaid purchasing; however, DOH's chief of managed care reports that some cooperative purchasing has occurred at the local level.
What Is Next for Oversight?
The data collection program conducted by Ohio's Medicaid program is expected to provide good comparative information on HMO and FFS health outcomes, which may lead to reassessment of quality oversight activities. Meanwhile, extension of OhioCare coverage to the indigent population remains on hold. Quality oversight and expansion of Medicaid managed care are shaping up as the dominant issues of future Ohio reform.
Additional Resources
- Department of Insurance
www.state.oh.us/ins- Department of Health
www.odh.state.oh.us- Department of Human Services
www.state.oh.us/odhs
(Last updated September 21, 1999)
Oklahoma
What Is Oklahoma Overseeing?
At the end of 1997, there were 11 licensed HMOs in Oklahoma with a total enrollment of 455,665; as of April 1998, there were 14 licensed HMOs.
The state has been active in health insurance market reform. In 1992 Oklahoma adopted small-group reforms, including portability of coverage, and enacted the Small Employer Insurance Reform Act, which established pooling and rating bands. In 1994 the legislature expanded this law by providing for guaranteed issue of a standard package, which small-group insurers are mandated to offer as a condition of doing business in the state.
Oklahoma has made moving its Medicaid recipients into managed care a high priority. In 1993 a law known as SB 76 mandated statewide conversion of the Medicaid program from fee-for-service to managed care. Approval of a 1915(b) waiver in May 1995 enabled the Oklahoma Health Care Authority (HCA) to begin enrollment of urban recipients in the five plans that had been awarded contracts. The legislature amended SB 76 in 1995, requiring HCA to have 50 percent of all Medicaid clients in the three largest cities in managed care plans by July, with the balance enrolled by 1996; however, in the 1996 legislative session, that target date was moved to July 1, 1997. In January 1995, the state submitted an 1115 waiver, requesting more flexibility to adapt managed care models for urban and rural areas, to the Health Care Financing Administration (HCFA); the new waiver was approved in October 1995.
In October 1996, the primary care case management (PCCM) program, SoonerCare Choice, was initiated in Oklahoma. As of December 1997 there were 125,337 member enrollments for Medicaid Managed Care in Oklahoma. There were 75,004 members enrolled in its urban program, SoonerCare Plus, and 50,333 in its rural program, SoonerCare Choice.
Who Is Overseeing?
The Oklahoma insurance commissioner is an elected position. The Department of Insurance (DOI) provides information on solvency and market practices to the Oklahoma Department of Health, which licenses HMOs.
The Oklahoma Department of Health (DOH) is the statutory agency responsible for all aspects of HMO licensure. DOH evaluates network adequacy, grievance procedures, and quality assurance; and evaluates financial solvency and market practice information received from DOI.
The Oklahoma Health Care Authority (HCA) was established in 1993 to administer the state Medicaid program and to oversee some components of state-purchased health care; the agency took over complete responsibility for Medicaid in January 1995. HCA is overseen by the governor, through the secretary of human services, and by the legislature through a Joint Oversight Committee composed of three senate members and three house members. The authority also has a board composed of seven members; three are appointed by the governor, two by the president of the senate, and two by the speaker of the house.
The Oklahoma State Legislature has been active in health care reforms. Lawmakers passed insurance reforms in 1992 and 1994, and approved SB76, the Medicaid managed care act, in 1993. The legislature has also approved several health care mandates, including 48-hour postpartum care; a prohibition on "gag" rules; and coverage for equipment and supplies related to the treatment of diabetes. Important health care bills passed in 1996 addressed the Columbia/HCA agreement for joint operation of the University Hospitals and the Presbyterian Hospital and for disclosure requirements in regard to discounting practices.
Senate Bill (SB) 639 was enacted in the 1997 legislative session and was intended to utilize the state's Medicaid managed care program as a vehicle to expand health coverage to Oklahoma's uninsured children and pregnant women. Implemented on December 1, 1997, the expansion brought categorical groups of children and pregnant women into the SoonerCare program at up to 185 percent of the federal poverty level (FPL).
House Bill (HB) 1860 (1997) amended SB 76, postponing the inclusion of the aged, blind, and disabled populations into a managed care delivery system to July 1, 1999. HCA has ongoing extensive and integrated efforts underway to assure a smooth medical transition for these patients. House Bill 179 created the Task Force on Medicaid Managed Care Services for People with Developmental Disabilities to examine the application of managed care principles and practices to this population.
In 1998 Governor Frank Keating signed Oklahoma's Title XXI State Children's Health Insurance Plan application to HCFA to use Title XXI funds to expand Medicaid coverage and designated HCA as the agency responsible for the administration of the program; HCFA approved the application in March 1999. HCA will use of the funds for expanding Medicaid eligibility as a complement to the Medicaid expansion under SB 639.
How Are They Doing?
Solvency Oversight of the Private Market
DOI oversees all Oklahoma HMOs and indemnity insurance plans, but has no oversight authority over individual providers. However, in 1983 DOI adopted a new regulation, prohibiting plans from penalizing their providers for specialist referrals, in response to early HMO efforts to control utilization. There is no prohibition against provider bonuses for reducing referrals or scaling back treatment services, as these have not been issues of concern in the state.
Quality Oversight of the Private Market
According to DOH's deputy commissioner, the rate of HMO complaints reached a high in Oklahoma in 1987-88, has since declined, and has not increased as market penetration has increased. On the other hand, he emphatically points out that consumer complaints reflect a perception of HMO quality different from public concern over managed care, which is growing. The chair of the House Public Health Committee thinks that the media have not "picked up on managed care problems."
The deputy commissioner characterizes his department's oversight approach as the creation of a framework for quality assessment, supplemented by "after-the-fact problem solving." The agency is not heavily funded for quality oversight and "doesn't have the resources to go out and aggressively assist organizations to become effective." DOH relies on a peer review organization to conduct twice-yearly HMO reviews; requires plans to seek accreditation from one of four approved certification organizations; and plans to adopt the forthcoming series of HEDIS measures.
In addressing consumer complaints, DOH cannot overrule HMO treatment decisions, but relies on informal discussion. "We are a jawboner," explains the deputy commissioner.
Medicaid Oversight
Under the approved 1115 waiver, HCA moved Oklahoma's rural Medicaid population into a PCCM program. The PCCM supplements the mandatory HMO program operated in Tulsa, Oklahoma City, Lawton, and surrounding areas. The program includes a fully integrated mental health care component. The enrollment of aged, blind, and disabled Medicaid populations into managed care was set to start in July 1999.
HCA officials realize that the HMO program will require new oversight mechanisms. "In managed care, expectations are so much higher. You can expect them [HMOs] to be more responsive than fragmented providers," notes the associate director for policy. HCA views data collection as a crucial part of an effective contracting program, and staff worked to establish data systems up front, drawing on the experience of other states. The agency holds five mandatory monthly meetings with HMO representatives––senior administrators, medical directors, information systems staff, and mental health and marketing and client relations personnel––to address issues as they arise.
A survey was sponsored by HCA and carried out by the Oklahoma Foundation for Medical Quality, Inc. (OFMQ), in the winter of 1997. A total of 8,675 members of five HMOs in the SoonerCare Plus plan completed the survey. These people had been with their SoonerCare Plus HMO for at least six months and were chosen to represent all members. OFMQ analyzed the survey results and collaborated with HCA on the design of the report. The report card will be mailed out to all SoonerCare Plus members.
Coordinating Oversight
DOH and DOI staff characterize their relationship as "cooperative." HCA maintains close ties with the legislature through its oversight committee and will be responsible for coordinating specific aspects of state health care purchasing.
What Is Next for Oversight?
DOH's deputy commissioner thinks that the most important issue facing the state will be the impact of the managed care expansion on the medical safety net: "The system is not being designed to deal with uncompensated care. Everyone is ratcheting down their part of the system. It will force cost shifting in the system down to zero.... The only place for the uninsured to go [will be] acute care [emergency facilities]. That costs big money." He adds that capitated managed care will "define the problem rather than hide it, and maybe that's an advantage."
Oklahoma's rapid move into Medicaid managed care will require careful monitoring and planning by legislators and agency staff to ensure the most effective oversight and coordination.
Additional Resources
- Department of Insurance
www.oid.state.ok.us- Department of Health
www.health.state.ok.us- Oklahoma Health Care Authority
www.ohca.state.ok.us
(Last updated August 31, 1999)
Oregon
What Is Oregon Overseeing?
Five HMO plans cover 55 percent of the insured population in Oregon. The state legislature passed an employer mandate in 1989 to assure universal coverage, but the federal government failed to grant an ERISA exemption, and the mandate was rescinded by a sunset provision on January 2, 1996.
The state's Medicaid program, the centerpiece of the Oregon Health Plan, which has attracted national attention, received an 1115 waiver from the Health Care Financing Administration (HCFA) in March 1993 and has been operating under this waiver since February 1994. The plan, which is available to almost everyone beneath the federal poverty level, lists 745 medical conditions and therapies according to their treatment priority; the 1997-1999 biennial budget funds coverage of the first 578 conditions.
Eighty-five percent of Oregon's Medicaid population has been enrolled in managed care programs; 97 percent of that group is in capitated plans. The state has also implemented managed mental health, chemical dependency, and dental care plans for its Medicaid clients. Medicare is moving its dually eligible recipients into the Oregon Health Plan, and the regional Medicare office (Region 10) is collaborating with Medicaid to develop joint standards.
Who Is Overseeing?
The Insurance Division of the Department of Consumer and Business Services (DCBS) oversees solvency and market practice for Oregon's private HMO plans and is paying more attention to issues affecting the delivery and denial of care. While DCBS does not regulate providers, hospitals, or the Medicaid managed care program, it does regulate the solvency of insurers that contract with the Medicaid program.
The Oregon Health Division (OHD) has no responsibility for oversight of managed care. The department enforces antidumping regulations (which require hospitals to evaluate and stabilize emergency patients before discharging them) and licenses some medical services, such as hospitals, laboratories, radiology, and mammography.
The division has a number of projects in collaboration with managed care designed to improve delivery of preventative services. These include the building and operation of a computerized immunization registry, development of tobacco cessation focus, and adoption of statewide guidelines for diabetes care.
Oregon's Office of Medical Assistance Programs (OMAP) is responsible for the Oregon Health Plan Medicaid demonstration and reviews quality measures, solvency, and marketing practice for all managed care Medicaid plans. OMAP allows each contracting plan to develop a single marketing brochure, which must be approved by the agency; active marketing is prohibited.
The legislature created the Office of the Oregon Health Plan Administrator in 1993 to report on the implementation of the Oregon Health Plan and on alternatives to the employer mandate. Now called Oregon Health Plan Policy and Research (OHPPR), its responsibilities have expanded to include all aspects of Oregon health care policy. The office conducts policy research, facilitates the implementation of health policy initiatives, and is the central state health care policy agency.
The Oregon Legislature was active in health plan oversight in the late 1980s, but its involvement has diminished in recent years.
How Are They Doing?
Solvency Oversight of the Private Market
Because Oregon's managed care market is so well developed, it has been more stable than those in other parts of the nation, avoiding the rapid series of mergers and takeovers that have occurred elsewhere. "The nationwide takeover wars are more active in states with low managed care penetration because the near-term potential is greater," notes Oregon's insurance commissioner. The governor's health policy advisor thinks that the main stakeholders are "comfortable with the Oregon approach to managed care." The commissioner adds: "There has been wide acceptance of managed care plans in Oregon, and we believe those plans operate, by and large, in a responsible fashion. However, the financial incentives in managed care may create a potential to underserve some plan members, and we have increased our monitoring efforts in that regard."
The insurance commissioner identifies physician hospital organizations (PHOs) as a new area needing oversight: "Oregon is starting to see interest on the part of ERISA employers. They [employers] are saying, 'Look, we want you [PHOs] to help us manage our costs,' and capitation is a key component." The insurance division has advised both providers and employers that any capitation arrangement, whether with an HMO, PHO, or other entity, constitutes the transaction of insurance and requires a state license.
Quality Oversight of the Private Market
The increased use of capitation in Oregon has prompted policy changes that affect quality-of-care issues like scope of coverage and access to specialists. The insurance division's policy is to deal with these issues in an informal style that stresses cooperation. The insurance commissioner estimates that his office receives "dozens" of complaints each month about private sector managed care plans and that the number is increasing as more plans introduce capitation. The commissioner comments: "We are finding the issue is knowing where to draw the line when fundamental matters of medical judgment are involved." He offered the example of a case where a provider under contract with a managed care plan refused initially to authorize treatment for a plan member who was experiencing depression after the death of a spouse. While the division does not second guess medical judgments, it does act to ensure that treatment decisions are not compromised by the financial structure of managed care plans.
The commissioner reports that he does not have the resources to monitor HMO practices intensively. The insurance division employs 90 people, five of whom are available to respond to complaints regarding HMOs and other health insurers. A former Oregon Health Plan administrator suggests that consumers could do their own monitoring if they had more information about plans. She comments: "There are big differences between plans, and people need to make informed choices."
Managed care oversight in Oregon seems to have benefited from the absence of media sensationalism in that state. No stories or scandals surfaced regarding managed care disasters that created pressure for regulatory reform, as occurred in several other states. This tranquil history may reflect the fact that managed care is well established in Oregon.
Medicaid Oversight
OMAP has been very active in its oversight of the Medicaid demonstration project. The acting assistant administrator attributes the office's attitude to these factors: (1) an activist state government; (2) the national attention given the health plan, which helped to generate a commitment to meet challenges; (3) an active OMAP director who encouraged excellence; and (4) the amount of resources made available to the plan.
The chair of the Oregon Health Plan Contractor Committee explains that the Medicaid plan mandates certain requirements beyond those imposed by private benefit managers. For example, Medicaid providers must publish information in seven languages; provide interpreters for physician visits; resolve and document every complaint; and provide the state with a significant amount of cost-related information.
The chair credited OMAP for listening to the concerns of health plans before drafting the regulations. Although participation is voluntary, the state has been able to recruit most of its HMOs to participate in the Medicaid program. Although there initially were concerns about OMAP's ability to enforce its standards, contracts now allow the state to take any of the following actions when a plan is out of compliance: (1) initiate corrective action; (2) suspend new enrollment; (3) reduce current enrollment; (4) assess penalty equal to 1 percent of the last capitation payment; and/or (5) notify enrollees of noncompliance and allow them to change health plans.
Coordinating Oversight
OHPPR is the state agency that largely coordinates oversight of health care reform policy in Oregon. Originally created to report on the implementation of the Oregon Health Plan, OHPPR is now the focal point for health policy in state government. The office actively monitors and coordinates other agencies and health care entities, but it has no line programs or direct regulatory input. A former administrator describes the job of OHPPR as supplying the best information for policymakers. As of mid-1998, OHPPR had been studying these issues:
- the generation and publication of health care information
- the makeup of the uninsured population, workplace insurance coverage, and the ability of employers to purchase health insurance and managed care coverage
- the improvement of state purchasing of health insurance coverage, including managed care
Several OHPPR projects are directly linked to managed care. The office studies quality assessment of HMOs and other plans; it has developed a consumer score card, and it assesses medical technology. A more fundamental issue is the impact of managed care on the entire health care system. The former administrator sees managed care as "imperiling the ability of a number of Federally Qualified Health Centers to exist"; she thinks that the various players must work together to seek solutions for the indigent uninsured currently served by the FQHCs.
What Is Next for Oversight?
The state health care market is experiencing a second wave of changes, including more provider-health plan affiliations and growing competitive pressures on smaller local plans. Because dually eligible Medicare-Medicaid recipients are enrolling in managed care plans, advocates for senior citizens have been actively lobbying for new regulations.
The consumer scorecard that has been developed by OHPPR will systematically compare plan assessments. The former administrator explains: "We are asking people to give information that is proprietary. We are asking them to step back. We won't have a quick fix and a silver bullet. We can't threaten with legislation; there isn't the political will to do that. What you are trying to do is to get people to cooperate in a different way." She believes that government must convince business that there is not a regulatory agenda.
Many state officials foresee continued incremental progress in oversight, which will focus on negotiated policy initiatives with diverse stakeholders and on making more information available to consumers. These initiatives will probably take place at the agency level rather than through legislation. Oregon's success has been built on coordination and cooperation, both between agencies and with insurers and providers; this approach holds promise for the future.
Additional Resources
- Department of Consumer and Business Services, Insurance Division
www.cbs.state.or.us/insurance.htm- Office of Medical Assistance Programs
www.omap.hr.state.or.us- Office for Health Plan Policy and Research
www.ohppr.state.or.us
(Last updated March 30, 1998)
Pennsylvania
What Is Pennsylvania Overseeing?
Thirty-three HMOs cover approximately 40 percent of Pennsylvania's insured population.
The state's Medical Assistance (MA) managed care program, in which approximately 30 percent of the 1.6 million recipients are voluntarily enrolled, is expanding. In February 1997, the Office of Medical Assistance Programs (OMAP) began a mandatory HMO program to cover most of the 600,000 Medicaid clients of the five counties of the greater Philadelphia region; authorized by a 1915(b) waiver, this initiative will increase MA managed care enrollment by 35 percent. OMAP plans to expand managed care statewide and is also examining its potential for serving special needs clients. OMAP will also continue to operate its existing primary care case management (PCCM) program, the Family Care Network, which serves approximately 225,000 children in 59 counties, using a noncapitated, primary care provider/case-management-driven model. The Family Care Network was designed to improve quality and control costs by encouraging clients to use the health care system more appropriately and efficiently.
Who Is Overseeing?
The Pennsylvania Department of Insurance (DOI) is one of two state agencies that issue HMO licenses. DOI approves premium rates; oversees HMO solvency; and monitors marketing practices. In the spring of 1996, the department, in conjunction with the Department of Health, issued new Statements of Policy, clarifying the respective responsibilities of HMOs and providers that contract with the plans.
The Pennsylvania Department of Health (DOH) works with DOI on HMO oversight. DOH sets standards for HMO adequacy; reviews and approves provider contracts, member grievance and complaint procedures, and quality assurance practices; tracks quality-of-care complaints; and hears appeals from HMO members who are dissatisfied with the way plans have resolved their complaints about claim denial, quality of care or services, or other HMO operations. In October 1998, DOH and DOI issued joint policy statements on implementation of the Quality Health Care Accountability and Protection Act (Act 68), a managed care consumer protection law. The two departments are working on implementing regulations.
The Pennsylvania Department of Public Welfare (DPW) oversees the Office of Medical Assistance Programs (OMAP), which administers Pennsylvania's Medicaid program, including a voluntary HMO program, a primary care case management program, and the "HealthChoices" mandatory HMO program. DPW contracts with 13 licensed HMOs to cover the voluntary program, and an additional three contracts are pending. Although OMAP is expanding its reliance on HMO managed care, the agency continues to operate a large fee-for-service program, which still covers more than one million recipients.
The Pennsylvania State Legislature passed Act 68, the Quality Health Care Accountability and Protection Act, in June 1998. This act, which became effective January 1, 1999, contains a range of provisions for continuity of care, creates new requirements for disclosure, and increases provider rights.
How Are They Doing?
Solvency Oversight of the Private Market
Two factors have been pushing DOI to undertake new initiatives in oversight of HMO solvency and contracting: the expansion of the market and the specter of financial failure. Two HMOs have become insolvent since 1986; since then DOI has strengthened its solvency inspection process by requiring all licensed HMOs to file quarterly financial statements. The department meets with each plan's executive staff to discuss the steps they must take to assure solvency. "We are trying to do what we can at the front door. I've been through insolvency. It's a horrible situation for everybody," explains the agency's former director of licensing and financial analysis.
Pennsylvania's health care market is changing rapidly, prompting further changes in oversight. Insurance staff observe that the market's reliance on integrated delivery systems (IDSs) is increasing. DOH's deputy secretary for quality assurance estimates that there may be more than 200 IDSs in the state, mostly centered around hospital medical staff plan development. Since June 1996, IDS contracts have been filed by HMOs and approved by the Department of Health.
Prior to 1996, Pennsylvania's HMO regulations did not directly address the issue of HMOs contracting with IDS plans and thereby shifting the risk downstream. The uncertainties acted as barriers to IDS development and HMO-IDS negotiation, so HMOs and provider groups asked the state for clarification and guidance. DOH and DOI considered regulating and licensing risk-assuming IDS plans, but they decided instead to hold HMOs accountable for the finances and the care and services provided by IDS subcontractors and their participating providers. IDS plans may now enter into capitation contracts or other risk-transfer agreements without themselves having to be licensed as HMOs or preferred provider organizations (PPOs).
The two agencies issued companion Statements of Policy in 1996, stipulating that, when HMOs enter into capitated or risk contracts with providers, the HMO, as the licensed entity, retains the ultimate responsibility for the subscribers. Under these guidelines, HMOs must file IDS contracts for DOH review and approval, and DOI monitors the delegation of responsibilities by HMOs to IDSs in order to safeguard the HMO's financial health. DOH monitors the delegation of quality oversight and consumer grievance activities.
Act 68 had further regulatory impact on such risk transfer arrangements. The act calls for entities conducting utilization review on behalf of a managed care plan to be certified by DOH. The act establishes specific operational standards for utilization review that are the basis for such certification. Each IDS that conducts utilization review on behalf of a managed care plan will have to be certified by DOH.
Quality Oversight of the Private Market
A former DOH deputy secretary states that "regulation is by definition for minimum standards" and that DOH has sought to avoid government "micromanagement" of the health care industry in Pennsylvania. Based on that philosophy, he describes the department's approach to quality assurance as aggressive. The department evaluates network adequacy, grievance procedures, and quality assurance protocols. Pennsylvania was one of the first states in the country to require periodic external HMO quality reviews by approved review organizations like the National Committee for Quality Assurance (NCQA) with the participation of DOH personnel.
DOH's Statement of Policy addresses quality assurance issues for HMO-IDS contracts, and the agency plans to review HMO oversight of IDS activities in this area periodically. HMOs are required to incorporate essential consumer protection provisions in their IDS contracts, which must then be included in the IDS's provider contracts; to oversee the delegation of quality assurance and utilization review to IDS plans and to retain the right to rescind such delegated responsibilities; and to file a delegation oversight plan with DOH or to certify use of NCQA delegation standards. Resolution of member grievances may not be delegated.
A critical component of ongoing oversight is DOH's complaint tracking system. Any HMO member dissatisfied with the plan's final decision concerning treatment or reimbursement may appeal to the state for review. DOH receives between 1,200 and 1,800 informal grievance calls a year, but estimates that only 600 appeals for review have been made since 1991. In addition, any consumer who is dissatisfied with an HMO's decision regarding acceptance into the plan or cancellation of membership may contact DOI.
A new component of both consumer and provider protection is the creation under Act 68 of an external appeal process when a managed care plan makes a denial based on necessity or appropriateness. DOH now assigns appeals that have been through the mandated two-step internal process at the plan itself to an independent entity to make a final decision in the appeal. Consumers also have the right to file complaints to either DOH or DOI, depending on the nature of the issue.
Medicaid Oversight
The deputy secretary for Pennsylvania's Medical Assistance Program notes that the department remains committed to the expansion of mandatory managed care. However, with three large urban areas and an otherwise rural population, the department needs to adjust its program to very different conditions. In Phase 1 of its planned managed care expansion, OMAP introduced capitated managed care into new areas of the state. Beginning with the implementation of the five-county mandatory HMO program in February 1997, the state plans to expand managed care across the state by the year 2002. Pennsylvania's rural areas will present different challenges in creating accessible and available, health care delivery sites. DPW's commitment to developing service networks that meet the needs of each region may lengthen the time required to complete delivery of managed care to these areas.
OMAP has developed managed care options for special groups like the disabled. Special-needs groups are represented, and assisted by a Special Needs Unit (SNU). The SNU will assist those with a special need in choosing a primary care provider (PCP) who can best meet the recipient's needs.
DPW has altered its HMO contracting procedures and its data collection as a result of experience with its voluntary HMO program. Because the voluntary program has been criticized for allowing plans to conduct direct marketing campaigns, the state will contract with a benefits consultant who will advise enrollees about their options. To improve its information base, OMAP plans to adapt HEDIS as its reporting standard, to collect encounter data, and to compare HMO performance against that offered by fee-for-service providers.
Criticism has been voiced as well of HMOs that subcontract components of their MA programs to make a profit. A legislator on the Public Health and Welfare Committee identified plans that were paid a capitated rate for drug and alcohol rehabilitation and then subcontracted these services to providers at a much lower rate. A previous administration considered capping subcontract profits at 5 percent, but the legislator has not heard such a proposal from the current administration. The behavioral health component has been carved out and may be either managed by the county or subcontracted out to a private company (or a combination).
Coordinating Oversight
Pennsylvania's cabinet-level officers are organized into functional "clusters" to address cross-cutting issues more effectively. The state agencies responsible for health have established good working relations and work together to coordinate activities, exchange information, and analyze outcomes. DOI and DOH collaborated on the Statements of Policy on IDS oversight and implementation of Act 68; and OMAP and DOH are coordinating data collection for quality improvement. Another possibility yet to be explored is coordinated purchasing by health care services.
What Is Next for Oversight?
Medical Assistance is likely to be the health care area that will be most drastically changed in Pennsylvania. The governor and his administration want to expand capitation statewide including special needs groups. Budget pressures are likely to keep the focus on managed care. The deputy secretary of OMAP notes that the state needs to recognize that special needs and chronic care populations require additional resources, while controlling the growth of Medicaid costs and balancing spending priorities.
DOH has set standards for how HMO-IDS contracts may transfer the HMO's risk and delegate its authority for quality assurance to IDS plans. According to the office of the deputy secretary for quality assurance, the agency plans to develop similar standards to be applied to contracts between IDS plans and Blue Cross/Blue Shield or commercial insurers.
A former DOI official thinks that the health care market will continue to develop, and he anticipates mergers and shakeouts but does not foresee major legislative or regulatory changes. The legislator on the Public Health and Welfare Committee cited earlier favors a consumer bill of rights for managed care. Moreover, she points out that with the lapsing of the state's Certificate of Need law, questions will arise about the possibility for unregulated growth and expansion in the health care delivery system. However, state officials appear satisfied with the oversight situation at present.
Additional Resources
- Department of Insurance
www.insurance.state.pa.us- Department of Health
www.health.state.pa.us- Department of Public Welfare
www.state.pa.us/PA_Exec/Public_Welfare- Health Care Cost Containment Council
www.phc4.org
(Last updated August 13, 1999)
Rhode Island
What Is Rhode Island Overseeing?
In Rhode Island it is estimated that 30 percent of the insured population are enrolled in HMOs; an even higher percentage is enrolled in some form of managed care. RIte Care, the state's managed care Medicaid program, began in 1994 under an 1115 waiver and has now 87,000 enrollees. The mandatory plan covers all recipients in the Family Independence Program (previously called Aid to Families with Dependent Children) and all pregnant women and children up to age 18, whose family incomes are less than 250 percent of the federal poverty level (FPL). RIte Care has expanded eligibility for adults up to 185 percent of FPL in families with children eligible for RIte Care. Family child care providers and the eligible dependents were added to the program in 1996. RIte Care uses only licensed HMOs under fully capitated contracts.
In 1996 the Rhode Island legislature passed the Health Care Accessibility and Quality Assurance Act, which considerably broadens state oversight of managed care. The act outlines specific provider protections; mandates periodic recertification of plans; and provides for comparative information on health plans to be offered to consumers.
The 1996 legislature also enacted a major revision of Rhode Island's Certificate of Need (CON) program. The new CON law makes important changes in the oversight of state health care, but in its final form will not have a major impact on managed care organizations. However, the act establishes a minimum standard for hospital care of the indigent to assure that new hospital corporations in the state, particularly large intrastate for-profit entities, are held to the same standards as those now operating in Rhode Island. As a result of the Hospital Conversion Act, passed in 1997, the director of health was given the authority to promulgate regulations pertaining to new hospital acquisitions; the attorney general is now responsible for establishing the sale price for such acquisitions.
By 1998, there was growing interest in some form of public or public-private purchasing cooperatives. Discussions about this were beginning to be held within state government and organized labor.
Who Is Overseeing?
The Rhode Island Department of Business Regulation (DBR) issues HMO licenses in coordination with the Department of Health (DOH). DBR oversees HMO solvency, handles consumer complaints related to market practices, conducts public hearings on changes in ownership, and has final authority over all health service matters not directly related to quality of care.
The Rhode Island Department of Health (DOH) oversees all quality of care. DOH assesses health plan networks, grievance procedures, and quality assurance practices during licensure and re-licensure; tracks and follows up on consumer complaints related to access and quality; oversees utilization review practices for HMOs and other entities; and oversees the external consumer appeals process that deals with denials of coverage and denials of specialist referral. DOH has been charged with implementing the 1996 Health Care Accessibility and Quality Assurance Act.
The Rhode Island Department of Human Services (DHS) manages RIte Care, the state's mandatory Medicaid managed care program. RIte Care recipients enroll in prepaid health plans that contract with the state. DHS conducts extensive monitoring, research, and evaluation to oversee health plan compliance with confidential requirements and to assess program results.
The Rhode Island Legislature (senate and house) meets on a part-time basis and has been very active in considering health care reform legislation. In 1992 lawmakers passed a package of small-group insurance reforms and, in 1993, a utilization review law for HMOs and other entities that determines the medical necessity of covered services requested for patients. During the 1996 legislative session, the legislature considered more than 30 bills related to managed care issues and passed both the Health Care Accessibility and Quality Assurance Act and the CON revision bill, as well as some statutory changes regarding health insurance purchasing for state employees. As a result of these statutory changes, health plan options for state employees were restructured and were increased from four to eight plans. Legislation passed in 1999 included a measure allowing providers to appeal an insurance company's decision not to pay for care that has already been rendered, a law establishing a health care advocate in the attorney general's office, and a requirement that health plans conduct member-satisfaction surveys; in addition, a law protecting mental health care coverage was strengthened.
How Are They Doing?
Solvency Oversight of the Private Market
HMOs represent a significant portion of Rhode Island's health care market, but the precise market share is difficult to determine. The deputy director for DOH estimates HMO enrollment to be between 30 and 35 percent of the state's population; but DBR considers it very difficult to gauge actual penetration because self-insured plans do not report membership data to the state and because the three markets in southern New England––Rhode Island, Massachusetts, and Connecticut––overlap.
DBR's oversight approach focuses on solvency and insurance regulation. The agency conducts a financial review of each HMO every five years and reviews rate requests to ensure adequacy of coverage for projected liabilities. The department oversees risk-bearing entities only and does not regulate contracting arrangements or provider groups.
Such regulation has seemed unnecessary to state officials, since there are few HMOs using provider, as opposed to plan, capitation and few integrated delivery systems in Rhode Island. The director of business regulation reports that there are only a couple of multi-specialty group practice entities in the state's area of greatest population concentration, and that the only capitated contracts in the state are for mental health care. The deputy director of health knew of only one plan using capitation with its providers.
However, the absence of capitation has not prevented Rhode Island legislators from introducing bills to require disclosure of financial arrangements and limit specific kinds of capitated arrangements. The director of DBR explains that the legislators are trying to "head off horror stories from other states," rather than reacting to problems within the state.
Quality Oversight of the Private Market
Quality oversight in Rhode Island is based on the state's HMO Act, which reflects the National Association of Insurance Commissioners (NAIC) recommendation of the early 1980s for network adequacy, grievance procedures, and quality assurance protocols. DOH tracks consumer complaints and conducts annual surveys of each HMO's operation, during which staff review the health plan's complaint records. If there is a pattern of poor quality, the department can require the HMO to file a corrective plan or petition the director of business regulation to shut down enrollment. In 1994 the legislature gave the DOH the additional authority to oversee utilization review practices. In 1996 the Rhode Island General Assembly passed legislation to protect practitioners who take action to protect patients from any retribution by HMOs or other vendors/insurers.
However, as of mid-1996, quality of HMO care has not been a major concern. The director of DBR reports no increase in complaints or difference between HMO patterns and those of other insurers. The deputy director of DOH sees HMOs on balance as a positive innovation in the health care arena. The General Assembly has initiated a Women's Health Review, which will look at outcomes of women's health. This review will lead to new legislative interventions designed to better protect the health status of women.
Medicaid Oversight
DHS has enrolled more than 87,000 Rhode Island residents in the RIte Care program, which provides an expanded package of benefits. DHS developed the program with input from the DOH. RIte Care contracts only with licensed HMOs, but the agency conducts its own quality assurance and collects a broad range of data and performance measures.
Program results have been highly positive. Physician participation has more than doubled since RIte Care was implemented. Prenatal care has improved dramatically and birth outcome and maternal health status have benefited significantly. Physician visits have more than doubled while hospital stays and emergency room visits have declined. Overall, 97 percent of RIte Care enrollees in the 1998 Member Satisfaction Survey indicated that they were very satisfied or satisfied with the program.
Coordinating Oversight
The three key Rhode Island oversight agencies maintain good working relationships. DOH and DHS worked closely together on the development of RIte Care, although DHS now has sole responsibility for the program. DOH and DBR also report that staff work well together.
As of the fall of 1997, there was little coordinated effort around cooperative health care purchasing; pooling of state employee and Medicaid purchasing has not been "popular" because of concern among employees. However, statutory changes in health insurance purchasing for state employees were enacted in the 1996 legislative session, and these may open new opportunities for coordinated purchasing.
What Is Next for Oversight?
Several factors will shape Rhode Island's future oversight. First, the Health Care Accessibility and Quality Assurance Act of 1996 extends DOH's purview to quality assurance for a broader array of managed care entities. Second, the revised CON program opens the way for increased service expansion on the one hand, while mandating provision for the indigent on the other. Third, the Administration is considering what DHS's director describes as a "statewide public restructuring of health care." State officials plan to focus on uncompensated care, welfare reform, and lowering health care costs to attract business to Rhode Island. The restructuring is in the discussion phase, but such a major reform would require new oversight strategies. Finally, as the state proceeds with its Title XXI planning process, consideration is being given to the possibility of expanding RIte Care to older siblings of currently covered uninsured children, parents of fee-for-service Medicaid children, foster parents, and other populations.
Additional Resources
- Department of Health
www.health.state.ri.us
(Last updated August 9, 1999)
South Carolina
What Is South Carolina Overseeing?
Managed care is a small, but rapidly growing, component of the health care market in South Carolina. HMO membership increased from 262,000 in 1995 to an estimated 440,000 in 1998 (approximately 11 percent of the total population). South Carolina's health care system is being transformed as hospitals, physicians, and other medical care providers negotiate agreements and stake out positions to prepare for the expansion of managed care and for possible Medicare and Medicaid initiatives. Integrated networks are being introduced into the state's well-served areas.
In 1994 the state passed two health care reform bills: one was enacted to facilitate cooperative agreements between health care purchasers and providers; the second, the Small Employer Health Insurance Availability Act, was designed to promote the formation of purchasing cooperatives and to encourage the development of appropriate plans for small businesses. The state has also enacted an any-willing-provider law for pharmacies and a freedom-of-choice clause for psychologists.
In 1996, South Carolina passed legislation regarding maternity lengths of stay and coverage of drugs used to treat cancer. In 1997, South Carolina passed legislation to conform its laws to the requirements of the federal Health Insurance Portability and Affordability Act (HIPAA).
In November 1994, the Health Care Financing Administration (HCFA) granted conditional approval to an 1115 waiver, known as the Palmetto Health Initiative, which offered Medicaid recipients in South Carolina the choice to enroll either in fully capitated HMOs or in partially capitated managed care plans; it also extended eligibility to all residents whose incomes are below the federal poverty level. South Carolina decided to postpone action on the Palmetto Initiative, however, because of financial concerns, limited managed care capacity, and anticipated federal changes to Medicaid. Instead, the state introduced a pilot project, which would allow recipients in selected areas to choose among a contractor HMO, a primary care case management (PCCM) program called the Physician Enhanced Plan (PEP), and a fee-for-service system. By 1998, there were three HMOs serving 13 counties; PEP was available in seven counties and expanding statewide; and the Healthy Options Program (an enhanced fee schedule for primary care providers) was available in 30 counties.
Who Is Overseeing?
The South Carolina Department of Insurance (DOI) regulates the solvency of all insurers in the state, including managed care plans; monitors market conduct; and tracks and responds to consumer and provider complaints. DOI does not oversee provider groups that assume downstream risk if these groups are contracting with single employer self-insured health plans.
The South Carolina Department of Health and Environmental Control (DHEC) houses the Division of Health Regulations (DHR), which is within the office of the Deputy for Health Services. The deputy performs limited monitoring of long-term-care facilities and hospitals regarding Medicaid and Medicare; oversees the state's health facility plan; inspects facilities; and supervises the Certificate of Need (CON) program. Under the 1994 statute, Health Services also monitors cooperative agreements between health care providers and purchasers and is empowered to grant antitrust exemptions for agreements (certificates of public advantage) that are determined to be in the public interest. One exemption was issued in 1997.
The South Carolina Department of Health and Human Services (DHHS) manages both the Medicaid program, including the voluntary Medicaid managed care program, which uses state-licensed HMOs, and PEP.
The South Carolina Department of Labor, Licensing, and Regulation regulates professional practice through licensing of physicians and other health care occupations.
The South Carolina State Legislature has enacted health care reforms and is the driving force behind most state policy initiatives. Lawmakers enacted legislation that mandates that employers who offer a closed panel plan such as an HMO must also offer a point-of-service option. In addition, in 1998, lawmakers considered consumer protection standards related to "gag" clauses, selection of OB-GYNs, emergency care services, and mastectomies.
How Are They Doing?
Solvency Oversight of the Private Market
Guaranteeing the solvency of HMOs and other insurers in South Carolina is the responsibility of DOI, which licenses all HMOs and conducts quarterly financial status reviews. The state does not have authority to license provider networks unless they are engaged in the business of insurance or acting as an HMO. The 1994 statute assigned to DHEC some authority to oversee provider agreements.
Quality Oversight of the Private Market
All HMOs must undergo review by a qualified external organization, based on criteria set forth in guidelines established by the National Committee for Quality Assurance (NCQA). The deadline for the first review was December 31, 1996, with a requirement to submit to further reviews at least once every three years. The DOI's Consumer Services Division responds to complaints from consumers and physicians; reviews complaint reports submitted by HMOs; and tracks the number, type, and pattern of problems reported.
Medicaid Oversight
South Carolina's withdrawal of its 1115 waiver request reflects changing managed care priorities. The governor began a major administrative restructuring in 1993 by creating a cabinet in the executive branch and merging several state agencies; the administration has committed its energies to welfare reform and to small business development rather than to health care reform, in part because it is awaiting changes in federal policy.
The Medicaid program has been evolving at the state level, including expanded eligibility for children up to 150 percent of poverty. This was done in response to the Children's Health Insurance Program (CHIP) in the Balanced Budget Act of 1997. Expansion to 200 percent of poverty is being considered. Enrollment in HMOs is conducted in-house at DHHS. In addition, DHHS has an outside peer review organization evaluating the performance of the HMOs, with an emphasis on quality.
Coordinating Oversight
Coordinating the oversight of its small degree of managed care is not an issue in South Carolina, except when it comes to the Medicaid program, which maintains a close liaison with DOI and consults DHHS.
What Is Next for Oversight?
It is difficult to forecast the direction of managed care oversight in South Carolina until market penetration has increased. The legislature has appointed a committee to study and plan for changes in regulatory oversight and health care reform. In the interim, and until the future course of Medicaid, Medicare, and other federal health programs are determined, market forces will probably dominate the new shape of health care systems in South Carolina. Mergers and alliances among hospitals, physician groups, and other medical care providers are already under way, while employers and insurers are exploring many ways to control costs, including managed care.
Additional Resources
- Department of Insurance
www.state.sc.us/doi- Department of Health and Environmental Control
www.state.sc.us/dhec- Department of Health and Human Services
www.dhhs.state.sc.us
(Last updated August 30, 1999)
South Dakota
What Is South Dakota Overseeing?
South Dakota currently has five licensed HMOs and a number of preferred provider organizations (PPOs) operating in the state. Active in health insurance reform, the South Dakota legislature considered several pieces of managed care legislation in the 1996 session including requiring all managed care organizations (MCOs) to establish grievance procedures and requiring the registration of all utilization review organizations (UROs) operating in the state.
During the 1999 legislative session, lawmakers enacted additional measures designed to provide more consumer protection to enrollees of managed care plans. Key provisions of this legislation include: network adequacy and quality of care requirements, information disclosure requirements, a "gag" clause prohibition, standards for utilization review, and provisions for covering emergency services. In addition, this legislation, which went into effect on July 1, 1999, requires all MCOs operating in South Dakota to register with the state's Division of Insurance (DOI).
Who Is Overseeing?
The Division of Insurance (DOI), located within the South Dakota Department of Commerce and Regulation, is the lead oversight agency for private market HMOs. It licenses all HMOs; establishes individual solvency and capital reserve requirements for each; reviews market practices; and tracks consumer complaints for all MCOs. DOI consults with the Health Department on quality-of-care and access issues.
The South Dakota Department of Health (DOH) works with DOI in evaluating HMO networks, quality assurance, and grievance procedures.
The Office of Medical Services (OMS), within the Department of Social Services, manages South Dakota's PRIME Medicaid program. PRIME (Provider and Recipient In Medicaid Efficiency) is a primary care case management (PCCM) program operating under a 1915(b) waiver.
The South Dakota State Legislature (senate and house) has debated and passed several insurance reforms in the 1990s, beginning with the implementation of rating restrictions for small employers in 1991.
In 1994 the state passed legislation allowing the establishment of purchasing cooperatives for health insurance; limiting exclusions for preexisting conditions; providing for portability and renewability for employer health plans; and creating a high-risk pool. The high-risk pool legislation was repealed in 1995, and no insurance cooperative has yet been organized. Also in 1995, lawmakers mandated guaranteed issue for employer plans. In 1996 the portability, renewability, and rating protections were extended to the individual market; MCOs were required to establish grievance procedures; and UROs were required to register with the state. In 1997, legislation was passed limiting the application of preexisting condition waiting periods to 12 months, and revising current statute to ensure state compliance with the providisions of the federal Kennedy-Kassebaum legislation (HIPAA). In 1999, lawmakers enacted additional consumer protection measures for enrollees of managed care plans, including network adequacy and quality of care requirements, information disclosure requirements, a "gag" clause prohibition, standards for utilization review, and provisions for covering emergency services.
How Are They Doing?
Solvency Oversight of the Private Market
South Dakota's HMO statute does not establish specific standards for HMO solvency; DOI establishes specific reserve requirements for each HMO, depending on its size. Although there are only five HMOs currently operating in the state, PPO plans rank second in enrollment only to Blue Cross/Blue Shield plans. Effective July 1, 1999, all PPOs are required to register with the state Division of Insurance (DOI). This requirement will enable state regulators to get a handle on the volume of PPO business in the state, the variety of PPO plans that are currently being marketed, and which networks are operating in the state.
Quality Oversight of the Private Market
Quality-of-care is a priority issue in South Dakota. Because of the low market penetration by HMOs, the state has not experienced the amount of problems with HMOs seen elsewhere. PPOs are a much larger part of the market and draw more attention. The consumer protection legislation enacted in 1999 extends many of the HMO-type requirements to other managed care plans and requires all MCOs (including PPOs) to develop and maintain a quality assessment program. Furthermore, MCOs that issue closed plans must also develop a quality improvement plan.
Medicaid Oversight
OMS has begun to implement utilization review for South Dakota's PRIME program to monitor cost effectiveness, as required by the 1915(b) waiver, and to develop provider utilization profiles. Although the office has been contacted by several HMOs interested in PRIME contracts, OMS does not plan to create a prepaid component of the PRIME program; however, the agency has developed a prepaid dental program for Medicaid clients.
What Is Next for Oversight?
Managed care is expected to continue expanding in South Dakota, although the very rural central and western portions of the state will pose major problems for expansion. With the passage of significant legislation in recent years, South Dakota is clearly moving forward in the area of managed care oversight, and consumer protection is sure to remain an important issue in the future.
Additional Resources
- Division of Insurance
www.state.sd.us/insurance- Department of Health
www.state.sd.us/doh- Department of Social Services, Office of Medical Services
www.state.sd.us/social/medicaid
(Last updated August 6, 1999)
Tennessee
What Is Tennessee Overseeing?
Tennessee's 17 HMOs enroll over 20 percent of the insured population. The state has enacted several insurance reforms, including guaranteed issue, guaranteed renewal, portability of coverage, and basic benefit plans for small groups and the prohibition on "gag" rules for managed care plans.
However, the dominant factor in the state health care market is TennCare. Implemented in January 1994, TennCare enrolls 800,000 Medicaid recipients, as well as 400,000 previously uninsured and uninsurable residents, through a prepaid managed care delivery system that emphasizes prevention and covers high-risk enrollees. All categorically eligible individuals and all those below the poverty line participate in TennCare free of charge; state residents whose incomes are above 100 percent of poverty have cost-sharing responsibilities that are based on a sliding scale. However, enrollment for the uninsured has been closed since January 1, 1995, and has yet to be reopened. Qualified individuals whose income exceeds 400 percent of poverty purchase TennCare coverage at full price. Because of the TennCare program, Tennessee has one of the lowest uninsured rates in the country.
Who Is Overseeing?
The Tennessee Department of Commerce and Insurance (DCI) oversees solvency and financial issues, monitors market practices, and tracks complaints for all commercial HMOs. The TennCare Division within DCI is responsible for financial and solvency oversight of managed care organizations (MCOs) that contract with the state to serve TennCare members.
The Tennessee Division of Public Health (DPH) evaluates commercial HMO networks, oversees quality assurance and grievance procedures, and coordinates with TennCare on public health issues.
The Tennessee Department of Health (DOH) houses the TennCare Bureau (TCB), which is responsible for the day-to-day management of the TennCare program. TCB executes and monitors MCO contracts, coordinates with DOH on broader health issues, and contracts with DCI for solvency oversight. The bureau also contracts with DCI to perform financial and compliance audits of TennCare MCOs and with the Comptroller of the Treasury for nursing homes housing Medicaid clients.
The Tennessee State Legislature (senate and house) has enacted several insurance reforms; it has also actively monitored the TennCare program through its Select Committee on TennCare Oversight. All legislative proposals that might impact on TennCare come before the Select Committee, but only the Health Care Financing Administration (HCFA) can amend the TennCare waiver.
How Are They Doing?
Solvency Oversight of the Private Market
Although the number of Tennesseans enrolled in commercial managed care plans is small compared to TennCare's enrollment, DCI's deputy commissioner with responsibility for commercial HMOs reports that the number of licensed plans has been rapidly increasing. DCI follows National Association of Insurance Commissioners (NAIC) guidelines for overseeing solvency, focusing on risk assumption; any entity that contracts directly with employers or enrollees on a prepaid basis is regulated as an insurer. Tennessee's Physician Hospital Organization (PHO) statute allows PHOs to contract with HMOs as providers, but requires the HMO to carry additional capital reserves to cover the risk of PHO insolvency. "Our goal," says the deputy commissioner, "is to get a handle on what is out there in the marketplace."
Quality Oversight of the Private Market
Quality oversight in Tennessee is the responsibility of the Department of Health. DOH reviews provider licenses to determine if they are qualified to provide contract services and investigates complaints about inappropriate behavior, inadequate coverage, and other quality issues. Neither DOH nor DCI officials report a great number of complaints or concern over managed care quality in the private market.
When there is public concern over quality, the issue usually comes to the legislature's attention. One example in the 1996 session was the bill to guarantee 48-hour postpartum hospital stays. When the bill was introduced, the TennCare Bureau convened its own work group to develop an alternative approach to mandated hospital length-of-stay. The group drafted new emergency regulations that encompassed accepted standards for obstetric and neonatal care; that language was adopted by the Tennessee legislature. Although health providers are wary of making health care policy by statute, they use the legislative route if they see little hope for change otherwise.
Medicaid Oversight
"TennCare was created in response to a financial nightmare," explains the assistant director for research in the Tennessee State Comptroller's Office. "Nothing had been successful in controlling costs. It was either cut services or throw some people off." The state had applied for the waiver in 1993 and began to implement it even before receiving formal approval to do so from HCFA; only 45 days after that formal approval came in, the state had begun to carry out the program. To many, it seemed that TennCare brought its Medicaid recipients, and much of the uninsured population, into managed care overnight.
TennCare's first 12 months of operation were extremely rocky. The Tennessee Medical Association filed suit against the state, charging "an unconstitutional delegation of authority to the executive branch," and argued that TennCare was in fact not managed care but heavily discounted fee-for-service care. Later the suit was withdrawn. In the early months, there were reports of unethical marketing practices, confusion about enrollment, and problems in processing claims; complaints persisted that the state was not adequately supervising the MCOs.
Despite the many initial problems and a change in administrations, Tennessee's state government has remained committed to TennCare. "We had a Democratic administration that created TennCare and a [new] Republican administration committed to making it work," says DCI's deputy commissioner for TennCare. "There is a realization by both parties that Tennessee can't afford to go back to the old Medicaid program."
Governor Sundquist, the Republican incumbent, has overseen a number of changes in TennCare. The governor's first executive order transferred TennCare from DOH to the Department of Finance and Administration, to strengthen financial oversight of the program, and created a TennCare Division within DCI. Recently, the TennCare Bureau was moved back to DOH, which oversees the solvency of any MCO whose TennCare enrollment exceeds 80 percent.
Governor Sundquist also created the TennCare Roundtable, which was made up of providers, consumers, and representatives of MCOs. In June 1995 the Roundtable issued a report that prompted significant modification of all TennCare contracts. In tandem with the Select Committee on Oversight, the Governor's Roundtable pushed for significant changes: imposing a 60-day limit for processing claims, for example, and also mandating arbitration between providers and MCOs in the event of a claims dispute.
TCB has also increased the capitation rate and tied it to contract amendments and to any legislative mandates. There are eight different rates, which vary with an enrollee's age, gender, medical condition, and the like. On July 1, 1996, TennCare carved out a capitated mental health program served by two behavioral health organizations (BHOs). Long-term-care services remain under the old Medicaid system but are delivered through TennCare MCOs.
TCB uses a partial withholding tactic to ensure compliance with predetermined quality assurance standards, retaining 10 percent of an MCO's monthly payments until standards are met. If a plan does not comply within six months, it forfeits the withheld moneys to the state. But the bureau has employed partial withholding with mixed results: one MCO forfeited $21 million in accumulated withholds and still failed to meet standards. "[The tactic] has not been as effective with some plans as others. It is hard to say it's been effective with the company that I got $21 million of their money," says TCB's former chief.
Almost all of Tennessee's local health departments contract with MCOs as TennCare Providers; these departments are also responsible for health outreach under the program. The local departments contract to provide immunizations, family planning, tuberculosis management, and treatment for sexually transmitted diseases, as well as other primary care services; few have the resources to be fully capitated providers. In areas with inadequate network coverage, health departments are reimbursed directly, using a negotiated fee-for-service rate. Health outreach efforts are reimbursed at cost.
TennCare officials are aware that there is still room for improvement of the program. DOH staff would like to make greater use of encounter data to track outcomes. The assistant director of the Comptroller's Office of Research comments that TennCare has an "overreliance on the system" and that the bureau has not itself been sufficiently active in MCO oversight. The program's grievance procedures also came under fire when a Federal Circuit Court ruled that they were inadequate.
"We are not over the hump," says DCI's deputy commissioner for TennCare. "We don't see the negative articles we saw at one time. There is more work to do, but providers have more confidence. If everything is flowing along, then there is no press, and that is good."
Coordinating Oversight
Coordination for managed care oversight in Tennessee centers around the TennCare program. Most of TennCare's oversight operates through the executive branch, and there is a great deal of coordinated activity among relevant agencies. The legislature's Select Committee on TennCare Oversight meets weekly during legislative session and "has been very active in giving input," according to DCI's deputy commissioner.
What Is Next for Oversight?
TennCare officials plan to continue improvement of the program and to move toward a true actively managed care system. TCB has begun to phase out preferred provider organizations (PPOs) and, beginning January 1, 1997, required all MCOs to be licensed as HMOs. The bureau also required its contractors to install gatekeepers on that date. All MCOs will continue to be under capitated contracts.
Presently, nine MCOs serve TennCare in various parts of Tennessee, with enrollments ranging from almost half a million to a little more than 11,000 enrollees. DCI's deputy commissioner for TennCare worries: "We may have too many MCOs, and there are risk problems with the smaller ones."
TennCare officials have discussed with each other the ramifications of moving long-term-care patients into the managed care system. They are also engaged in linking the DOH and TennCare Bureau databases.
Since enrollment of the non-Medicaid-eligible uninsured was closed on January 1, 1995, the percentage of the population with health care insurance has dropped, which deeply concerns many legislators. According to the chairman of the Select Committee of TennCare Oversight, reopening enrollment is a priority. He wants to open TennCare enrollment so that working Tennesseans and their families can afford health care insurance, which will also prevent cost shifting and lessen the free-care liability of hospitals and other providers.
On the whole, state officials support TennCare and are committed to its continuing improvement. The state's experience with the program may also be useful if and when Tennessee's commercial managed care market starts to expand.
Additional Resources
- Department of Commerce and Insurance, Insurance Division
www.state.tn.us/commerce/insurdiv.html- Department of Health, TennCare Bureau
www.state.tn.us/health/tenncare
(Last updated March 26, 1999)
Texas
What Is Texas Overseeing?
The growth of managed care is dramatically altering oversight functions in Texas. The Department of Insurance estimates that almost 24 percent of the population was covered by insured HMO plans by the end of 1998. There are 74 licensed HMOs in the state, and others have requested certification.
The legislature has introduced several significant health care reform initiatives. In 1997 the legislature passed laws codifying the Patient Protection Rules, which were designed to maintain quality of care, fairness to patients and providers, and keep costs down. The Department of Insurance was given exclusive regulatory authority over HMOs in the private market, ending dual regulation with the Department of Health. The bills also prohibit interference with doctor-patient communication ("gag" rules), and require written descriptions about policy terms to current or prospective enrollees. The legislature also passed laws allowing enrollees the right to an external review by an independent review organization assigned by the Department of Insurance when the care is denied based on a decision that the proposed treatment is not medically necessary. The reviewer's decision is binding on the health plan. As of August 31, 1999, more than 600 independent reviews have been conducted and 324 have been resolved either in whole or in part in favor of enrollees.
In 1991, the Texas legislature adopted House Bill 7, which authorized a pilot managed care Medicaid program in Travis County and in the area of Jefferson, Chambers, and Galveston Counties. Originally known as the LoneSTAR Health Initiative, and now called the STAR program, it enrolled approximately 70,000 Medicaid recipients by mid-1996. The state expanded the STAR program to four additional service delivery areas (SDA) in late-1996, which added another 200,000 recipients. The STAR program was expanded into the Harris SDA (Houston area) in late 1997 and to the Dallas SDA in July 1999. The STAR program now serves more than 400,000 Texans who are eligible for Medicaid and will be expanded to include the El Paso SDA beginning December 1999.
Who Is Overseeing?
The Texas Department of Insurance (TDI) is the primary agency to administer oversight of managed care in the private sector, and it also determines the financial solvency of Medicaid managed care entities. TDI approves applications by HMOs for Certificates of Authority (COA); monitors solvency; responds to complaints regarding denial of coverage; and investigates complaints about quality.
The Texas Department of Health (TDH) is administratively housed under an umbrella agency, the Health and Human Services Commission (HHSC). TDH has fiduciary responsibility for the Medicaid population.
The Medicaid Division, headed by the state Medicaid director, is located at HHSC and is the designated single state agency for Medicaid in Texas. As the single state agency, HHSC has final authority for Medicaid policies and operations.
The Texas Health Information Council and the Texas Health Care Information Office, administratively attached to TDH, were created by the legislature to develop a statewide health care data collection system. The council held its first board meeting in February 1996, and is developing a data collection mechanism; additionally the council is consolidating existing databases; and is staffing the Information Office.
The Texas State Legislature (senate and house) has been very active in health care reform. In 1997, the legislature passed House Bill 3, which established the Texas Healthy Kids Corporation in order to establish a program to provide affordable health care benefits to children who do not have adequate insurance coverage. In 1999, the legislature passed Senate Bill 445, which establishes Phase 2 of the state's Children's Health Insurance Plan (CHIP). This plan will provide health care coverage to uninsured children whose family incomes are less than 200 percent of the federal poverty level. Federal and state funds will be available to subsidize the premium cost for this coverage.
How Are They Doing?
Solvency Oversight of the Private Market
TDI has worked on responding to the dramatic increase in private-sector managed care. There are 74 HMOs licensed to operate in Texas as of September 1, 1999, up from about 70 the previous year. The director of HMO compliance and utilization review for TDI says that the licensure process requires extensive review and analysis of license application exhibits, which can take anywhere from a few months to a year or more to complete. In early 1997, at the direction of the Texas legislature, TDI began to perform the HMO Quality Assurance Oversight functions that were formerly performed by TDH. As such, the HMO Certificate of Authority application intake and case manager functions were moved to TDI's Insurer Services Division from the HMO Compliance Section. The realignment resulted in an efficiency of processes, as all company license application processing and coordination functions are performed in the same TDI division. Most applicants work directly with the Admissions Team in TDI's Insurer Services Division to submit applications and any changes or additional documentation. Once an HMO is licensed, TDI staff review the company's financial status every three months for incipient insolvency problems.
Quality Oversight of the Private Market
Quality of managed care has been the topic of considerable media and consumer attention in Texas. TDI estimates that it receives about 590 complaints related to managed care each month, and it employs 15 analysts whose responsibility is to examine and respond to these complaints. If an analyst thinks a complaint has merit, he or she sends a letter to the HMO, asking it to address the problem or to explain its actions within 10 days. If the problem remains unresolved, the analyst may forward the file to the legal office. Although TDI may penalize the HMO by imposing a fine of $25,000 per day or by revoking certification, it imposes these sanctions only rarely.
Late in 1995, TDI issued new regulations for HMOs: imposing new marketing standards; mandating continuity of care; detailing grievance procedures for physician termination; and requiring plans to release information to consumers such as the names of participating doctors.
Medicaid Oversight
In 1996, the state examined future needs for claims administration and managed care support in light of its administrative systems and Management Information System (MIS) requirements. As a result, the state contracted with four organizations to obtain specialized services to support the Texas Medicaid program. Under the new design of the Texas Medicaid Administrative Systems (TMAS), the state and its four contractors coordinate and work closely together in an enhanced system that supports Medicaid clients and their health care providers.
The claims administrator processes and adjudicates all claims for Medicaid services that are outside the scope of capitated arrangements between the health plans and the state. The enrollment broker assists in educating recipients concerning their health plan and primary care provider (PCP) choices and enrolls them into Medicaid managed care. The STAR network administrator is responsible for the development and management of the state-administered plan, primary care case management (PCCM), and prepaid health plan (PHP). The quality monitor provides external reviews of Medicaid recipient access to care and the quality of care provided to Medicaid recipients enrolled in managed care plans.
What Is Next for Oversight?
Given the dramatic changes in the legislative and oversight arenas in Texas, it is too early to predict what will ultimately unfold. The effects of the new TDI regulations are not yet clear.
Fiscal issues will constrain the impact of any major changes. According to the chair of the House Appropriations Subcommittee on Health and Human Services, Texas suffers from a chronically small tax base, and serious budget battles over health, education, and crime control are emerging that will push health care to a back burner.
The commissioner of TDH thinks that political and media pressure will force agencies at least to track measures that have high political visibility: "I will still be before a state senate hearing, answering questions about why an HMO or doctor has a huge profit margin. That's the reality of politics." The director of HMO and utilization review reports that "every day we continue to process complaints described by the media." The Texas Health Information Council and Information Office will also be important players if they are successful in consolidating data collection and disseminating the information.
Texas officials concerned with managed care will have to plot a course for health care reform that meets consumer needs while still falling within acceptable fiscal limits.
Additional Resources
- Department of Insurance
www.tdi.state.tx.us- Department of Health
www.tdh.state.tx.us- Health and Human Services Commission, Medicaid Department
www.hhsc.state.tx.us/med/med.htm- Health Care Information Council
www.thcic.state.tx.us
(Last updated September 24, 1999)
Utah
What Is Utah Overseeing?
Utah has eight HMOs, which enroll 19 percent of the state's insured population. The governor and the state legislature are committed to a market-based approach. The state has enacted major reforms. In March 1995 the governor signed the third phase of HealthPrint into law. In 1993 phase one established the Health Policy Commission to develop a gradual reform plan. Phase two instituted several reforms recommended by the commission, including the expansion of Medicaid to all children below the poverty line and the enactment of small-group reforms such as guaranteed renewability, rating bands, and the elimination of preexisting condition exclusions for people changing jobs. Phase three made these insurance reforms applicable to individuals and provided for open enrollment. In 1996 Utah enacted four important measures related to managed care, including an any-willing-provider law for rural areas and a small employer purchasing alliances act.
Utah's Medicaid program has a mandatory HMO component for clients living in the four-county area around Salt Lake City, the state's most heavily populated region. Members in rural areas may enroll in primary care case management, traditional fee-for-service, or HMOs where these are available. Medicaid covers one in eight Utah residents. The Medicaid program, which contracts with licensed HMOs, has enrolled 100 percent of its eligible clients in the greater Salt Lake City area in managed care.
Who Is Overseeing?
The Utah Department of Insurance (DOI) is the lead agency for overseeing private market HMOs. DOI works with the Department of Health in issuing licenses, oversees HMO solvency and market conduct, and tracks consumer complaints.
The Utah Department of Health (DOH) has oversight responsibility for private market HMOs, which it shares with DOI and the state's Medicaid program. DOH evaluates HMO networks, grievance procedures, and quality assurance plans, but it does not conduct ongoing oversight.
The Utah Health Policy Commission is the key policy development agency in the state. It makes yearly recommendations to the legislature on health policy issues and publishes a quarterly newsletter.
The Utah State Legislature (senate and house) is a citizen legislature that meets for one 45-day session and then for one day each month. It relies heavily on the recommendations from the Health Policy Commission in passing health care legislation. In 1996 the legislature passed four important health care bills. The Voluntary Health Insurance Purchasing Alliances Act allows small employers to band together to increase their bargaining power and thus offer employees a better choice of health insurance plans. The Health Care Quality Act (HCQA) is designed to improve the dissemination of health care data through report cards and comparative analysis. The legislature also created the Medicaid Transition Fund, which will protect funds saved through managed care efficiencies so that the state can expand Medicaid coverage. Finally, lawmakers enacted an any-willing-provider law for Utah's rural areas.
How Are They Doing?
Solvency Oversight of the Private Market
Seventy-five percent of Utah's population is concentrated around Salt Lake City, making it a competitive market for HMOs. DOI's commissioner says that "prices are extremely competitive"; he is concerned that competition is forcing HMOs to market their plans below cost and make up the difference by cutting quality. He cited the case of a "large national provider" with "deep pockets," which underbid an incumbent plan for a school district contract by 25 percent, although the latter had been losing money on the contract. The commissioner thinks that the national HMO intends to build its market share and then to raise prices or make quality reductions.
DOI is investigating strategies to ensure that the competition does not get out of hand. DOI does not require insurers to file rates for approval, except for small-group coverage; however, the department can challenge rates on an ad hoc basis if warranted. So far the agency has not used this strategy, but the commissioner says it is a possibility: "We don't want to stifle innovation so long as we can provide some level of protection to policy holders and can make it an even playing field."
Quality Oversight of the Private Market
DOI receives many quality complaints. The commissioner attributes this problem to the increased market competition in Utah. He cites a case where an HMO disputed coverage for follow-up care for a patient who had had a kidney transplant. Another plan has mandated a 15 percent cut in referrals to specialists. A state representative on the House Health and Human Services Committee is alarmed at media reports of "people delivering babies in their homes, cars, and garages because they are not getting the OK to move to the hospital. HMOs deny it, but the stories exist." The legislature has not investigated these incidents because "it is hard to have hearings with a part-time legislature," says the representative.
However, as DOI's commissioner states, the commission "wants to be careful not to regulate by anecdote," and there are some indications that the market is responding on its own to concerns about HMO quality. The department has several approaches for ensuring that HMOs provide quality care. Plans are required to have quality assurance procedures in place, but the commissioner thinks that oversight in this area could be strengthened. The agency also conducts targeted exams of each HMO to identify and address patterns of complaints or poor care. The state has considered and rejected other systemic reforms such as patient protection acts. "Most patient protection acts are really payment protection acts, so they come under a lot of fire," explains the commissioner. The Health Data Committee, established by the HCQA, will publish report cards and enable DOH to conduct comparative analyses.
Medicaid Oversight
Since 1983 Utah has offered Medicaid clients a choice between primary care case management or an HMO. In 1995, Utah Medicaid modified its 1915 waiver so that Medicaid clients in the four urban counties around Salt lake City had to select an HMO. Medicaid is the single largest purchaser of HMO services in the state, covering 75,000 enrollees, including special needs groups such as the aged and disabled, and operating a separate capitated program for mental health. In 1996 the state established the Medicaid Transition Fund so that savings from managed care will be available for expanding coverage to more of the state's poorer residents. The legislature had appropriated the Medicaid savings for other spending priorities in each of the preceding three years.
Overall, Medicaid is satisfied with the performance of its contractor HMOs, reports the director of managed health care. The size of Utah's program gives Medicaid great purchasing power, enabling it to require plans to conform to state requirements. For example, Medicaid requires plans to supply member-specific encounter data so that it can better track each plan's performance. The director reports that there are no "problem plans" and few unresolved grievances. The program is in the early stages of conducting focused studies that will target the issues of undertreatment and care for special needs populations, such as the disabled.
In 1996, an HMO enrollee satisfaction survey was conducted. More than 2,000 Medicaid clients were contacted and asked in-depth questions about how satisfied they were with their HMO. About four out of every five Medicaid HMO enrollees reported that they were very or completely satisfied. A follow-up survey was conducted in 1998 with similar results. In 1997, a limited number of HMO HEDIS performance measures were reported by the Medicaid contracting HMOs; in 1998 a more complete set of HEDIS performance measures was reported by the HMOs.
Coordinating Oversight
Utah's governor has been active in coordinating health care reform. Utah's Health Policy Commission is the key policy discussion forum for health care issues. Based on commission recommendations, the legislature passes two or three bills each year. In 1996, the commission's various technical advisory groups and study groups addressed issues such as health professions, preventive health, school health, insurance for long-term care, mental health care, and quality of care.
What Is Next for Oversight?
There are several key developments in Utah's oversight program. First, DOI plans to continue to strengthen its quality oversight program for commercial HMOs. Second, the 1115 waiver, under negotiation with HCFA, will enable the state to dramatically expand Medicaid coverage and managed care enrollment. Finally, the important legislation passed in 1996 will make better health care data available and may expand managed care enrollment for small-group employees, as well as for Medicaid clients. One area of concern is the small market reform issues, mainly private sector acceptance of preexisting conditions. The next few years will be a period for consolidation and refinement of Utah's oversight program, as it meets the demands of a growing market.
Additional Resources
- Department of Insurance
www.insurance.state.ut.us- Department of Health
www.health.state.ut.us- Health Policy Commission
hlunix.hl.state.ut.us/hpc- Office of Health Data Analysis
www.healthdata.state.ut.us
(Last updated September 2, 1999)
Vermont
What Is Vermont Overseeing?
The Vermont insurance market is a concentrated one. Approximately 46 percent of the state's population is enrolled in two plans: about 170,000 residents are Blue Cross subscribers, and an estimated 90,000 are members of Vermont's only statewide HMO, Kaiser Permanente/Community Health Plan (CHP), which, however, gave formal notification in September 1999 that it was withdrawing from the Vermont market. Another 90,000 people are covered by major employers through self-insurance, while 10,000 are insured by smaller HMOs or commercial carriers. Medicare provides coverage for 75,000 Vermont residents and Medicaid, for 107,000 (including dual eligibles). Approximately 40,000 Vermonters, or 6.8 percent, are uninsured.
In an attempt to enact universal coverage in 1993-94, the state legislature created the Health Care Authority, which developed two proposals for reform: a single-payer system and a competitive managed care plan similar to the one proposed by the Clinton Administration. Neither proposal was enacted because stakeholders failed to reach a consensus on issues of financing, benefit structure, and governance. However, the state has taken other steps to expand access. As one of the first states to ban discrimination in insurance, Vermont passed a series of reform measures in 1992 and 1993 that guaranteed issuance and renewal, limited demographic adjustments to community rating, and banned medical underwriting.
In August 1995, Vermont received approval from the Health Care Financing Administration (HCFA) to implement the Vermont Health Access Plan (VHAP), which is designed to expand coverage to uninsured adults with incomes below 150 percent of poverty and to phase all Medicaid recipients into managed care plans. The program is financed by an increase in the cigarette and tobacco taxes and through anticipated managed care savings. The phase-in was delayed until October 1996 by a shortage of acceptable bids from managed care plans. A ten-month interim program covered physician and outpatient services (inpatient services were not included) for the uninsured.
In the 1996 session, the governor's office proposed, and the legislature passed, a bill that significantly reformed the regulatory environment. The new law merged the Health Care Authority with the Department of Banking, Insurance, and Securities and created a new state agency, the Banking, Insurance, Securities and Health Care Administration. The merger took place with these goals in mind: to make health care quality oversight more effective; to improve the information base for decision making; to coordinate provider and payer cost-containment measures; to simplify the existing regulatory process; to use limited government resources more efficiently; to establish a single point of contact for consumers and employers; and generally to make health care regulation more effective and more responsive to the changing environment. The reform bill also eliminated the Hospital Data Council and the Health Policy Council, transferring some of their responsibilities to a new Public Oversight Commission.
Who Is Overseeing?
The Banking, Insurance, Securities and Health Care Administration (BISHCA) thus is a newly formed Vermont state agency that incorporates Banking, Insurance, and Securities (BIS) and the Health Care Authority (HCA); it oversees both indemnity insurers and HMOs. The Insurance Division regulates plan solvency and monitors market practices. The Division of Health Care Administration (DHCA) collects and analyzes health care data; oversees the Certificate of Need (CON) and binding hospital budget process; reviews health insurance rates and forms; and oversees managed-care quality assurance and consumer protection.
The Vermont Health Department does not oversee managed care, but it is responsible for developing the State Health Plan.
The Office of Vermont Health Access (OVHA), housed within the Vermont Department of Social Welfare (DSW) runs the state's Medicaid program. DSW is implementing the VHAP, and now has managed care coverage for uninsured residents with incomes at or below 150 percent of poverty. VHAP also provides a pharmacy benefit for low-income elderly or disabled Vermonters on Medicare with incomes below 175 percent of poverty.
The Vermont State Legislature (senate and house) has been very active in health reform. Lawmakers have passed major insurance reforms; introduced proposals for universal coverage; authorized extended coverage for indigent residents through the 1115 waiver request; and created an Oversight Committee to monitor the implementation of the VHAP. Major legislation in 1996 included the formation of BISHCA; the managed care quality bill; and a mental health network bill. In 1997, mental health parity legislation was adopted.
How Are They Doing?
Solvency Oversight of the Private Market
The health insurance market in Vermont is healthy, and both the individual and small group markets are competitive, although managed care has not penetrated to a significant degree. There is only one statewide HMO; the managed care plans that operate have not imposed either extensive capitation or aggressive restrictions on visits to specialists. There are some indications that the managed care market is developing. Two HMOs are extending their networks, and several physician hospital organizations (PHOs) have begun operation.
HMOs must pass a two-step test to be licensed in Vermont. HMOs must meet the CON test that is required of any new service or capital expansion; plans must then meet BISHCA's financial solvency and quality assurance standards. The merging of HCA and BIS is expected to streamline this process. BISHCA also reviews insurance premium rates to ascertain that they are neither inadequate nor excessive.
Vermont also requires all provider groups that accept risk by contracting directly with employers to be licensed as HMOs. As part of the managed care bill passed in 1996, the legislature asked DHCA to report on whether PHOs deserve a separate regulatory approach.
Quality Oversight of the Private Market
Vermont has a rigorous HMO quality assurance program that performs annual reviews and periodic audits of plans. Complaints about HMO quality have been rare; notably, there have been few instances of plans limiting specialist access. "I track the complaints process, and there are not a lot of complaints about denial of care by specialists," says BISHCA's commissioner.
Mental health recently emerged as a significant issue. In response to complaints from psychologists and psychiatrists that plans were using inappropriate utilization review (UR) standards and procedures for mental health, the legislature passed a law requiring a separate BISHCA licensing process for mental health UR agents. This process would include a review of resources, policies, and procedures and adjudication of patient/client appeals of adverse treatment decisions by UR agents to an independent panel of Vermont providers administered by BISHCA.
The managed care quality bill passed in 1996 assigned to BISHCA regulatory authority for quality assurance of all managed care entities, including PPOs and gatekeeper systems; prohibited "gag" clauses in HMO provider contracts; mandated specific disclosures to consumers; and directed DHCA to develop guidelines on postpartum care.
Medicaid Oversight
Managed care is the key to the VHAP, but when OVHA first put out the contract for bid, only one plan bid at the specified rates. This plan was new in the state and was developing its network; although the bid was accepted, the HMO later failed to meet the licensing requirements. DSW received three new bids from HMOs and has accepted two, which are now operating on a statewide basis. Managed care enrollment reached nearly 50,000 in April 1998. Enrollment of recipients of Aid to Families with Dependent Children (AFDC) and indigent uninsured adults in the first contracted plan began in October 1996; the second started accepting members in January 1997. Enrollment of AFDC recipients was voluntary until the second HMO was in place in order to give clients a choice of plans.
OVHA meanwhile had received approval from HCFA to start an interim program offering ambulatory care coverage for uninsured adults under a fee-for-service reimbursement scheme, which has operated since January 1996. The office planned to convert to a fully mandated managed care system for Medicaid by the end of 1998.
The legislature has kept a close watch over the VHAP. Having authorized the waiver application and created an Oversight Committee to monitor its progress. The legislature also increased the state tobacco tax to fund the program and expansion of enrollment.
Coordinating Oversight
Coordination has been a strong point of Vermont's managed care oversight. The state created BISHCA specifically to improve coordination. Prior to the change, HCA was "working within the world of providers" and BIS dealt with insurance and solvency-related issues. Quality assurance problems arose because HCA performed quality assurance reviews while BIS handled enforcement. Now DHCA will oversee all aspects of health plans and data collection. The managed care legislation of 1996 also directed BISHCA and DSW to coordinate their approaches. BISHCA will follow Medicaid's lead in implementing HEDIS; and the two agencies will use the same quality standards.
What Is Next for Oversight?
The Vermont legislature has charged DHCA with several important tasks: developing recommendations on consumer protection issues like coverage for postpartum care and formulating policies for risk-bearing provider networks. The division is comleting its triennial review under HMO quality assurance regulations. OVHA is implementing the Medicaid managed care program and will be monitoring its effectiveness in quality assurance and cost containment.
BISHCA's new structure and division of responsibilities are promising but untested. Vermont has undertaken several important initiatives in health care reform and anticipates positive results in the next few years.
Additional Resources
- Banking, Insurance, Securities, and Health Care Administration, Insurance Division
www.cit.state.vt.us/bis/insur.htm- Banking, Insurance Securities, and Health Care Administration, Division of Health Care Administration
www.cit.state.vt.us/bis/hca/general/home_hca.htm- Department of Social Welfare, Office of Vermont Health Access
www.dsw.state.vt.us- Program for Quality in Health Care
www.vpqhc.org
(Last updated September 24, 1999)
Virginia
What Is Virginia Overseeing?
HMO penetration in Virginia had reached 5 million enrollees by September 30, 1997. The state enacted a package of small group health reforms in 1992 and 1993 and a patient protection act in 1996. In 1997 legislation was passed to implement the Health Insurance Portability and Accountability Act (HIPAA) as well as to require the commonwealth's health commissioner to examine the quality of care provided by HMOs licensed in Virginia. The 1998 legislature passed a bill expanding the role of the health department to all managed care plans with regard to quality of health care provided.
Virginia has introduced three managed care programs for its Medicaid population. Medallion is a fee-for-service, primary care gatekeeper program that serves 200,000 Medicaid clients statewide. Virginia's Options program, a voluntary HMO plan, has enrolled more than 36,000 recipients. Medallion II, which operates under a 1915(b) waiver, is a mandatory HMO program for approximately 95,000 recipients in selected urban areas.
In 1995, the Virginia General Assembly directed the Department of Medical Assistance Services to seek an 1115(a) demonstration waiver to expand Medicaid eligibility and offer reinsurance for indigent care in selected areas across the state. The legislature also directed that, as part of the demonstration, funds donated to the Indigent Health Care Trust Fund be used to assist employers and employees in financing health insurance for families with incomes at or below 200 percent of poverty. Virginia planned to apply for the 1115(a) waiver before the end of 1996.
Who Is Overseeing?
The Virginia State Corporation Commission (SCC) is responsible for licensing and oversight of commercial HMOs. The agency is run by three commissioners selected by the state legislature. SCC oversees solvency, monitors market practice issues, and oversees a wide range of corporate activities outside health care.
The Virginia Department of Health (DOH) shares oversight responsibility of HMOs with SCC. The department has statutory authority to examine the affairs of HMOs at least once every five years and to examine the quality of health care services of any plan or of any provider contracting with or participating in an HMO plan. DOH reviews HMO grievance procedures, investigates complaints, and has begun to implement a quality-of-care review process jointly with SCC. The 1998 general assembly introduced a law that expands DOH oversight of quality health care services for managed care health insurance plans, which includes preferred provider organizations and provider-sponsored organizations. DOH will promulgate regulations regarding quality and these plans must apply for a certificate of quality as a condition for licensure by the SCC.
The Virginia Department of Medical Assistance Services (DMAS) runs the Medicaid program. DMAS operates three managed care programs and collaborates with DOH to provide quality oversight of Medicaid HMO contractors.
The Virginia State Legislature enacted small group insurance reforms in 1992 and 1993, which mandated guarantee issue and renewal, ensured portability of coverage, and limited exclusions for preexisting conditions. In 1995 the general assembly limited the allowable time frame for exclusions of preexisting conditions in the individual health insurance market. In 1996 lawmakers approved a Patient Protection Act and a postpartum care bill. In 1997 the general assembly enacted legislation that implemented the Health insurance Portability and Accountability Act. In 1998 legislation providing authority for the health commissioner to become more active in regulating the quality of health care provided by all managed care plans was passed.
How Are They Doing?
Solvency Oversight of the Private Market
Virginia's solvency oversight focuses on risk and disclosure. SCC regulates any entity that assumes risk by accepting prepayment directly from employers or members. Providers that accept capitation from HMOs are not regulated by the state; however, the 1996 Patient Protection Act requires HMOs to disclose all financial agreements with provider groups.
Quality Oversight of the Private Market
The Virginia legislature has made quality a key focus for HMO oversight, according to the Health Commissioner. In 1996 the general assembly passed legislation establishing mandatory criteria for postpartum maternity coverage following both normal births and Caesarian sections. DOH investigates consumer complaints related to HMO quality of care. The majority of complaints are due to denial of payment for services, or medical necessity.
Medicaid Oversight
Virginia's Medicaid program has increased its reliance on managed care, but intends to move cautiously, particularly in contracting with HMOs. DMAS requires that all HMOs contracting with DMAS be accredited or seek accreditation from National Committee for Quality Assurance (NCQA), and considers the accreditation report in making contracting decisions. The department has successfully implemented Medallion II, its mandatory managed care program, in the populous eastern part of the state and planned to expand into Northern Virginia before the end of 1997. DMAS staff are especially concerned about developing an appropriate managed care system for the state's rural areas.
DMAS maintains an extensive quality review process for all of its managed care programs. The department assesses recipient satisfaction for each program; conducts clinical studies of quality of care for specific diagnoses (asthma, prenatal care, and hypertension were studied in 1996); and contracts with Key Pro of Pennsylvania, a Health Care Financing Administration (HCFA)-certified peer review organization (PRO), to assess the quality of services offered by HMO contractors, as required by federal mandate.
Key Pro reviews medical records of all cases where a "sentinel event"––a questionable outcome such as a death, an unscheduled return to the operating room, or a readmission to the hospital––might indicate inappropriate care. Center staff also survey recipients who voluntarily disenroll from a plan, assess the reliability and validity of the encounter data required from HMO contractors by DMAS, and perform other quality studies.
DMAS also sponsors an HMO Oversight Group, which includes physicians, pharmacists, HMO staff, consumer representatives, and staff from other state agencies, such as the Department of Mental Health, Mental Retardation, and Substance Abuse Services, the Department of Rehabilitative Services, the Department of Social Services, and the Department of Aging. This group meets quarterly and oversees all aspects of HMO Medicaid services, but focuses primarily on quality of care and access to care.
Coordinating Oversight
The Joint Commission on Health Care, created by the general assembly, studies a variety of health care related issues and makes recommendations to the legislature. In 1996 the commission was studying the appropriate role of various state agencies in oversight and regulation of managed care, and its recommendations may offer suggestions to improve interagency coordination. SCC and DOH are already collaborating on quality-of-care review, and DMAS seeks input from other departments through its HMO Oversight Group.
What Is Next for Oversight?
The major areas for future activity in managed care oversight in Virginia appear to be improvement of quality-of-care regulation, expansion of the mandatory Medicaid program, and development of workable plans for rural areas and for the indigent population. The Joint Commission on Health Care may also make recommendations to alter some responsibilities, regulations, and programs.
Additional Resources
- State Corporation Commission
www.state.va.us/scc- Department of Health
www.vdh.state.va.us- Department of Medical Assistance Services
www.cns.state.va.us/dmas- Joint Commission on Health Care
legis.state.va.us/jchc/jchchome.htm
(Last updated April 29, 1998)
Washington
What Is Washington Overseeing?
There are currently more than 40 health care service contractors (HCSCs), 12 health maintenance organization (HMOs), one PACE site (Program for All-Inclusive Care for the Elderly), and 1,500 commercial insurers in Washington State. The HMOs and HCSCs write about 80 percent of Washington's health insurance. The HCSC/HMO in Washington makes up another roughly 5 percent. It has been estimated that 85 percent of Washington's populace is in some form of managed care plan offered by these insurance entities. Of Washington's 1,500 commercial insurers, only about one-half have authority to write health insurance. Only the top 20 of those commercial insurers will write any business in Washington.
The Basic Health Plan (BHP), enacted in 1988, remains in effect. The statewide plan contracts with a variety of private carriers to provide standard managed care coverage on a sliding scale for small employers, groups, individuals, and low-income residents not covered by Medicaid. This coverage is subsidized for low-income individuals and families, with the amount of the subsidy dependent on the extent of annual appropriations. In February 1998, the BHP had a total of 213,733 enrollees: 123,957 individuals were subsidized enrollees; 19,289 were non-subsidized enrollees; 70,487 were BHP+ enrollees (children up to age 19 with families under 200 percent of the federal poverty level). Significant premium increases have affected this waiting list, which has dropped from more than 60,000 in 1997.
Washington has a 1915(b) waiver for its Medicaid program, entitled Healthy Options. The Healthy Options program reflects the state's desire to permit an array of service models for specific client populations, or those in severely underserved areas. It currently employs two managed care contracting models––full risk-based capitation through licensed health carriers, and primary care case management (PCCM) with tribal and Indian Health Services clinics and rural primary care providers.
Washington State is also home for one of the 15 national PACE demonstration sites. It is an integrated Medicare/Medicaid managed care model providing comprehensive benefits to frail elders with a seamless continuum of care. PACE sites offer alternatives to traditional nursing home placement. The four-year-old demonstration now serves more than 120 individuals who are Medicare, Medicaid, and nursing home eligibles.
Who Is Overseeing?
The Washington Office of the Insurance Commissioner (OIC), led by an elected official, does solvency regulation and licensure for all health care service contractors (HCSCs), health maintenance organizations (HMOs), and commercial insurers (CIs) in the state. Washington's designation of HMOs differs from that of other states: HMOs are defined by the OIC as carriers that provide comprehensive health care to enrolled participants. HCSCs and HMOs have managed care offerings, and HMOs can operate as either staff or network models, or a combination of both. OIC also licenses HCSCs, such as Blue Cross/Blue Shield, which may allow enrollees to access non-contract as well as contracted providers; and disability insurers, which offer managed care plans as well as traditional fee-for-service coverage. The insurance commissioner and her staff respond to consumer complaints; review changes in premium rates; and, under the state's every-category-of-provider law, have become increasingly involved in mandating the types of providers health plans must offer.
The Department of Health (DOH) now has a new role in direct regulation of integrated health care delivery systems. The department, which includes the state's provider and facility licensing boards, joined forces in 1997 with the Medical Assistance Administration and Health Care Authority in an effort to streamline public sector health contracting and monitoring.
The Medical Assistance Administration (MAA), within the Department of Social and Health Services, manages the state Medicaid program. More than 700,000 clients, the majority of whom are women and children, are eligible to receive medical services through MAA. Of these, 458,179 were enrolled in the Healthy Options program in March 1998. MAA tracks quality-of-care measures for recipients, and creatively utilizes a collaborative, multi-agency approach to standardize contracting, increase efficiency, and leverage purchasing power, and improve plan performance through consistent quality standards. The agency contracts only with licensed entities, including HMOs and HCSCs, and relies on OIC for solvency oversight. Medicaid does include solvency standards in its contracts with HMOs and works with OIC to monitor financial issues of these plans.
The Washington State Legislature (house and senate) has been very active in health policy, particularly in the passage of the 1993 Health Services Act (HSA) and its 1995 modification. HSA was a sweeping piece of legislation; it established an employer mandate to provide insurance coverage; expanded subsidized care; created defined schedules for implementation of both the employer mandate and the expansion of subsidized care, with the objective of universal state coverage by 1999; required uniform benefit packages, premium caps, and mandatory managed care options; and established the Health Services Commission, with major regulatory powers. The 1995 law repealed many of these mandates and replaced the Commission with the Health Care Policy Board. However, it also enacted important insurance reforms based on the insurance commissioner's 1994 regulatory initiative, which included limits on exclusions for preexisting conditions, required portability of coverage, and modified community rating.
In 1995 the legislature approved a measure allowing self-referral for women's health services. In 1996 it passed bills governing provider contracts; a law providing women with postpartum hospital stays; and a prohibition on "gag" rules. Earlier important enactments included a broad every-category-of-provider law, which requires all HMOs, HCSCs, and disability carriers to contract with all classes of licensed providers. Legislators also authorized the lifting of the Basic Health Plan's initial enrollment cap of 2,000, and established state budget directives for new enrollee and sponsor contributions.
How Are They Doing?
Solvency Oversight of the Private Market
Health insurance pricing has become a serious issue in Washington. Insurers complain that reforms designed to expand access result in greater costs and drive up rates. A policy advisor in OIC acknowledges that some of the 1994 insurance reforms were meant to be temporary, until the state completed implementation of universal coverage. However, she thinks that the insurance companies exaggerate the impact of the reforms. The policy advisor reports that insurance lobbyists have used anecdotal evidence to justify large rate hikes, such as an increase of 34 percent for one Blue Shield plan. A typical example of such evidence is the story of the patient who came to Washington to purchase cheap insurance. He took advantage of community rating and limitations on preexisting conditions in order to receive a liver transplant. The Policy Board has attempted to gather data to substantiate these anecdotal claims, but has not yet obtained data confirming these widespread stories.
Quality Oversight of the Private Market
Washington's insurance commissioner has been active in responding to consumer and provider complaints about managed care coverage. Most patient complaints concern lack of access to a desired participating provider or denial of coverage for a particular service believed to be covered under the plan. For these complaints, OIC acts as the consumer's advocate with insurers, asking for contractual or other justification. Women's health care has been one major area of concern; a 1995 law mandated that managed care plans allow women to self-refer to women's health care practitioners.
The office carefully reviews all complaints of poor or inadequate medical treatment. If the consumer has been unable to resolve the matter through the plan's internal grievance and appeal process, OIC may review further and the commissioner may also refer the consumer to the appropriate quality assurance board within DOH.
OIC maintains a database that tracks the number and type of complaints and how each was resolved. If one health plan's record shows a pattern of problems, insurance officials discuss solutions with the health plan's senior management.
OIC also conducts consumer outreach and education. The Statewide Health Insurance Benefits Advisor (SHIBA) program, sponsored by OIC, assists consumers with questions on health care coverage and purchase options, including special problems with Medicare and Medicare supplements encountered by senior citizens. SHIBA is nationally recognized as a model for health plan consumer education. The office participates in the Interagency Committee's Consumer Education and Involvement workgroup; it also consulted on a health care buyers' guide recently published by a consumer advocacy group. The Health Care Policy Board has produced a series of brochures, translated into seven languages, to assist consumers and employees through the often confusing health care reforms and law changes in the state.
Provider complaints often involve conflicts between professional ethics and contract provisions. These have become more frequent as new providers enter contracting relationships under the "every-category" law; mental health professionals have had particular concerns. The 1996 legislature passed a bill that orders plans to allow mental health providers and patients to contract for care on a fee-for-service basis, if coverage is denied by the carrier. Two other laws passed in 1996 include a ban on "gag" rules in provider contracts; and a postpartum hospital stay law, which did not impose a minimum requirement but stated that length of stay must be the joint decision of attending provider and patient.
Officials in both OIC and DOH acknowledge that it is hard to promote systemic quality improvements by dealing with quality issues on a case-by-case basis. The director of special projects for DOH says the state hopes to improve health care quality through nonregulatory techniques, such as purchasing coordination and data collection. Several agencies have sponsored several innovative activities, including joint health plan penalty measures, joint site visits to contracted health plans, coordinated use of the Consumer Assessment Health Plans Survey (CAHPS), and a coordinated automated directory of providers participating in contracted health plans.
Medicaid Oversight
MAA's expanded use of national quality standards and measurements and joint purchasing has served to assure and improve the quality of care in the Healthy Options program. The agency tracks several indicators to signal poor plan performance: data related to utilization, as well as client complaints, enrollment choices and changes, and targeted reviews and surveys. Indicator data is being refined and standardized for efficiency and precision, and efforts are underway for developing plan reports for comparative analysis and trending. Emphasis continues to be placed on providing regular feedback and technical assistance to guide self-correction where needed; the major disciplinary tool used by the Medicaid program remains assignment freezes.
Medicaid contracts include standards for plan solvency, which is overseen by OIC. Agency staff work with OIC to monitor financial issues. MAA representatives are active on the Interagency Quality Committee, and the agency has coordinated joint purchasing arrangements with Washington's Basic Health Plan and public employees' insurance.
Coordinating Oversight
Medicaid oversight is no longer an isolated activity, but rather a part of a broader, more cohesive approach to overall state health purchasing. State health agencies and purchasers, have, in fact, been required by the state legislature to work together for greater efficiency and reduced administrative overlap. In the face of shrinking revenues and increasing demand, agencies recognize the need to maximize the greatest amount of service for each dollar invested. Many interagency initiatives to improve managed care performance have originated through the efforts of the Interagency Quality Committee, whose representatives hail from Medicaid, Department of Health, Health Care Authority, OIC, and others. Collaboration has also been enhanced through efforts of other public-private alliances such as the Foundation for HealthCare Quality. Rather than duplicating performance oversight responsibilities, collaborative efforts in Washington are paving the way for administrative efficiencies, influencing the marketplace, and serving as a national model. Examples of these efforts are the creation of TeaMonitor, the tri-agency site monitoring and review team; issuance of a joint RFP, notable for inclusion of quality and access performance/outcomes standards shared across three program and two agencies; and standardization of credentialing, now being undertaken by all health purchasers.
Washington has moved a step closer to a centralized administrative approach to health quality oversight, given recent developments in collaboration. Still, public concerns over specific access or quality issues often drive oversight by the ultimate policymakers––the state's legislature.
What Is Next for Oversight?
Assuring access and quality while maintaining fiscal prudence continues to challenge care oversight efforts in Washington. A growing public backlash against managed care has resulted in a push for greater accountability and quality. This must be balanced against the legislature's pressures to ease state requirements for health plan reporting, lest they drive up health costs.
The outlook is good for improvements being made to the Medicaid managed care program, Healthy Options. The program has embraced National Committee for Quality Assurance (NCQA) quality guidelines, and incorporated them into its joint procurement and contract development process. The 1997 initiatives for improved consumer education and involvement gained new ground when the 1998 legislature included $3.9 million for targeting outreach and education efforts for Healthy Options eligibles. Further, a number of new MAA program efforts are focusing on increasing voluntary enrollment and overall client satisfaction. Plan and administrative improvements are anticipated as further refinements are made through the TeaMonitor process, begun in 1997. Finally, as the OIC develops new managed care rules, MAA will conduct careful reviews to determine how it can assure consistency in contracting and purchasing.
Although Washington has many issues and problems yet to resolve, and the HSA plan was suspended, state officials appear committed to improving managed care oversight.
Additional Resources
- Office of the Insurance Commissioner
www.wa.gov/ins- Health Care Authority
www.wa.gov/hca- Department of Health
www.doh.state.wa.gov- Department of Social and Health Services, Medical Assistance Administration
www.wa.gov/dshs/maa2/maa2hp.html
(Last updated August 27, 1999)
West Virginia
What Is West Virginia Overseeing?
West Virginia's managed care market is at a very early stage compared to that in other states, with HMO penetration growing slowly. There are seven active HMOs in the state, up from only two in 1993. The state legislature was attentive to this trend, passing HMO reform acts in 1995 and 1996. In 1997, the legislature directed the Health Care Authority to conduct a study of managed care in the state, including the need for specific regulatory programs.
Governor Caperton, who left office at the end of 1996, was committed to expanding managed care. In 1995 he directed the three major state programs that contract for health services––the Public Employees Insurance Agency (PEIA), Bureau for Medicaid Services, and Workers' Compensation––to examine strategies for joint purchasing. As of mid-1996, 28 percent of all state employees were enrolled in HMOs through PEIA, and the state government is a major purchaser of managed care.
In 1996, West Virginia received and began to implement a 1915(b) waiver to enroll approximately 30 percent of Medicaid recipients in mandatory managed care. The Medicaid program also operates a fee-for-service primary care case management program (PCCM). The Workers' Compensation Program plans to implement a preferred provider model for its population.
Who Is Overseeing?
The West Virginia Department of Insurance (DOI) is the sole licensing entity for HMOs and the key state regulatory agency for managed care. The department reviews solvency and rate requests, sets quality standards, and tracks complaints. DOI's authority was greatly enhanced by the 1995 HMO Act.
The Bureau for Medical Services (BMS) operates West Virginia's Medicaid program, including the PCCM component, and the new 1915(b) waiver program for mandatory managed care, which may enroll recipients in 12 counties. BMS contracts only with DOI-licensed HMOs, and the two agencies will collaborate to oversee participating plans, particularly in regard to quality and access issues. BMS also develops its own capitation rates and oversees contract performance for Medicaid plans.
The Public Employees Insurance Agency (PEIA) negotiates HMO contracts to be offered as coverage options for state employees.
The Bureau for Public Health (BPH) is not involved in direct oversight of managed care activities. However, the bureau participates in several projects related to increased access to medical services in the changing market and consults with BMS on quality assurance for Medicaid plans.
Governor Caperton put together the Interagency Health Council to provide overall coordination of West Virginia's movement towards managed care. The Council consists of representatives from DOI, BPH, BMS, PEIA, the Division of Workers' Compensation, and the Health Care Cost Review Authority. It focuses on coordinating the purchasing efforts of state employees, Medicaid enrollees, and Workers' Compensation recipients; improving rural access to health care; and examining the state's role in the downsizing of rural hospitals. Governor Cecil Underwood, elected in 1996, has directed the council to continue these efforts.
The Health Care Cost Review Authority (HCCRA) is responsible for Certificate of Need (CON) and hospital rate reviews. The agency collects information from hospitals and nursing homes for systematic health status evaluation.
The West Virginia Legislature (house and senate) has been active in HMO reform. In 1995, West Virginia passed a statute that imposed new requirements on HMOs and significantly increased DOI's authority. The 1996 HMO reform act revised and added to these provisions.
How Are They Doing?
Solvency Oversight of the Private Market
West Virginia is the second most rural state in the country, and managed care companies have been slow to enter the private market, particularly after one HMO went bankrupt in the 1980s. Former Governor Caperton's decision to move state employees into managed care created a fresh demand for HMOs, bringing five new plans into the state. As managed care expansion began in 1995, the state reviewed its oversight law, in place since 1978, and passed a major revision. The insurance commissioner thinks that the state's late development has been an advantage. "By being a laggard, we could study problems with managed care in other states, so that we would not experience them in West Virginia," he explains.
The HMO statute requires plans to be domiciled in the state, increases the minimum capitalization requirements, and specifies allowable marketing practices. The insurance commissioner emphasizes the particular importance of the solvency regulations. Under the law, HMOs may shift risk downstream through capitation, but they must monitor and report on the financial status of all provider organizations with which they contract. The legislation also authorizes the state to pursue criminal sanctions against HMO executives; West Virginia is the only state so empowered.
Quality Oversight of the Private Market
DOI is responsible for monitoring the quality of West Virginia's HMOs. The department requires each HMO to be accredited by the National Committee for Quality Assurance (NCQA) or a similar entity and has increased its capacity to track the source and resolution of consumer complaints.
However, the state's most critical problem is lack of access to quality medical services in rural areas. Rural access is a long-standing issue in West Virginia. Unfortunately, market pressures have further eroded the capacity of rural hospitals to remain solvent. "HMOs are not buying rural hospitals; they have high costs and need to be linked with larger acute care facilities," reports the director of the Office of Community Rural Services for BPH. The bureau has worked to restore market equilibrium by helping several financially threatened hospitals to downsize to small primary care centers. The small centers operate with six-bed capacities and can stabilize patients before they are sent elsewhere for more comprehensive treatment. The legislature has considered authorizing state contracts with provider groups in rural areas. The bill failed to pass, primarily because of concerns about the solvency of such provider groups.
Medicaid Oversight
In response to West Virginia's continuing Medicaid fiscal crisis, the governor and the legislature approved submission of two 1915(b) waivers for managed care programs one for behavioral health services and the other for medical care. After receiving Health Care Financing Administration (HCFA) approval for the latter, BMS put together an advisory task force to help design the program and began enrollment in four counties. The bureau's plan was to expand managed care to nine counties by the end of 1996 and eventually to ten or twelve. HMO plans will receive capitation payments for services provided during the startup period.
BMS is also analyzing the possibility of converting the PCCM program to a partially capitated model. The waiver for behavioral health services has been placed on hold and payment for these services remains fee-for-service based.
In the fall of 1995, the governor convened a Medicaid Crisis Panel to study other methods of cost reduction. This group developed recommendations for cutting approximately $150 million dollars, more than 10 percent of the program's budget.
Coordinating Oversight
Governor Caperton's interest in managed care and the market power of state purchasing promoted interagency cooperation. The Interagency Health Council has representatives from the key health-related agencies in the state and focuses on issues of common interest, including rural access to care, access for high-need groups and the state's role in the changing health care market. There is particular interest in the Administration in developing joint purchasing standards for Medicaid, PEIA, and Workers' Compensation.
Despite the emphasis on coordination of health care policy, there are disagreements about priorities. BPH is most concerned with increased access to medical services and has favored state contracts with rural providers. Although DOI favors increased access, it argues that solvency cannot be ensured under direct contract. DOI has also expressed concern over the BMS proposal to make capitation payments to HMO contractors for their initial effort in launching the managed care program; the department plans to scrutinize proposed HMO rates for this initiative closely. The bureau meanwhile is preoccupied with balancing client needs and ongoing cost pressures within its fee-for-service component, while working to maximize the expected benefits (universal access, improved quality, lower costs) of the managed care initiative.
What Is Next for Oversight?
One of West Virginia's next challenges will be the problem of extending managed care to rural areas, while increasing access to service. "I think for the really remote areas managed care will not be integrated, and the state will have to help these communities make the transition," the insurance commissioner says. He adds, "I hope we can stay ahead of market development. It's rare, but at this point we are ahead of the market."
Additional Resources
- Insurance Commission
www.state.wv.us/insurance- Department of Health & Human Resources, Bureau for Medical Services
www.wvdhhr.org/bms- Health Care Authority
www.hcawv.org
(Last updated April 21, 1998)
Wisconsin
What Is Wisconsin Overseeing?
HMOs have been integrated into Wisconsin's health care system for many years; the state commissioner of insurance calls the market "very mature." The state has a history of large, physician-owned group practice HMOs; 18 of Wisconsin's 26 HMOs fit into this category. Other HMOs developed from local independent practice associations (IPAs). The decision reached in 1983 to offer state employees incentives to join HMO plans spurred market penetration; by 1996, HMOs had enrolled almost 90 percent of state employees and represented about 25 percent of the state's health care market.
Wisconsin's HMO-based Medicaid managed care program was also launched in 1983. By 1998, managed care covered about 178,000 residents, approximately 80 percent of all welfare recipients, or virtually all of the population receiving benefits from Aid to Families with Dependent Children (AFDC). Starting in the fall of 1997, however, the majority of these clients were shifted to the Wisconsin Works (W2) program, a welfare reform initiative that eliminates AFDC and requires all recipients to work.
On July 1, 1999, Wisconsin implemented BadgerCare, the state's Children's Health Insurance Program (CHIP) that provides Medicaid benefits to low-income uninsured families, children, and adults, with income at or below 185 percent of the federal poverty level (FPL). Once eligible, families can remain eligible for BadgerCare with income at or below 200 percent of FPL. At full implementation, 67,500 persons will be covered in BadgerCare. BadgerCare recipients will be enrolled in the HMO-based Medicaid managed care program.
Who Is Overseeing?
The Wisconsin Office of the Commissioner of Insurance (OCI) is responsible for licensing and regulating all HMOs in the state. The office regulates solvency and market conduct, tracks consumer complaints, reviews grievance processes, and maintains information on HMO contracting relations, finances, and operations. OCI provides a wide range of information to the public and disseminates it through the Internet and other formats.
The Wisconsin Department of Health and Family Services (DHFS) oversees Medicaid and will manage the W2 program. As the state's largest purchaser of HMO services, DHFS relies on an aggressive contracting strategy to maintain quality while containing costs. Because of the performance data it generates from the Medicaid HMO program, DHFS is also the state's largest disseminator of information on managed care access and quality.
The Wisconsin Bureau of Health Information (BHI) compiles patient-level information and financial data from hospitals and freestanding rehabilitation, psychiatric, and substance abuse facilities, as well as physicians' offices. BHI distributes the information to hospitals, health care providers, insurers, business coalitions, and consumers.
The Wisconsin Department of Employee Trust Funds (ETF) enters into and oversees contracts with HMOs as part of its responsibility for administering the state employee health plan.
The Wisconsin State Legislature (senate and assembly) has cooperated effectively with the governor in reforming the health insurance markets in the 1990s. Wisconsin Act 289, passed during the 1995-96 session, which overhauled the state welfare system, also mandated portability of coverage and eliminated exclusions on coverage of certain preexisting conditions; both provisions had earlier been extended only to small employee groups. Measures approved in the 1993-94 session required all health insurance policies and self-insured government plans to cover blood lead tests for children under six and outlined new information requirements for insurers that deny coverage of chiropractic treatment. Lawmakers also conduct oversight through various committees and are considering the need to increase state oversight of Medicaid managed care for special needs populations.
How Are They Doing?
Solvency Oversight of the Private Market
Wisconsin law first recognized HMOs as insurers in the early 1980s and has maintained strong financial requirements ever since. Most HMOs are on solid financial ground, at least partially because of effective state oversight; there have been few instances of actual or threatened insolvency. This strong financial health and the dominance of physician-owned HMOs in Wisconsin led the commissioner of insurance to voice her skepticism about physician complaints that capitalization requirements are a significant barrier to the HMO market: "I wonder what barriers doctors are finding. I don't believe they need to be 'jump started' or have lower capital requirements."
Although many of Wisconsin's HMOs grew from local roots, ownership patterns have changed as the plans have grown. Some of the largest HMOs have been acquired by national companies, while others, once entirely owned by a single physician group, now are partially owned by other insurers or health systems. These links and mergers are viewed as "strategic alliances" for the parties involved. However, the increase in consolidation and joint venturing of managed care organizations and provider networks has provoked charges of unfair competitive practices. In 1994, Blue Cross/Blue Shield of Wisconsin sued Marshfield Clinic in federal district court, alleging geographic monopolization of health care providers and price-fixing that was detrimental to the Blues' HMO. The district court ruled in favor of Blue Cross/Blue Shield, but the verdict was partially reversed on appeal, and a final decision is still pending.
Quality Oversight of the Private Market
HMO regulation and oversight are well developed in Wisconsin's mature market. Since the 1980s, OCI has required HMOs to report consumer complaints, to comply with standards for grievance resolution, and to report the nature and type of provider contracting practices.
However, in the 1990s, concerns about plan accountability for quality of care have arisen statewide. The commissioner is working with the National Association of Insurance Commissioners (NAIC) to develop a series of health plan accountability models for use by all states; and the legislature is expected to consider several bills for improved HMO quality and outcome evaluation in 1997.
Medicaid Oversight
Enrollment of AFDC/Medicaid recipients in managed care began in Milwaukee and Dane Counties, Wisconsin's two largest metropolitan areas, in 1984, and has since been expanded to all but two of the state's 72 counties. According to the DHFS administrator for health and the former health financing director, Medicaid did not do a good job in assuring quality of care during the early years of managed care.
In 1991, as voluntary HMO Medicaid enrollment remained stagnant at 30 percent of eligible recipients and the state faced rising costs, DHFS launched an initiative to increase the program's quality and to expand participation. Medicaid officials brought together recipient advocacy groups, health care providers, and public health representatives to discuss program shortcomings and proposals for improvement. These meetings helped promote a series of important changes that dramatically expanded the program by 1996.
DHFS has increasingly emphasized quality and has worked to change the program's image among AFDC recipients and the public at large. Research in the Milwaukee managed care program recently demonstrated that AFDC clients consistently received better care than comparable fee-for-service recipients. For example, children in the Medicaid HMOs received more comprehensive physical exams, hearing and vision screens, and immunizations.
Medicaid contracts only with licensed HMOs, but DHFS uses its purchasing power to go well beyond the licensing requirements set by OCI. Medicaid collects a wide range of information and builds measures based on these data into its contracting standards, focusing on contractor performance rather than on financial regulations. DHFS experimented with a primary care case management (PCCM) program for Medicaid and found that it received better administrative accountability and quality from this kind of contracted, capitated program.
In assessing the Medicaid program's accomplishments, the administrator identifies two factors that were critical in shaping the program. First, bringing providers, state administrators, and advocacy groups together to discuss the program's problems and potential helped to create a consensus for change. Second, DHFS has built an effective team that focuses on program improvement.
Wisconsin has continued to contract with HMOs for the years 1998 and 1999 for AFDC-related and low-income women and children. Significant improvements and initiatives in oversight were made in the contract for this period:
- Requirements of the Balanced Budget Act were incorporated into the new contract. For example, adjustments were made for marketing prohibitions, the elimination of the 75/25 rule, and the prudent layperson definition of emergency services.
- A requirement was included that managed care organizations (MCOs) provide complete encounter data to the state by the end of the contract period. Encounter data will significantly improve the state's capacity to monitor MCO performance and to develop effective performance standards.
- New performance standards and provider access standards were required of MCOs in the areas of mental health and substance abuse services. Good performance in this area is crucial for successful family reunification and welfare reform.
As previously mentioned, BadgerCare recipients will be enrolled in the HMO-based Medicaid managed care program. The standard Medicaid HMO oversight activities will also apply to BadgerCare recipients enrolled in HMOs. In addition, Medicaid HMOs will be required to produce separate statistical reporting for BadgerCare recipients.
Finally, existing quality performance indicators have been reviewed by the Bureau of Managed Health Care Programs in terms of relevance and clinical importance to enrollees under BadgerCare. Several of the existing indicators were found to be of high value in these terms for use in BadgerCare. A clinical indicator on the care of diabetes has been recommended for addition as a targeted performance improvement area, and a family health improvement initiative on smoking cessation has been recommended for addition as an optional clinical priority area.
Coordinating Oversight
Regulatory oversight in Wisconsin is concentrated in OCI and DHFS; the two agencies work together as needed to coordinate policy and gather data. Both agencies actively generate information that can be used to evaluate health care programs and policies. DHFS disseminates extensive information on managed care access and quality, based on the performance data generated by the Medicaid HMO program. BHI also compiles information on a large and diverse set of measures and distributes it widely in various formats.
What Is Next for Oversight?
Wisconsin is exploring several important changes. The insurance commissioner has drafted for legislative review a new rule requiring HMOs to use "report cards," or certification announcements in marketing materials that must be certified by an independent, OCI-approved vendor. The commissioner is also seeking ways to deal with the potential impact on the state's health care market of proposed federal changes to exempt provider sponsored networks (PSNs) from state regulation.
DHFS is considering expanding the capitation program into long-term care and care for the disabled. The administrator thinks the good will that the Medicaid program has developed through its work with AFDC recipients will ease the transition to managed care for these two highly vulnerable groups. The Division of Health Care Financing has been working with consumer groups, providers, insurers, and HMOs to develop a consensus plan to implement managed care of these populations incrementally.
Enabling legislation for managed care for long-term care was introduced in the legislature in 1998. Some of the key issues discussed with providers, advocacy groups, community-based organizations, and local county and other state agencies are:
- Contracting Protocol. What priority or preference should local county agencies have in receiving contracts for managed care organizations (MCOs) for long-term care, given the fact that counties have been administering many of the long-term-care programs and have developed considerable expertise and experience in this area?
- Rates. What are fair rates for MCOs serving populations requiring long-term care services?
- Recipient Choice. What are the best methods and organization arrangements for providing effective and flexible choices of recipients of long-term-care services within a managed care environment?
The legislature will also consider revision of Wisconsin's high-risk health insurance program, the Health Insurance Risk Sharing Program (HIRSP). Enrollees have paid 60 percent of the costs for high-risk coverage; the remaining 40 percent is derived from an assessment on insurers. Rising costs have made enrollee premiums unaffordable for many people. In 1996, lawmakers authorized $1.5 million to mitigate the impact of a 27 percent HIRSP rate increase set for July 1 and directed DHFS and OCI to study and recommend changes in the program.
Effective January 1, 1998, HIRSP was transferred from the Office of the Commissioner of Insurance to the Department of Health and Family Services. The premium cost to enrollees was reduced by the following actions: (1) the fund for HIRSP was supplemented by the addition of $6 million per 6 months from state cigarette taxes; (2) the 40 percent share of costs based on insurance assessments was split between 20 percent assessed on insurers and 20 percent assessed on Medicaid providers; (3) $1.8 million for the 1997-99 budget was added to subsidize premium costs for enrollees with income less than $20,000 per year; and (4) an absolute premium cap of 200 percent of the standard individual market rate was established.
Although managed care appears certain to be the mechanism for future service delivery to high-risk patients, the senate chair of the Joint Legislative Audit Committee noted that there is disagreement about funding options. Insurers are resistant to subsidizing a higher portion of costs while self-funded plans are exempted from paying by ERISA. They favor a broad-based assessment on health services provided by HMOs, indemnity plans, and self-funded plans to finance high-risk care. The chairman of the Assembly Health Committee predicts that the state will shift costs either to the Medicaid program or to the general revenue fund; however, other legislators do not foresee the state budget absorbing these costs.
It appears likely that Wisconsin will continue its pattern of managed care reform and expansion over the next few years. Several legislators see managed care as the best service option for citizens with developmental disabilities or terminal illness. The chair of the Joint Legislative Audit Committee considers that implementing managed care for high-cost, high-utilization clients, while maintaining quality assurance and cost effectiveness, is the state's next great challenge. Well-defined agency oversight and management, active interest-group involvement, and incremental implementation will contribute to the success of Wisconsin's managed care program.
Additional Resources
- Office of the Commissioner of Insurance
badger.state.wi.us/agencies/oci- Department of Health and Family Services
www.dhfs.state.wi.us- Wisconsin Network for Health Policy Research
www.medsch.wisc.edu/prevmed/network/index.html
(Last updated September 13, 1999)
Wyoming
What Is Wyoming Overseeing?
With only three licensed HMOs, enrolling about 3 percent of the state's 480,000 people, Wyoming ranks among the lowest states in HMO penetration. The Health Reform Commission offered 49 recommendations for action in 1995; the Wyoming legislature enacted nine of these, including insurance reform measures; antitrust protections for providers and consumers; an upgraded managed care act, based on model legislation from the National Association of Insurance Commissioners (NAIC); and expansion of the Office of Rural Health. The state also passed a comprehensive any-willing-provider act, mandating that any provider who meets the published terms and conditions of an HMO or preferred provider organization (PPO) must be allowed to participate. The Medicaid program relies on fee-for-service providers and does not have a managed care component. There is a selective contracting program for recipients under 21 for specific services, including neonatal care, organ transplants, and extended psychiatric services.
Who Is Overseeing?
The Wyoming Insurance Department (WID) shares licensing and oversight responsibility with the Health Department; oversees plan solvency; and monitors market practices.
The Wyoming Health Department (WHD) has responsibility for reviewing HMO network adequacy, quality assurance, and grievance processes. The department has no authority to overrule HMO treatment decisions or outcomes of internal grievance procedures.
The Division of Health Care Planning and Implementation (DHP&I) within WHD runs Wyoming's fee-for-service Medicaid program. The division contracts with out-of-state providers for tertiary care not available in Wyoming.
The Wyoming State Legislature (senate and state) alternates every other year between general and budget sessions. Lawmakers have passed several major health reform measures, including the HMO act and the any-willing-provider law.
How Are They Doing?
Solvency Oversight of the Private Market
Wyoming's rural and isolated population is an unpromising market for managed care. Nineteen of the 23 counties in this state are medically underserved. "People are more concerned about medical access" than about saving money through managed care, explains WID's insurance standards consultant. The newest HMO in the state was organized by local physicians as a defensive maneuver against out-of-state HMOs, according to the chairperson of the State Senate's Labor, Health, and Social Services Committee, and had not enrolled any patients as of mid-1996. There are a few PPOs, but the state does not require them to be licensed unless the PPO assumes risk.
The state adopted a law based on NAIC guidelines because of concerns that its solvency requirements were too weak. The new statutory capital requirements for HMOs are $1.5 million in net worth and operating capital and a $300,000 line of credit. The law also incorporated HMOs into the state's insurance guarantee fund.
Quality Oversight of the Private Market
WHD has responsibility for evaluating the provider networks and quality assurance procedures of Wyoming HMOs. Ongoing review has not been an issue because of the small market. WHD is required by law to conduct a review every five years, but WHD's director states that if the department received a large number of complaints about a particular plan, staff would probably conduct an earlier review. The director usually defers to HMO decisions on treatment or grievance resolutions.
Medicaid Oversight
Wyoming's Medicaid program relies entirely on fee-for-service medicine and has no contracts with HMOs. DHP&I has not been approached by any HMOs and has made the decision not to pursue contracts with them at this point. DHP&I's administrator sees the very small HMO market as a dilemma for Medicaid. A voluntary HMO alternative would offer only limited cost savings since fee-for-service medicine is so readily available. Ninety-five percent of the doctors and all of the hospitals in the state participate in Medicaid. The state also has a "freedom of choice" waiver, which allows negotiation of contracts with out-of-state providers for health care services not available in Wyoming.
The state would have to apply for an 1115 waiver to work exclusively with a single HMO. "We are open to examining managed care networks," says the administrator, "but we are not currently pursuing it."
Coordinating Oversight
With low levels of managed care enrollment, coordination of oversight is not a high priority in Wyoming. WID and WHD share oversight responsibility for commercial HMOs and report a good working relationship.
What Is Next for Oversight?
There is some difference of opinion about the future of managed care in Wyoming. WID's insurance standards consultant does not expect dramatic growth in managed care; the chair of the Senate's Labor, Health, and Social Services Committee thinks growth may occur after a few more years. WHD's director also expects that growth will likely be slow in the state overall, but will probably begin increasing at the borders of the state. The Medicaid program has organized a forum, including providers, state agency staff, legislators, business representatives, and other stakeholders, to discuss implementing Medicaid managed care in Wyoming. Slow market growth should continue to allow the state to prepare itself for future change.
Additional Resources
- Insurance Department
www.state.wy.us/~insurance- Health Department
www.wdhfs.state.wy.us/WDH- Health Department, Division of Health Care Financing
www.wdhfs.state.wy.us/WDH/medicaid.htm
(Last updated September 2, 1999)
Acknowledgments
This report is based on information included in State Oversight of Integrated Health Systems (1997) as revised by state officials who participated in the preparation of that edition, their successors in office, and additional staff where requested. In addition, members of the Reforming States Group inspected the information about their state in the tables. Kay Johnson prepared the tables using primary as well as secondary source material and conducted follow-up interviews with officials in particular states.
The names of state officials, with their titles or former titles as of August 1999, who participated in interviews, reviewed drafts of the tables, and/or updated their state's summary for inclusion in the electronic edition of this report, are on the following pages.
Alabama
Medicaid Agency
Vicki W. Huff
Director, Managed Care
Jean Stone
Associate Director, Managed Care Outreach and Education
Alaska
Department of Health and Social Services
Jay Livey
Deputy Commissioner
Department of Commerce and Economic Development
Marianne K. Burke
Director, Division of Insurance
Katie Campbell
Life/Health Actuary, Division of Insurance
Arizona
House of Representatives
Andrew W. Nichols
Member, Subcommittee on Health and Welfare of the Appropriations Committee
Department of Insurance, Life and Health Division
Tammi A. Goldberg
Legal Analyst
Lisa Block
Former Legal Analyst
Arizona Health Care Cost Containment System
Phyllis Biedess
Director
Lynn Dunton
Analyst, Office of Policy Analysis and Coordination
Arkansas
Department of Human Services, Division of Medical Services
Ray Hanley
Director
Bill Freeburn
Chief Program Administrator for Medical Assistance
Insurance Department
John Hartnedy
Deputy Commissioner and Life and Health Actuary
Ronald L. Sheffield
Former Special Assistant to the Commissioner
John Shields
Director of Compliance, Life and Health Division
Jay Morgan
General Counsel, Legal Division
Jean Langford
Chief Counsel, Legal Division
Jackie Smith
Director, Consumer Services Division
Ray Morris
Director, Senior Health Insurance Information Program
California
Department of Corporations
Christine R. Hall
Corporations Counsel, Health Plan Division
Colorado
Senate
Sally Hopper
Chair, Health, Environment, Welfare and Institutions Committee
Legislative Council Staff
Whitney Gustin
Research Assistant
Department of Health Care Policy and Financing
Richard Allen
Director, Medical Assistance Office
Donna Kellow
Quality Improvement Coordinator
Lawrence McNeal
Project Manager, Managed Care Transition
Department of Public Health and Environment
Marge Block
Policy Analyst, Health Facilities Division
Department of Regulatory Agencies
William J. Kirven III
Commissioner, Division of Insurance
Susan Gambrill
Special Assistant to the Commissioner, Division of Insurance
Jack Ehnes
Former Commissioner, Division of Insurance
Connecticut
Senate
William A. Aniskovich
Republican Whip
General Assembly
John Kasprak
Senior Attorney, Office of Legislative Research
Department of Public Health
Norma Gyle
Deputy Commissioner
Marie V. Roberto
Chief, Office of Policy, Planning and Evaluation
Judith A. Sartucci
Director, Special Projects, Office of Policy, Planning and Evaluation
Department of Social Services
David Parrella
Director, Medical Care Administration
James J. Linnane
Medical Administration Manager
Insurance Department, Life and Health Division
Karen H. Smigel
Insurance Certified Financial Examiner
Pat Levesque
Utilization Review Coordinator
Delaware
House of Representatives
Jane Maroney
Former Vice Chair, Health and Human Development Committee (retired)Department of Health and Social Services
Kay E. Holmes
Chief Administrator, Managed Care, Division of Social Services
Florida
House of Representatives
John F. Cosgrove
Deputy Democratic Leader
Department of Health
Richard Polangin
Senior Health Policy Analyst, Legislative Planning Office
Department of Insurance
Michelle L. Newell
Bureau Chief, Life and Health Insurer Solvency and Market Conduct
Health Care Administration Agency
Jeffery N. Gregg
Chief, Bureau of Health Policy
Martin Markovich
Senior Health Policy Analyst, Bureau of Health Policy
Erwin P. Bodo
Former Division Director, Health Policy and Cost Control
Georgia
Department of Medical Assistance
Louise Bryde
Former Director, Division of Managed Care Programs
Office of Insurance and Safety Fire Commissioner
John Oxendine
Commissioner
Carol Whittington
Director, Consumer Services Division and Life and Health Division
Hawaii
Senate
Andrew Levin
Co-chair, Ways and Means Committee
House of Representatives
Alexander C. Santiago
Chair, Committee on Health
House Majority Staff Office
Wesley Lum
Legislative Analyst
Legislative Research Bureau
Peter G. Pan
Researcher
Department of Health
Louis Erteschick
Hearings Officer
Lawrence Miike
Former Director
Idaho
Department of Health and Welfare
Joyce McRoberts
Regional Director
Joseph R. Brunson
Administrator, Division of Medicaid
Kathy S. Lee
Administrative Assistant I, Division of Medicaid
Illinois
Department of Public Aid
Michelle Maher
Assistant to the Bureau Chief, Bureau of Managed Care
Pam Bunch
Legislative Analyst, Bureau of Managed Care
A. George Hovanec
Former Medical Operations Administrator
Department of Public Health
John R. Lumpkin
Director
Michelle Gentry-Wiseman
Chief of Staff
Indiana
Department of Health
Richard D. Feldman
Commissioner
Department of Insurance
Joy Long
Health Deputy
Jim Fuller
Former Health Deputy
Family and Social Services Administration
Andrew E. Stoner
Director of Communications
Legislative Services Agency
Barry Brumer
Senior Staff Attorney
Iowa
Senate
Mary Kramer
President
Elaine Szymoniak
Ranking Member, Human Resources Committee
Division of Insurance
Susan Voss
Projects Director
Kansas
Department of Social and Rehabilitation Services
Bob Heintzelman
Manager, Policy Evaluation Unit, Adult and Medical Services Commission
Kentucky
Senate
Nick Kafoglis
Majority Caucus Chairman
Department of Insurance
D. J. Wasson
Principal Assistant
Department of Public Health
Rice Leach
Commissioner
Louisiana
Department of Health and Hospitals
Helene Robinson
Program Manager, Division of Research and Development
Department of Insurance
Denise Cassano
Director, Health Care Commission
Maine
House of Representatives
Jane Saxl
Chair, Joint Banking and Insurance Committee
Office of Policy and Legal Analysis
Colleen McCarthy Reid
Legislative Analyst
Department of Professional and Financial Regulation, Bureau of Insurance
Alice Knapp
Director, Consumer Health Care Division
Glenn Griswold
Health Policy Analyst
Maryland
Department of Health and Mental Hygiene
George C. Benjamin
Secretary
Diane Herr
Deputy Director, Medical Care Finance and Compliance Administration
John G. Folkemer
Director, Health Services Analysis and Evaluation Administration
Ann Kerns
Research Statistician, Health Services Analysis and Evaluation Administration
Jill Porter
Special Assistant, Health Services Analysis and Evaluation Administration
Brenda Rose
Special Assistant, Medical Care Finance and Compliance Administration
Center for Health Program Development and Management, University of Maryland/Baltimore County
John J. Kaelin
Executive Director
Mary Mussman
Director, Medical Affairs
John O'Brien
Director, Health Policy
Massachusetts
House of Representatives
Harriette Chandler
Chair, Joint Health Care Committee
John E. McDonough
Former Chair, Joint Health Care Committee; Associate Professor, Heller School, Brandeis University
Division of Insurance
Linda Ruthardt
Commissioner
Kevin Beagan
Director of Health Policy, Health Unit
Christopher J. Goetcheus
External Affairs Manager
Division of Medical Assistance
Jeremiah Cole
Director, Planning and Program Development
Mary Beth Fiske
Director, Managed Care Organizations Program
Michigan
Senate
John J. H. Schwarz
President, Pro Tempore; Vice Chair, Community Health Appropriations
Subcommittee
Marc Speiser
Administrative Assistant, Office of Senator Schwarz
Community Health Department
James K. Haveman, Jr.
Director
Denise Holmes
Director, Plan Administration and Customer Services Bureau, Medical Services Administration
Janet Olszewski
Director, Quality Improvement Bureau, Medical Services Administration
Department of Consumer and Industry Services, Insurance Bureau
Jean K. Carlson
Deputy Commissioner, Office of Financial Evaluation
Fran Wallace
Deputy Director
Minnesota
Senate
Linda Berglin
Chair, Human Resources Finance Committee
Department of Commerce
David G. Gruenes
Former Commissioner
John Gross
Director of Health Care Policy
Department of Health
Julie Brunner
Deputy Commissioner
David J. Giese
Director, Health Policy and Systems Compliance
Kristen J. Libby
Former Deputy Commissioner
Lynn A. Blewett
Former Director, Health Economics Program
Department of Human Services
James Chase
Director, Purchasing and Service Delivery Division
William E. Novak
Consultant, Purchasing and Service Delivery Division
Mississippi
Division of Medicaid
Helen Weatherbee
Executive Director
Melzana M. Fuller
Director, Bureau of Managed Care
Missouri
Senate
Betty Sims
Member, Public Health and Welfare Committee
Department of Health
Tricia Schlechte
Deputy Director, Division of Maternal, Child and Family Health; Formerly, Managed Care Coordinator
Department of Insurance
Wendy Taparanskas
Supervisor, Managed Care
Department of Social Services
Gregory A. Vadner
Director, Division of Medical Services
Montana
Senate
B. F. Chris Christiaens
Member, Finance and Claims Committee
Department of Public Health and Human Services
Nancy Ellery
Administrator, Division of Health Policy and Services
Office of the State Auditor
Mark O'Keefe
State Auditor
Claudia Clifford
Health Policy Specialist, Insurance Department
Nebraska
Nebraska Unicameral Legislature
Don Wesely
Former Chair, Committee on Health and Human Services (retired)
Department of Insurance
L. Tim Wagner
Director
Timothy J. Hall
Former Director
Manuel Montelongo
Interim General Counsel
Nevada
Department of Human Resources, Division of Health Care Financing and Policy
Laurie England
Chief, Managed Care
Steve Bremer
Former Chief, Managed Care
Mary M. Lushina
Medicaid Services Specialist III, Managed Care
April Townley
Former Deputy Administrator, Medicaid Office
Patty Thompson
Management Analyst III, Managed Care, Medicaid Office
New Hampshire
Department of Health and Human Services
Kathleen Sgambati
Deputy Commissioner
Katie Dunn
Assistant Director, Office of Community and Public Health
New Jersey
Department of Banking and Insurance
Jaynee LaVecchia
Commissioner
Jane Majcher
Special Deputy Commissioner
Elizabeth Randall
Former Commissioner
Department of Health and Senior Services
Marilyn Dahl
Director, Office of Policy and Research
Ruth Charbonneau
Senior Policy Analyst, Office of Policy and Research
Department of Human Services
Jill Simone
Executive Director, Office of Managed Health Care, Division of Medical
Assistance and Health Services
New Mexico
Department of Human Services
Charles Milligan
Director, Medical Assistance Division
CaraLyn Banks
Former Chief, Contract Administration Bureau
New York
Senate
Jane Preston
Executive Director, Health Care Committee
Department of Health
Barbara A. DeBuono
Former Commissioner; Chief Executive, New York Presbyterian Healthcare Network, Inc.
Ellen Anderson
Director, Office of Managed Care
North Carolina
Senate
Beverly M. Perdue
Co-chair, Appropriations Committee
Department of Health and Human Services
Andrew McBride
State Health Director
Daphne O. Lyon
Deputy Director, Division of Medical Assistance; Former Assistant Director of Medicaid Managed Care
Department of Insurance
Barbara Morales Burke
Senior Deputy Commissioner, Technical Services
North Dakota
Department of Health
Murray Sagsveen
State Health Officer
Michael J. Mullen
Senior Adviser for Health Care Policy
Department of Human Services, Medical Services Division
David Zentner
Director
Tom Solberg
Administrator, Managed Care
Ohio
Department of Insurance
Adam Barclay
Public Information Officer
Phil Biesesi
Former Assistant Director, Life and Health Services
Oklahoma
Health Care Authority
Mike O. Fogarty
Chief Operating Officer and State Medical Director
Karen Collier
Director, Health Plan Design and Development
Oregon
Department of Human Resources
Elinor C. Hall
Administrator, Health Division
Lynn Read
Director, Office of Medical Assistance Programs
Oregon Health Plan Policy and Research
Barney Speight
Administrator
Pennsylvania
Department of Health
Lori Gerhard
Deputy Secretary for Quality Assurance
David R. Henry
Director, Division of Quality Review
Molly Raphael
Former Deputy Secretary for Quality Assurance
Department of Public Welfare
Suzanne Love
Director, Bureau of Policy, Budget and Planning
Rhode Island
House of Representatives
Eileen S. Naughton
Member, Finance Subcommittee on Health and Human Services
Department of Administration
Robert L. Carl
Director
Brian E. Keeler
Chief of Employee Benefits
Department of Business Regulation
Tom Schumpert
Director/Insurance Commissioner
G. Rollin Bartlett
Chief Life, Accident and Health Insurance Analyst, Insurance Division
Barry G. Hittner
Former Director
Department of Health
Patricia A. Nolan
Director
William J. Waters, Jr.
Deputy Director
Department of Human Services
Christine C. Ferguson
Director
Murray Brown
Consultant, Center for Child and Family Health
South Carolina
Department of Health and Environmental Control
Candace Jones
Policy Advisor, State and National Initiatives
Department of Health and Human Services
Sheila L. Rivers
Director, Division of Family Services
Department of Insurance
Robert A. Ehrlich
Supervising Managed Care Analyst
South Dakota
Department of Health
Thomas Martinec
Management Analyst
Tennessee
General Assembly, Select Oversight Committee on TennCare
Keith Johnson
Executive Director
Ginger Penick Parra
Former Executive Director
Comptroller's Office
Douglas Wright
Assistant Director, Office of Research
Texas
House of Representatives
Leticia Van de Putte
Vice Chair, Economic Development Committee; Former Vice Chair, Insurance Committee
Gilbert R. Loredo
Legislative Assistant, Office of Representative Van de Putte
Department of Insurance
Patricia Brewer
Program Specialist, HMO Division
Health and Human Services Commission, State Medicaid Division
Maureen Milligan
Senior Policy Analyst
Jill Melton
Program Analyst
Utah
House of Representatives
Gene Davis
Member, Health and Human Services Committee
Department of Health
Rod Betit
Executive Director
Ed Furia
Director, Bureau of Managed Health Care, Division of Health Care Financing
Department of Insurance
Neal Gooch
Deputy Commissioner
Tanji J. Anderson-Northrup
Health Analyst
Health Policy Commission
Patrick J. Johnson
Executive Director
Vermont
Agency of Human Services
Paul Wallace-Brodeur
Managed Care Director, Office of Vermont Health Access
Department of Banking, Insurance, Securities and Health Care Administration
Susan Gretkowski
Deputy Commissioner, Health Care Administration
Virginia
Department of Health
Nancy Hofheimer
Director, Center for Quality Health Care Services and Consumer Protection
State Corporation Commission, Bureau of Insurance
Robert L. Wright, III
Principal Insurance Analyst, Life and Health Division
Washington
Senate
John A. Moyer
Former Member, Health and Long-Term Care Committee
Governor's Executive Policy Office
Sue Crystal
Director
Department of Health
Dan Rubin
Director of Special Projects, Office of the Secretary
Department of Social and Health Services
Tom Bedell
Acting Assistant Secretary, Medical Assistance Administration
Jane Beyer
Former Assistant Secretary, Medical Assistance Administration
Julie Lake
Director, Division of Program Support, Medical Assistance Administration
Diane Weeden
Supervisor, Managed Care Contracts, Medical Assistance Administration
Margo Westfall
Project Planner, RWJ Medicare/Medicaid Integration Project, Aging and Adult Services Administration
West Virginia
Department of Health and Human Resources
Mary J. Huntley
Director, Office of Community and Rural Health Services
Insurance Commission
Donna Walker
Deputy Insurance Commissioner
Wisconsin
Department of Health and Family Services
Joe Leean
SecretaryPeggy Bartels
Administrator, Health Care Financing Division
Wyoming
Department of Health
Kay Wagner
Administrator, Office of Health Quality
Don Ralston
Former Director
Department of Insurance
Lloyd B. Wilder
Insurance Standards Consultant
Additional Resources
General
- EBRI Health Benefits Databook. Washington, DC: Employee Benefit Research Institute, 1999.
www.ebri.org
Health Care Financing Administration
www.hcfa.gov
National Academy for State Health Policy
www.nashp.org
National Committee for Quality Assurance
www.ncqa.org/pages/main/index.htm
National Conference of State Legislatures
www.ncsl.orgAlabama
- Department of Insurance
www.aldoi.org
Department of Public Health
www.alapubhealth.orgAlaska
- Division of Insurance
www.commerce.state.ak.us/insurance
Department of Health and Social Services
www.hss.state.ak.usArizona
Department of Insurance
www.state.az.us/id
Department of Health Services
www.hs.state.az.usArkansas
- Department of Insurance
www.state.ar.us/insurance
Department of Health
health.state.ar.us
Division of Medical Assistance
www.medicaid.state.ar.usCalifornia
- Department of Corporations
www.corp.ca.gov
Department of Health Services
www.dhs.ca.gov
Office of Statewide Health Planning and Development
www.oshpd.ca.govColorado
- Department of Health Care Policy and Financing
www.chcpf.state.co.us
Department of Public Health and the Environment
www.cdphe.state.co.us
Department of Regulatory Agencies, Division of Insurance
www.dora.state.co.us/insuranceConnecticut
- Department of Insurance
www.state.ct.us/cid
Department of Public Health
www.state.ct.us/dph
Department of Social Services
www.dss.state.ct.us
Office of Health Care Access
www.state.ct.us/ohcaDelaware
- Department of Insurance
www.state.de.us/inscom
Department of Health and Social Services
www.state.de.us/dhss/irm/dhss.htm
Delaware Health Care Commission
www.state.de.us/dhccFlorida
- Agency for Health Care Administration
www.fdhc.state.fl.us
Department of Insurance
www.doi.state.fl.us
Department of Health
www.doh.state.fl.usGeorgia
- Georgia Community Health
www.state.ga.us/gch
Office of the Commissioner of Insurance
www.inscomm.state.ga.us
Office of Regulatory Services
www2.state.ga.us/departments/DHR/orsHawaii
- Division of Insurance
www.hawaii.gov/insurance
Department of Health
www.state.hi.us/health
Department of Human Services
www.state.hi.us/dhsIdaho
- Department of Insurance
www.doi.state.id.us
Department of Health and Welfare
www.state.id.us/dhwIllinois
- Department of Insurance
www.state.il.us/INS
Department of Public Health
www.idph.state.il.us
Department of Public Aid
www.state.il.us/dpa
Health Care Cost Containment Council
www.state.il.us/agency/hccccIndiana
- Department of Insurance
www.state.in.us/idoi
Department of Health
www.state.in.us/isdh
Family and Social Services Administration
www.state.in.us/fssaIowa
- Division of Insurance
www.state.ia.us/government/com/ins
Department of Public Health
www.idph.state.ia.us
Department of Human Services
www.dhs.state.ia.usKansas
- Department of Insurance
www.ink.org/public/kid
Department of Social and Rehabilitative Services
www.ink.org/public/srs
Health Care Data Governing Board
www.ink.org/public/hcdgbKentucky
- Cabinet for Health Services
cfc-chs.chr.state.ky.us
Department of Insurance
www.doi.state.ky.usLouisiana
- Department of Insurance
wwwldi.ldi.state.la.us
Department of Health and Hospitals
www.dhh.state.la.usMaine
- Bureau of Insurance
www.state.me.us/pfr/ins/inshome2.htm
Department of Human Services
janus.state.me.us/dhs/welcome.htmMaryland
- Insurance Administration
www.mia.state.md.us
Department of Health and Mental Hygiene
www.dhmh.state.md.us
Health Services Cost Review Commission
www.hscrc.state.md.us
Health Resources Planning Commission
www.mhrpc.state.md.us
Health Care Access and Cost Commission
www.hcacc.state.md.us
Center for Health Program Development and Management
www.research.umbc.edu/chpdm/Massachusetts
- Division of Insurance
www.state.ma.us/doi
Division of Medical Assistance
www.state.ma.us/dma
Department of Public Health
www.state.ma.us/dph
Division of Health Care Finance and Policy
www.magnet.state.ma.us/dhcfp/index.htmMichigan
- Insurance Bureau
www.cis.state.mi.us/ins
Department of Community Health
www.mdch.state.mi.usMinnesota
- Department of Health
www.health.state.mn.us
Department of Health, Managed Care Systems
www.health.state.mn.us/divs/hpsc/mcs/mcshome.htm
Department of Commerce, Insurance Division
www.commerce.state.mn.us/mainin.htm
Department of Human Services
www.dhs.state.mn.us
Minnesota Health Data Institute
www.mhdi.orgMississippi
- Department of Insurance
www.doi.state.ms.us
Department of Health
www.msdh.state.ms.us
Division of Medicaid
www.dom.state.ms.us
Department of Finance and Administration
www.dfa.state.ms.usMissouri
- Department of Insurance
www.insurance.state.mo.us
Department of Social Services, Division of Medical Services
www.dss.state.mo.us/dms
Department of Health
www.health.state.mo.usMontana
- Insurance Division
www.state.mt.us/sao/insdiv.htm
Department of Public Health and Human Services
www.dphhs.state.mt.usNebraska
- Department of Insurance
www.nol.org/home/NDOI
Health and Human Services System
www.hhs.state.ne.usNevada
- Division of Insurance
www.state.nv.us/b&i.id
Department of Human Resources
www.state.nv.us/hr
Division of Health
www.state.nv.us/health
Division of Health Care Financing and Policy
www.state.nv.us/dhcfpNew Hampshire
- Department of Insurance
www.state.nh.us/insurance
Department of Health and Human Services
www.dhhs.state.nh.usNew Jersey
- Department of Health and Senior Services
www.state.nj.us/health
Department of Human Services
www.state.nj.us/humanservices
Department of Banking and Insurance, Office of Life and Health
www.naic.org/nj/life.htm
Health Reform Insurance Information
www.naic.org/nj/reform.htmNew Mexico
- Department of Health
www.health.state.nm.us
Health Policy Commission
hpc.state.nm.us
Human Services Department, Medical Assistance Division
www.state.nm.us/hsd/mad.htmlNew York
- Department of Insurance
www.ins.state.ny.us
Department of Health
www.health.state.ny.usNorth Carolina
- Department of Insurance
www.ncdoi.com
Department of Health & Human Services, Division of Medical Assistance
www.dhhs.state.nc.us/dmaNorth Dakota
- Department of Insurance
www.state.nd.us/ndins
Department of Human Services
www.state.nd.us/humanservicesOhio
- Department of Insurance
www.state.oh.us/ins
Department of Health
www.odh.state.oh.us
Department of Human Services
www.state.oh.us/odhsOklahoma
- Department of Insurance
www.oid.state.ok.us
Department of Health
www.health.state.ok.us
Oklahoma Health Care Authority
www.ohca.state.ok.usOregon
- Department of Consumer and Business Services, Insurance Division
www.cbs.state.or.us/insurance.htm
Office of Medical Assistance Programs
www.omap.hr.state.or.us
Office for Health Plan Policy and Research
www.ohppr.state.or.usPennsylvania
- Department of Insurance
www.insurance.state.pa.us
Department of Health
www.health.state.pa.us
Department of Public Welfare
www.state.pa.us/PA_Exec/Public_Welfare
Health Care Cost Containment Council
www.phc4.orgRhode Island
- Department of Health
www.health.state.ri.us
South Carolina
- Department of Insurance
www.state.sc.us/doi
Department of Health and Environmental Control
www.state.sc.us/dhec
Department of Health and Human Services
www.dhhs.state.sc.usSouth Dakota
- Division of Insurance
www.state.sd.us/insurance
Department of Health
www.state.sd.us/doh
Department of Social Services, Office of Medical Services
www.state.sd.us/social/medicaidTennessee
- Department of Commerce and Insurance, Insurance Division
www.state.tn.us/commerce/insurdiv.html
Department of Health, TennCare Bureau
www.state.tn.us/health/tenncare/Texas
- Department of Insurance
www.tdi.state.tx.us
Department of Health
www.tdh.state.tx.us
Health and Human Services Commission, Medicaid Department
www.hhsc.state.tx.us/med/med.htm
Health Care Information Council
www.thcic.state.tx.usUtah
- Department of Insurance
www.insurance.state.ut.us
Department of Health
www.health.state.ut.us
Health Policy Commission
hlunix.hl.state.ut.us/hpc
Office of Health Data Analysis
www.healthdata.state.ut.usVermont
- Banking, Insurance, Securities, and Health Care Administration, Insurance Division
www.cit.state.vt.us/bis/insur.htm
Banking, Insurance, Securities, and Health Care Administration, Division of Health Care Administration
www.cit.state.vt.us/bis/hca/general/home_hca.htm
Department of Social Welfare, Office of Vermont Health Access
www.dsw.state.vt.us
Program for Quality in Health Care
www.vpqhc.orgVirginia
- State Corporation Commission
www.state.va.us/scc
Department of Health
www.vdh.state.va.us
Department of Medical Assistance Services
www.cns.state.va.us/dmas
Joint Commission on Health Care
legis.state.va.us/jchc/jchchome.htmWashington
- Office of the Insurance Commissioner
www.wa.gov/ins
Health Care Authority
www.wa.gov/hca
Department of Health
www.doh.state.wa.gov
Department of Social and Health Services, Medical Assistance Administration
www.wa.gov/dshs/maa2/maa2hp.htmlWest Virginia
- Insurance Commission
www.state.wv.us/insurance
Department of Health & Human Resources, Bureau for Medical Services
www.wvdhhr.org/bms
Health Care Authority
www.hcawv.orgWisconsin
- Office of the Commissioner of Insurance
badger.state.wi.us/agencies/oci
Department of Health and Family Services
www.dhfs.state.wi.us
Wisconsin Network for Health Policy Research
www.medsch.wisc.edu/prevmed/network/index.htmlWyoming
- Insurance Department
www.state.wy.us/~insurance
Health Department
wdhfs.state.wy.us/WDH
Health Department, Division of Health Care Financing
wdhfs.state.wy.us/WDH/medicaid.htm
Contact us with revisions
by e-mailing us at mailto:mmf@milbank.org
or call us at the Fund at (212) 355-8400.
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Be sure to specify which report you want,
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(c) 1999 Milbank Memorial Fund. This file may be redistributed electronically as long as it remains wholly intact, including this notice and copyright. This file must not be redistributed in hard-copy form. The Fund will freely distribute this document in its original published form on request.
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ISBN 1-887748-32-6
     
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