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Revamped Medicaid to debut

ATLANTA - To Gov. Sonny Perdue and state health officials, the overhaul of Georgia's Medicaid program that takes effect this week is win-win.

They say patients will get better health care even as taxpayers save money.

But health care advocates are worried that Georgia Healthy Families, the name for the state's latest effort to transplant managed care to a large portion of the Medicaid population, may end up putting too much emphasis on the savings side of the equation and not enough on quality of care.

On Thursday, about 600,000 low-income adults and children from metro Atlanta and middle Georgia will be enrolled in one of three managed care networks that successfully bid for contracts with the state Department of Community Health.

The program is set to begin Sept. 1 for roughly an equal number of Medicaid recipients in the rest of

the state.

Much is at stake. The 2007 budget adopted by the General Assembly in March projects that the new program will save $80 million during the fiscal year that starts on July 1, funds that would have to be made up with cuts elsewhere in state government if the numbers don't pan out.

Managed care, now the prevalent model for health insurance in the private sector, has had a checkered career.

HMOs gained a reputation, particularly in the early years, for generating profits by denying care through burdensome prior-approval restrictions.

Medical home

But the three CMOs - care management organizations - that will be serving Georgia Medicaid enrollees will make their money by giving patients better care rather than denying services, said Rhonda Medows, commissioner of the DCH.

Medows, a former family physician, said the program's goal is to steer recipients accustomed to taking every illness to a costly emergency room to a regular doctor.

"If the doctor knows a patient and their family history, you save a lot of time and effort,'' she said. "It's a much smarter way to do business.''

Linda Lowe, a consumer health advocate, said the concept of a medical home for Medicaid enrollees sounds great. But she said it's difficult to get past the state's motives for doing the program, rising health care costs that are eating up a bigger portion of the budget each year.

"A managed care plan that's not focused on cost cutting but improving care can improve care,'' she said. "But when you're doing something like this as a cost-cutting measure, there are questions as to whether this will lead to the improvements in health care you want to achieve.''

Lowe and others are worried that DCH officials, under pressure to hit the savings target, are rushing into the program before they're ready. The initiative already has been delayed twice from its original targeted launch of Jan. 1.

HomeTown Health Care, an alliance of rural hospitals, has worked closely with the state and the CMOs on a training effort described as "exemplary'' by HomeTown's president, Jimmy Lewis.

Process hurdles

Still, Lewis sees tough times getting the program up and running.

"We think some process issues will have to be overcome, especially in the first 30 days,'' he said. "Those providers who were slow to the table signing their contracts (with the CMOs) will probably have some significant cash disruptions.''

Medicaid recipients themselves also have been slow to the table.

At the end of last week, only 51 percent of enrollees in the two regions where the program will begin had chosen a plan.

But Medows said that statistic masks the significant progress that has been made linking most of the other 49 percent of enrollees with a familiar doctor.

She said the DCH has assigned 22 percent of the 600,000 enrollees to doctors or other providers they have been to before.

Another 20 percent were assigned to doctors or other providers based on their family's history, she said.

Thus, only 7 percent of enrollees are being "randomly'' assigned to a plan.

"You want to preserve choice, but you also want to make sure you don't disrupt care,'' Medows said. "We have preserved that doctor-patient relationship.''

Not your father's program

The state also is banking on some major differences between the new program and previous failed efforts to bring managed care to Georgia Medicaid.

David McNichols, president, CEO and chairman of Peach State Health Plan, one of the CMOs chosen for the program, said the state is requiring the companies to carry more financial reserves than under the 1990s version of Medicaid managed care.

More importantly, enrollment in Georgia Healthy Families will be mandatory.

"With the old voluntary program, the companies spent 20 percent to 25 percent simply attracting and retaining members,'' said McNichols, whose parent firm is St. Louis-based Centene Corp. "It never hit critical mass.''

To the state's bean counters, the key measure to the program's success will be whether it reaches the projected savings.

Alan Essig, executive director of the Georgia Budget and Policy Institute and a former legislative budget aide, said the prospects for savings are better in the short term than over the long run.

"The track record in other states that have done this is ... you get some initial savings,'' he said. "But that doesn't do anything about the long-term trends, which are usually based on the economy and health care inflation.''

But Medows said it's more important that the program achieve some savings, even if it doesn't hit the target.

"If we don't do this, the budget is going off the charts anyway,'' she said. "We can only win, even if we don't see the entire savings.''