Update: SB #2441 just passed the House and Senate.
*MHA bills are SB #2441 and SB# 2588*
* MississippiCan to uses managed-care companies control Medicaid costs
*MississippiCan expands in 2017 to include hospital in-patient services. MHA wants a piece of that action. Guess when its plan proposes to begin coverage?
*SB #2441 allows MHA to operate under a different set of rules than its competitors.
*Bills passed conference and are awaiting approval by legislature.
The Mississippi Hospital Association suffered some losses in its fight to get some special treatment from the legislature but make no mistake, Frankenstein is alive and well as it fights to create its Medicaid monster during this last week of the 2015 session. Copy of SB #2441. Copy of SB #2588.
MHA is pushing SB #2441. The bill would allow MHA to set up its own health insurance plan for Medicaid patients as a non-profit organization. In other words, MHA could establish an HMO for Medicaid while operating under a different set of rules than would its competitors. Boring stuff. Its not Ole Miss. Its not about guns. Its not about Common Core or charter schools. However, the bill will create an 800-lb gorilla in Medicaid. An 800-lb gorilla that could turn into another Beef Plant, Kior, or ITD. Projects that all blew up but were ignored by everyone when first created. Original post on bill.
This whole saga began several years ago when Mississippi sought relief from the never-ending headache of funding Medicaid. The legislature got tired of having special sessions because Medicaid was running out of money every year. The legislature authorized Medicaid to start using managed-care companies in order to control this endless spiral that always threatened to wreck the budget as well as make budget planning much more difficult. The program was called MississippiCan. Two private for-profit companies, United Health Care and Magnolia Health Care (Centene), won the bids in 2010 and began enrolling Medicaid patients in 2011 under the MississippiCan. Thus capitation came to Medicaid. Medicaid pays a set fee per Medicaid enrollee to the insurance company. If the costs are below the capitated rate, the insurance company keeps the money. However, if the costs are above the capitated rate, the insurance company eats the money it pays for the difference.
However, the legislature can giveth away and it can keepeth away as well. The legislature only allowed these companies to enroll a small percentage of Medicaid patients and even at that it was the most costly: disabled children, the elderly, and psychiatric patients. The legislature prevented them from enrolling patients who used the more profitable in-patient hospital services. However, the legislature did allow the MississippiCan program to expand and eventually cover 65% of all Medicaid enrollees.
Enter the Mississippi Hospital Association. It promoted two bills, SB #2441 and #2558. The bills would allow MississippiCan to cover in-patient hospital services. The hospitals then decided that if MississippiCan was going to enter into the hospital business, they wanted a piece of that action. There is nothing stopping the hospitals from partnering with insurance companies or setting up their own managed care plans. Section 41-83 of the Mississippi Code specifies the guidelines for the establishment and regulations of managed care plans. However, MHA didn't want to play on the same field as its would-be competitors and made sure its bill contained a section that said it was exempt from that part of the Mississippi Code. The bill stated that the Commissioner of Insurance would establish all regulations for MHA's managed-care plan. Thus the two private managed-care companies had to follow the Mississippi Code while MHA would have its rules written by an Insurance Commissioner (who MHA hoped was friendly to its cause.).
Think that is no big deal? There is one little statute that meant a great deal to MHA: the minimum net worth requirement. Want to sell insurance in Mississippi or any state? Better have some money. States require insurance companies and their plans to have a minimum net worth. A cushion of sorts. There are good reasons for such requirements. A plan must be able to cover claims even if it sustains huge losses. Section 83-41-325 specifically covers net worth requirements:
(1) Before issuing any certificate of authority, the commissioner shall require that the health maintenance organization have an initial net worth of One Million Five Hundred Thousand Dollars ($ 1,500,000.00) and shall thereafter maintain the minimum net worth required under subsection (2). Section 325.
However, MHA's bill changed that little requirement to this language:
Section 4... (b) Satisfy the minimum financial and reserve requirements to be established by the Department of Insurance;
The Department of Insurance could require more or less reserves. Would MHA push for this change if it planned to place more money into its plan than required by law? MHA needs the law changed if its wants to put less money into its proposed managed-care plan than the current minimum required by law. Think of the minimum net worth as a floor, a safety net. SB #2441 removes that protection and allows the Commissioner of Insurance to set that floor at whatever level he desires. If MHA and its allies can somehow elect a "friendly" Commissioner of Insurance, they can effectively control the regulations. It's much easier to herd one cat than several hundred. Legislatures are such pesky things.
A Commissioner could set the net worth requirement at $1 million, $500,000, or whatever his department thinks is necessary. These plans can and do fail. Google "Promina" and "Georgia". What happens if a plan goes belly-up and there are not enough reserves to cover the plan? It's a serious question worth asking. Health care providers stuck with large unpaid medical bills. Health care providers is such a technical term. Think hospitals, doctors, therapists. All suffer if a health insurance plan goes under. This is a Medicaid program. The patients won't have the money. Someone will have to take the haircut. Who will it be? The hospitals? The taxpayers? Who will it be?
Make no mistake, MHA wants to create its own health insurance/managed-care plan. A lower net worth requirement means it can put less money into the plan. It wants its rules written by the Insurance Commissioner instead of following specific laws that have already been debated and passed by the legislature. However, this is not the end of the MHA mischief. MHA CEO Tim Moore told Paul Gallo on his radio show that it would cost "$75 to $100 million" to establish the plan. Earlier post with recording of radio show. Numerous legislators and lobbyists told this correspondent that MHA was pushing to get a $30 million of assistance for start-up costs stuffed into SB #2588. They also said MHA was pushing for either a tax credit or subsidy of $10 million a year (The "subsidy" would be taken from the UPL fund. See note below) for three years. House Insurance Committee Chairman Gary Chism gave the game away when he said so on the Gallo radio show last week. Earlier post with recording of Chism interview.
It makes one see MHA's fights against expanding public records laws to include public hospitals in a different light, doesn't it?
The Mississippi Hospital Association will be able to compete with private insurance companies for Medicaid business in Mississippi. It will enjoy lower capital requirements. It will enjoy rules specially written for it by the Insurance Commissioner and not have to follow the guidelines spelled out for HMO's in the Mississippi Code. It would enjoy a nice assist of $30 million from the taxpayers - something its private competitors do not enjoy. All the while screaming this is good for Mississippi because its "local" and the money "stays here". A local screwing is better than a foreign screwing but I digress.
The bills passed both chambers but with differences so they went to conference. The conference committee fixed SB #2441 and decreed that MHA's plan shall follow the Mississippi Code but for one area- net worth. The conference bill still allows the Commissioner to set the minimum net worth requirements for a MHA managed-care plan. It is worth killing the bill over this one section. The net worth protects the health care providers, the patients, and yes, the taxpayers. If the hospitals don't want to carry at least $1.5 million to support a health insurance plan, then they should stay out of the health insurance business. The conference bill is an improvement but without a change in the net worth requirement language that follows current Mississippi law, it should not become law.
SB# 2588 passed the conference committee as well and awaits passage in both chambers. A mandate to force MississipiCan to include the MHA plan (and thus guarantee a slice of the Medicaid pie) was removed from the bill. The language providing $30 million to MHA for the plan did not appear in the conference bill despite much lobbying by MHA.
What is interesting is how the media and the usual opponents of crony capitalism were silent in respect to this little fight that garnered so much attention from political insiders. Make no mistake, if MHA got everything it wanted and the plan blew up, the same media that ignored its creation would be asking how it happened. The Tea Party Trio did not offer a voice against this cronyism but instead voted to help MHA. They complain about seat belt laws, texting while driving bans, and hunting licenses but are strangely silent when it comes to fighting a big dog in Mississippi politics pushing what is called "Obamacare-lite" by more than a few people.
The big fear when reading these bills is that the Mississippi Hospital Association will create a health insurance plan that dominates Medicaid due to the special treatment it would enjoy. Supporters of these bills say MHA will "keep the money here" or "that money isn't going out of state". A standard practice in business to consider a deal to be bad if someone has to use race, sex, religion, or homerism to close the sale.
The legislature should say no to MHA and tell it to compete for Medicaid business on the same level playing field as everyone else. MHA will still enjoy an advantage due to its non-profit status. There have been more than enough corporate implosions in Mississippi that were assisted by the government. The legislature does not need to make that list any longer. SB #2441 should die a quick death.
* SB# 2588 is the so-called "Med Tech" bill. The bill proposes to fix several items in the Medicaid program. The bill has attracted much attention due to its reform of the UPL formula. Medicaid and Medicare pay different rates to hospitals. Medicare has a higher reimbursement rate while Medicaid mare not exactly profitable. The state pays hospitals the difference between the two levels of reimbursement. However, the UPL formula has not been readjusted in some time and there is currently a deficit in the program.