Senate Bill #2441. One of the biggest stories taking place in the current session of the Mississippi Legislature. A true case of insider baseball. It's discussed by the legislators, lobbyists, consultants, and even the bureaucrats, but completely unnoticed by the media. The older reporters probably think it's a song by Chicago. The story of SB #2441 is The Mississippi Hospital Association and other groups are making a determined push to get this bill passed, as they seek to enter the HMO business and grab more Medicaid business, as well with some friendly re-writing of Mississippi health insurance laws. The bill passed both the House and Senate but with some differences.
SB #2441 states:
SECTION 1. (1) In order to encourage and facilitate collaboration between Mississippi Medicaid providers and managed care entities contracting on a capitated* basis with the Division of Medicaid pursuant to Section 43-13-117(H), to align incentives in support of integrated and coordinated health care delivery, and to encourage the development of appropriate population or community health strategies to better serve Medicaid beneficiaries and the state's health care delivery system as a whole, the Legislature hereby authorizes and encourages the creation of provider-sponsored health plans as defined in Section 2 of this act.
The key words in this section: Medicaid and "provider-sponsored health plans". That means the MHA and various medical groups want to get in the health insurance bidness. Section 2 gives the game away.
SECTION 2. As used in this act, "Provider-Sponsored Health Plan" means a Mississippi not-for-profit corporation formed for the purposes of operating a not-for-profit health plan or managed care entity, with its principle place of business within the State of Mississippi, and which is owned and governed exclusively by (a) not-for-profit Mississippi hospital or physician industry or trade association in which the majority of the hospitals or physicians within the state are members, or (b) a combination of (i) not-for-profit Mississippi hospital or physician industry or trade associations that represent a majority of the hospitals or physicians within the state, and (ii) licensed Mississippi hospitals or physicians who participate in the Mississippi Medicaid Program. At least one purpose of the provider-sponsored health plan shall be to contract with the Division of Medicaid to provide managed care services on a capitated basis pursuant to Section 43-13-117(H). To qualify as a provider-sponsored health plan under this section, the entity must further meet the requirements of Section 4 of this act
The devil is always in the details and JJ found a few demons. Beelzebub hangs out in Section 2 (posted above). The bill allows a non-profit located in Mississippi to provide a health insurance plan to Medicaid patients. Just one problem: the state allows two private insurance companies, United Healthcare and Centene, to provide managed care to Medicaid patients. Two companies that were selected through the bidding process.
However, the bill will allow valued trade associations such as the Mississippi Hospital Association or the Mississippi State Medical Association to establish their own managed care/health insurance plans and compete for Medicaid patients with private insurance companies. Numerous sources told JJ that these two groups are pushing the bill and are not doing so in a mild and meek manner. MHA already sells medical malpractice insurance coverage in Mississippi, as the state suffered a crisis in finding coverage for doctors years ago. (The annual report is posted below.) However, the bill gets better for MHA and MSMA.
Section 3 is just boilerplate language giving the Commissioner of Insurance the authority to certify plans on an annual basis. However, Section 4 is where Mephistopheles appears.
SECTION 4. Provider-sponsored health plans shall meet the following additional minimum requirements:This section is very interesting because there is already a Mississippi Code Section that specifically provides the guidelines on how managed care plans are to operate. Mississippi Code Section 41-83. Section 4 will allow a "friendly" Insurance Commissioner to allow those providing such plans to get around the law. Section 41-83-7 of the Mississippi Code regulates HMOs. It defines an HMO as:
(a) Demonstrate ownership or substantial representation in governance and operations by licensed Mississippi hospitals and physicians that participate in the Mississippi Medicaid Program. Notwithstanding any other provision of law to the contrary, for the purpose of meeting this requirement, hospitals owned by the state and hospitals owned by local governmental entities are authorized to provide funds for the establishment and operation of provider-sponsored health plans, provided the hospital governing body first determines that such participation is in the best interest of the hospital and the communities it serves;
(b) Satisfy the minimum financial and reserve requirements to be established by the Department of Insurance; (Forget Mephistopheles, this is Loki and Majin Bu combined.).
(c) Meet all contractual requirements for contracting with the Division of Medicaid to provide managed care or coordinated care services to Medicaid recipients pursuant to Section 43-13-117(H). Compliance with this requirement shall be determined and supervised by the Division of Medicaid. Nothing in this act shall be construed as giving the Department of Insurance responsibility or authority for the operation of the State Medicaid Program; and
(d) Such other requirements as may be established by valid regulation of the Department of Insurance.
(n) "Health maintenance organization" means any person that undertakes to provide or arrange for the delivery of basic health care services through an organized system which combines the delivery and financing of health care to enrollees on a prepaid or other financial basis (except for enrolled responsibility for copayment or deductibles) through an organized system which combines the delivery and financing of health care. When an organization accepts and assumes risks and accepts payments, fees, premiums or premium equivalences for that risk it is deemed to be a health maintenance organization.That little definition sounds very much like Sections 1 and 2 of SB #2441, doesn't it? However, that is not the most troublesome part of the bill. That little section (b) that covers net worth requirements is worthy of your attention. 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.
Let your skulls filled with mush percolate for a minute. Current law requires these insurance companies to keep at least a net worth of $1.5 million dollars. Think of it 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 Commissioner of Insurance "friendly" to their interests, they can effectively control the regulations. A friendly 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. It's much easier to herd one cat than several hundred. Legislatures are such pesky things.
The bill passed the Senate unanimously. Yes, even the Tea Party trio voted for the bill. However, the bill was amended in the House. The House changed Section 3 and requires managed care plans to follow the requirements spelled out in the Mississippi Code for HMO's. In other words, there will be no "friends" in state government who will be able to write "friendly" regulations at will for these "nonprofits" and "trade associations". Such plans will have to follow the Mississippi Code- as does everyone else.
The bill is currently enjoying the hospitality of the Conference Committee. Numerous sources inform JJ that the MHA is quietly but strongly pushing for the stuffing of tax credit language into the final conference committee bill. Forget tax cuts for the common folk, its about the tax breaks for the connected cronies. Stay tuned.
*Capitated: Negotiated price per patient. If the actual cost is below that price, the insurer makes a profit. If it is above the price, the insurer loses money. It's an incentive to control costs.