Joanne Sammer

	As a new health plan, Kentucky Health Cooperative needs to be all things to all people-all on a budget. As the state gets ready for the first year of operation for its “kynect” health insurance exchange, Kentucky Health Cooperative (KHC) is preparing to insure “tens of thousands” of individuals and families.

	Leaders for the cooperative are not sure where it will rank relative to the rest of the market in terms of enrollment and premium costs.

	“However, we do think that we will be very competitive,” says Janie Miller, Kentucky Health Cooperative’s CEO. “We expect a large percentage of the uninsured and underinsured populations to be eligible to receive a premium subsidy.”

	The organization began with a federal loan agreement signed in June 2012, which provides $11.9 million of start-up funding that is made available as the plan achieves specific milestones in the development process, as well as $46.8 million in solvency funding. The loan letter of agreement was signed before the federal government cut funding for cooperatives that had been made available under the Patient Protection and Affordable Care Act (PPACA).

	KHC itself was established as a result of actions by “business and community leaders, particularly those involved with primary care and federally qualified health centers throughout Kentucky, who are very familiar with the issues of the uninsured and the lack of access to health coverage for people in Kentucky,” says Miller.

Feedback from our reader surveyWhat is also clear is that, given the state’s population, the co-op’s covered population is likely to include many individuals with cardiovascular disease, cancer, smoking-related conditions, obesity and other serious and chronic conditions. For that reason, the plan is preparing to help consumers to navigate the healthcare system and to deal with pent-up demand. The need will be particularly acute among individuals who have not had access to preventive care or treatment for chronic conditions.

	“We will be reaching out to those members and helping them to identify a medical home where they can obtain needed care,” says Miller. “We will also be looking at whether they are they up to date on preventive health needs, particularly for children. We can work with parents to make sure that they understand the importance of getting the children in for well-child visits and immunizations.”

	The outreach could extend to helping individuals to make their first appointment with a physician.

	Because the co-op cannot use federal loan funds for marketing, it has no marketing budget to begin open enrollment season. Therefore, outreach and education is the best way for the KHC to make connections in the marketplace and make itself known to consumers.

	“We are finding is that there is a lot of confusion and lack of information out there as to what [PPACA] means,” says Miller. “We are doing grassroots work in small meetings with various associations, women’s clubs, chambers of commerce and local and county governments.”

Articles

New members likely to have more chronic conditions

Kentucky co-op leverages outreach during open enrollment

	On September 1, MemorialCare Health System, a not-for-profit integrated delivery system with six hospitals 

its Seaside Health Plan as perhaps a hedge against the ongoing uncertainty surrounding the future of healthcare.

	“We are now moving from a being a system of hospitals to becoming a fully integrated health system,” says Barry Arbuckle, PhD, MemorialCare Health System president and CEO. “The addition of a health plan license will be useful in the immediate term but also have some potential longer-term strategic value.”

	As payers move from traditional fee-for-service to risk-based reimbursement, Arbuckle notes that many physicians believe that they can better serve the community by “being in a position to own and operate the health plan that allows them to make some utilization decisions rather than having some other middle person doing so.”

	Rather than building its own infrastructure to support the plan, Seaside began by acquiring the assets of Universal Care in November 2012. The deal included the retention of certain key staff members with experience in health plan operations, as well as plan-to-plan contracts to be serviced by assignment of agreements with Universal Care’s contracted providers and MemorialCare’s primary care physician network.

	The plan-to-plan contracts allow Seaside to operate like a health plan but partner with other health plans for certain services, including claims processing and marketing.

	“We wanted to be able to hit the ground running with greater success and less expense this way,” says Arbuckle.

	Seaside will not be participating in the California health insurance exchange in 2014 and it is evaluating whether to participate in 2015.

	A key initiative for Seaside Health Plan is the demonstration project it is operating for California Children’s Services. The project is one of five in the state designed to create a managed care environment for children with certain chronic conditions that will require life-long care.

	“These kids typically see multiple specialists for a lifetime,” says Arbuckle. “The care for these patients has historically been quite uncoordinated and paid on a fee-for-service basis. The demonstration project is moving that care back to more of a managed care, fully coordinated mode.”

	Insurance for that population has traditionally been an issue. This demonstration project has the added benefit of being able to move children out of the demonstration project and into the Seaside Health Plan under Medi-Cal if they qualify when they turn 18 years old.

	“Because we are a health plan, we can continue to cover them and we have the systems necessary to hand them off seamlessly,” says Arbuckle.

	Seaside is a regional plan that will serve southern Los Angeles County and northern Orange County, Calif. with a network that includes about 300 primary care physicians and specialists. Seaside was approved with a Knox Keene health plan license earlier this year, and is a participating network for certain partner health plans that include Health Net, L.A. Care Health Plan, Anthem Blue Cross, Blue Shield of California and Care 1st Health Plan.

	The not-for-profit Seaside Health Plan is named after Long Beach’s first hospital which opened in 1907 and is today Long Beach Memorial. It is open to individuals and families enrolled in Medicare, California’s Medicaid program Medi-Cal, Medicare/Medicaid dual eligibles and commercial health plans.

A key initiative for Seaside Health Plan is California Children’s Services demo

MemorialCare's new Seaside MCO manages plan-to-plan contracts

 are willing to accept Medicaid patients today, as the reimbursement rates continue to decline. State and federal policies are attempting to remedy the problem with additional funding, particularly for primary care.  

For most states, the rule proposed in the Patient Protection and Affordable Care Act (PPACA), which increases Medicaid rates up to Medicare levels, and the $11 billion in new federal funds to improve Medicaid primary care, were good news.  

"That is increasingly difficult to do that with such a difference between Medicare and Medicaid rates," says Johnson. 

However, there are long-term implications for any temporary increase in provider fees, he says. It could be difficult for providers and Medicaid managed care plans to return to the lower fees when the short-term program expires. If rates return to past fee levels-which will then be several years out of date-the payment difference could be dramatic. Sharp rate drops could cause a mass exodus of providers and put Medicaid managed care over a barrel. 

The scenario plays out year after year in Medicare, in which the intended payment reduction to providers based on the Sustainable Growth Rate is habitually overruled by Congress. Cumulatively, the well-overdue rate reduction has climbed to 30%. 

There is concern that future Medicaid expansion under PPACA will strain existing provider networks. Networks might not be adequate to accommodate primary care much less specialty care needs. The Kaiser Family Foundation estimates Medicaid expansion could bring an additional 17 million individuals to the program by 2016.  

A new fee increase can help alleviate the access issue to some extent by potentially attracting new providers to Medicaid plan networks or encouraging contracted to providers to accept more new patients.  

It is less clear what will happen to plans' ability to serve new Medicaid beneficiaries if large numbers of providers exit. The segment seems to be fairly attractive to plans looking to expand membbership.  

In the 1990s, Medicare providers opted out of the program because of low rates, but were attracted back in when Medicare Advantage was created and rates increased.  

For Medicaid enrollees, an abrupt change in physician availability could be problematic; particularly for those who have just gained access to primary care coverage and preventive care for the first time in years. The patients could develop relationships with physicians and get into the habit of seeking care. 

However, once the relationship is established, a physician might later decide to stop accepting new patients or stop taking Medicaid all together, says Doug Fenstermaker, managing director and vice president of healthcare at Warbird Consulting Partners in Atlanta.  

"That is a problem when taking care of people who are new to the system and just learning how to use primary care rather than relying on the emergency room for care," Fenstermaker says. "That could come to a grinding halt." 

Temporary Medicaid fee hike could come back to haunt plans

Enrollment in Medicare Advantage plans climbed this year, despite the fact that Medicare Advantage payment rates were frozen at 2010 levels, according to recent research conducted by the Kaiser Family Foundation.  

One quarter of Medicare beneficiaries are now enrolled in Medicare Advantage plans. Within these Medicare Advantage plans, 65% of Medicare beneficiaries are enrolled in HMOs, 27% in local or regional PPOs, and just 5% in private fee-for-service plans.  

This increase in Medicare Advantage enrollment can be traced to two key trends. The first is the sheer number of new beneficiaries as more of the baby boom generation reaches the age of Medicare eligibility.  

The second trend driving the popularity of Medicare Advantage plans is the fact that, prior to enrolling in Medicare, more of the Medicare-eligible population have experience and have become comfortable with managed care plans.  

"Many of these people are familiar with managed care, which was not the case for the people going into Medicare 10 years ago," notes Donahue. "They are used to having copayments. They are used to having some type of health insurance. They are more aware of the need for health insurance." 

Other issues are also playing a role in the growing popularity of Medicare Advantage plans. As larger hospitals and more well-known providers participate in managed care plans, individuals will be more drawn to Medicare Advantage plans, says Christina Frizzera, senior advisor with Leavitt Partners in Salt Lake City, Utah. For example, in Maryland, the entry of Johns Hopkins University and the University of Maryland Medical Center have served to make Medicare Advantage plans more popular in that region.  

Enrollment in Medicare Advantage plans climbed this year, despite the fact that payment rates were frozen

Author | Joanne Sammer

Articles

Kentucky co-op leverages outreach during open enrollment

MemorialCare's new Seaside MCO manages plan-to-plan contracts

Temporary Medicaid fee hike could come back to haunt plans

Medicare Advantage grows in size, percentage of total enrollment