View MHA Today online.

MHA Today Header

April 11, 2014

MHA Today is provided as a service to members of the Missouri Hospital Association. Additional information is available online at MHAnet.


Rifles and shotguns are both firearms. However, they are as different as they are similar. The choice of which is the appropriate one in any given situation is based on what you are aiming at.

There has been a great deal of discussion about managed care as a solution to the state’s approach to Medicaid reform. Expanding managed care to all of Missouri, beyond just the I-70 corridor, is a deceivingly simple solution to a very complicated problem. It’s a rifle shot when a shotgun blast — or more appropriately, a comprehensive solution — is what’s needed.

Expansion of Medicaid managed care statewide, especially as currently proposed, would lead to many unintended consequences. Among those is the fact that it’s not significantly more efficient than fee-for-service Medicaid. Research from Mercer suggests (see Page 9) that the direct cost savings are minimal — less than 3 percent. Other states’ experiences bear this out. Both Connecticut and Oklahoma have dropped their programs because the big savings were never realized.

Another problem with managed care is that the costs are not controlled by the appropriation process. Contract rates for the state’s Medicaid managed care plans must be within a range determined by an actuarial firm. The Centers for Medicare & Medicaid Services requires the rates be actuarially sound, and the legislature must appropriate the revenue. In the current budget, lawmakers will be required to appropriate more than $34 million to maintain the present contracts. This means the automatic increases for managed care would crowd out discretionary inflation updates for doctors, dentists, hospitals and other health care professionals and organizations.

There’s worse news. Managed care administrative costs are high. In fact, the per-member-per-month administrative cost of Medicaid managed care is more than double that of fee for service. I can’t imagine selling that argument to lawmakers — private-sector administration that costs more than public-sector administration. However, lawmakers haven’t set an administrative cost cap, like the 85 percent medical loss ratio required of most commercial insurers, to reign in these costs. If lawmakers were to expand the managed care system statewide, assuming an administration and profit margin of 15 percent, the state would be exporting $46.5 million from the rural parts of our state to insurance companies’ corporate headquarters, all but one of which are in other states. That’s a reverse jobs agenda.

Sadly, this isn’t the only reason why statewide managed care is a bad deal. Of the eight states that border Missouri, only one has a lower percentage general revenue commitment to Medicaid. This is largely because of the provider tax programs for hospitals, nursing homes, ambulance services and pharmacies. No such program exists for the state’s managed care programs. As a result, managed care gets all of the financial reward without the “skin in the game” that has become such an important part of Medicaid sustainability in Missouri. Medicaid managed care is currently the largest part of the general revenue portion of the state Medicaid budget at 26 percent, compared to 2 percent for hospitals. Expansion will only increase Medicaid managed care’s share of the state budget and increase the crowd out pressure, as noted previously. And, expansion on its own could increase the pressure to divert hospital tax payments to fund the managed care budget line.

Here’s another troubling part of the debate. As managed care is touted as a solution, it would exclude the most challenging and expensive components, such as behavioral health and pharmacy. The source of all of those claimed savings, then, would be medical care provided by hospitals and individual practitioners.

Another important fact is the data shows Medicaid managed care’s performance during the past decade has serious gaps in terms of actual patient management. Since 2004, total outpatient emergency department utilization for managed care is up by 25 percent, compared to 1 percent for fee for service. And for psychiatric disorders, managed care emergency department utilization increased by 64 percent, compared to 21 percent for fee for service. These numbers alone set up a whole set of questions that legislators should be asking.

The Medicaid debate should be about problem solving. We have a tremendous opportunity to build a system that returns value to taxpayers and improves the health of enrollees. Missouri doesn’t get that by simply “privatizing” parts of Medicaid through expansion of managed care. In fact, it does quite the opposite.

Managed care expansion is a rifle shot approach. Unfortunately, the target of an efficient and effective health care system requires much more than a rifle shot. We need a solution that does more than focus on the efficiency of the payer, especially based on assumed efficiency that doesn’t deliver. We need to innovate.

The solution is an integrated care model connecting payers, providers and patients that allows the health care system to deliver on the value of the Triple Aim — better care, better health and lower cost. Managed care hasn’t delivered on these goals, even among its limited population of enrollees. There’s little evidence that managed care is the solution, when scaled up.

The Triple Aim is big thinking and a big target. When you are shooting at three things at the same time, you need a shotgun, not a rifle.

What do you think? Send me a note to let me know.

Herb B. Kuhn Signature
Herb B. Kuhn
MHA President and CEO

In This Issue
General Assembly Sends Budget Shortfall Funding Bill To Governor
Senate Committee Reviews Conscience Protection Legislation

House Committee Adds Hospital Pharmacy Language To Architect Licensure Bill

Senate Committee Hears Psychiatric Patient Restraints Bill
Senate Committee Approves Mammography Bill
Senate Committee Hears Bill On Program for Donor Human Milk
Sebelius Resigns From HHS; Obama Appoints OMB Director To Post
MO HealthNet Publishes Proposed No Payment Rule For EEDs

Resources Outline Meaningful Use Stage 1 Criteria Changes For Fiscal Year 2014

Advocate Advocate state and federal health policy developments

General Assembly Sends Budget Shortfall Funding Bill To Governor
MHA Staff Contact: David Hale

The Missouri House and Senate have given final approval to the “supplemental appropriations” bill that authorizes funding to address unexpected expenses or revenue shortfalls in the state budget for the current state fiscal year that ends June 30. House Bill 2014 includes $40.3 million in state general revenue to offset the loss of tobacco settlement revenue used to fund Medicaid hospital payments. The loss was caused by the General Assembly’s ongoing failure to enact laws needed to comply with a settlement agreement between most states and the major tobacco companies. The bill now moves to the governor for his signature.


Senate Committee Reviews Conscience Protection Legislation
MHA Staff Contact: David Hale

This week, a Senate committee reviewed legislation that would expand the state’s legal protections for health care workers and institutions that decline to provide specified services that contradict with their religious or moral principles. House Bill 1430 was filed by Speaker of the House Tim Jones, R-Eureka. Although MHA has opposed versions of the legislation in previous sessions, asserting that they would likely spawn employment discrimination litigation, disrupt services without notice and add to hospitals’ administrative burden, the current version of the bill mitigates many of these previous concerns.


House Committee Adds Hospital Pharmacy Language To Architect Licensure Bill
MHA Staff Contact: David Hale

The House General Laws Committee heard a measure on the licensure of architects and other professionals. Before passing House Bill 2131, the committee added the language in Senate Bill 942 that would revamp the regulatory oversight of hospital pharmacies. The language in Senate Bill 942, supported by MHA and heard in a Senate committee last week, would require joint regulation by the Missouri Board of Pharmacy and Missouri Department of Health and Senior Services to provide consistent guidance to pharmacists operating in hospital-based pharmacies. MHA has worked with the pharmacy board, DHSS and other stakeholders to develop this proposal.


Senate Committee Hears Psychiatric Patient Restraints Bill
MHA Staff Contact: David Hale

Yesterday, a Senate committee reviewed House Bill 1779. If passed, it would allow advanced practice registered nurses to order the use of physical or chemical restraints or seclusion if done under the auspices of a collaborative practice arrangement with attending physicians. The new standard would apply in facilities or programs operated by the Missouri Department of Mental Health, licensed psychiatric hospitals and in designated psychiatric units of licensed acute care hospitals. Such APRN orders are subject to specified review standards. MHA testified in favor of the bill and requested language broadening the bill to include public hospitals with designated psychiatric units. No further action was taken.


Senate Committee Approves Mammography Bill
MHA Staff Contact: David Hale

This week, a Senate committee approved House Bill 1510, which requires that patients be notified of the potential implications of dense breast tissue on the results of mammograms. A companion bill, Senate Bill 639, was heard by a House committee last week.


Senate Committee Hears Bill On Program for Donor Human Milk
MHA Staff Contact: David Hale

Yesterday, a Senate committee reviewed Senate Bill 899 requiring the Missouri Department of Social Services to reimburse hospitals under the MO HealthNet program for donor human milk provided to critically ill infants under three months of age in neonatal intensive care units, if physicians order the milk and DSS determines it is medically necessary. St. Luke’s Health System in Kansas City and MHA testified in favor of the bill. No further action was taken.


Sebelius Resigns From HHS; Obama Appoints OMB Director To Post
MHA Staff Contact: Andrew Wheeler

After serving as secretary for five years, Kathleen Sebelius has resigned from the U.S. Department of Health and Human Services. President Obama has nominated Sylvia Mathews Burwell, the director of the Office of Management and Budget, for HHS secretary.


Regulatory News Regulatory News the latest actions of agencies monitoring health care

MO HealthNet Publishes Proposed No Payment Rule For EEDs
MHA Staff Contact: Sharon Burnett

In the April 15 Missouri Register, the MO HealthNet Division will publish a proposed payment policy rule, 13 CSR 70-3.250, for early elective deliveries. The rule specifies that EEDs, or deliveries before 39 weeks gestation without a medical indication, will not be reimbursed by MO HealthNet. Nonpayment includes maternal obstetrical services billed by both the delivering physicians/providers and the delivering institutions. Nonpayment also applies to facility charges for nonroutine newborn services provided during the initial stay for conditions resulting from an EED that are identified within 72 hours of delivery by the delivering facility. Comments on the proposed policy must be sent to the MO HealthNet Division by Thursday, May 15, for consideration.

In Missouri, 46 birthing hospitals have been working with MHA and the March of Dimes for the past two years on an initiative to significantly reduce EEDs by the end of 2014. Of those 46 hospitals, 78 percent currently report a rate of 5 percent or less, and 61 percent have had no EEDs in the last six months of reported data. This initiative from MHA has demonstrated that having and enforcing a “hard stop” policy is the key to eliminating EEDs. Currently, 87 percent of the participating hospitals have a hard stop policy in place. Only 35 percent of the hospitals reported having a hard stop policy when the collaborative began.


Resources Outline Meaningful Use Stage 1 Criteria Changes For Fiscal Year 2014
MHA Staff Contact: Josette Bax

The Stage 2 rule for meaningful use included changes to Stage 1 requirements that took effect Oct. 1, 2013, the start of the 2014 fiscal year. Eligible hospitals or critical access hospitals planning to participate in Stage 1 of the Medicare or Medicaid Electronic Health Records Incentive Program can review these changes using the following resources.

Additional information is available online.


Did You Miss An Issue Of MHA Today?

The following articles were published in this week’s issues of MHA Today and are available online.

April 10, 2014
MHA Today’s “Spotlight” — Callaway Community Hospital, Fulton
Senate Debates House Measure On Medical Malpractice
HHS: 7.5 Million Enrolled In Health Coverage Through Exchanges
MHA Distributes Uncompensated Care Analysis
MHA To Host MEDES Webinar
Study Examines How Community Factors Affect Hospital Readmission Rates
MLN Connects Provider eNews Available

April 9, 2014
MHA Today’s “Spotlight” — BJC Healthcare, St. Louis
Senate Debates Measure Restricting State General Revenue Appropriations
Legislators Enact New Law On Consent To Treatment
CMS Releases Physician Transparency Data
MO HealthNet Expansion Of Health Homes Presents Opportunity For Outpatient Clinics
CMS Releases New Meaningful Use Stage 2 Attestation Calculator
AHA Announces New Quality Forum
February MUR Available On HIDI Analytic Advantage®

April 8, 2014
Kaiser Report Examines Uninsured In Missouri
CMS Announces 2015 Medicare Advantage Rates
IOM Issues Report On Capturing Social, Behavioral Domains In EHRs

April 7, 2014
CMS Announces Provider Webcasts On Improving Patient Outcomes
CMS To Host Webinar On OQR Program, ED Throughput
Lee’s Summit Medical Center Names New CEO
Carondelet Health Names Interim CEO

Did You Miss MHA News?

The following was published recently by MHA and is available online.

Issue Brief
HHS Releases Physician Data, Payment Information (4/9/14)

MHA Consider This Consider This ...

The percentage of children without health insurance coverage declined from 9.7 percent in 2008 to 7.5 percent in 2012.

Source: Robert Wood Johnson Foundation

Missouri Hospital Association
P.O. Box 60 • Jefferson City, MO 65102
Phone: 573/893-3700 • Fax: 573/893-2809 • MHAnet
UnsubscribeContact UsPrivacy Policy