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Under a new state policy that went into effect on July 1, hospitals in Missouri that don't contract with one of the three state insurers for managed Medicaid face a 10 percent cut in fee-for-service reimbursement.
The move is aimed at increasing provider participation in managed care plans, but the Missouri Hospital Association says providers and others are scratching their heads over the reason why.
There is no apparent savings to the state, only for the three managed care plans, Centene, UnitedHealthcare and WellCare, according to Dave Dillon, spokesman for the MHA.
"It basically shifts power to the managed care organizations," Dillon said.
Under managed Medicaid, the insurers negotiate the per member per month rate with the state, and also enter into agreements directly with the providers for what they'll pay for hospital services.
Should providers and the MCOs not be able to agree on a contract, the insurers can simply walk away and say they'll pay whatever the fee-for-service rate is, minus the 10 percent, according to Dillon.
Already the insurers are using their new bargaining power, according to Dillon.
"We're seeing MCOs come in and say, by the way, we want to renegotiate the contract," he said
During a public hearing held by the state Department of Social Services, many hospital representatives said the payment cuts would be financially disastrous, especially for rural hospitals operating on tight margins.
Critics say the policy puts patient health at risk as some physicians would decline to see Medicaid beneficiaries if payments were cut by 10 percent.
Providers and the MHA also complained of a lack of transparency to the department's process of instituting the 10 percent FFS cut.
When asked at the public meeting the reason for the policy, department representatives said they wanted to ensure all enrollees have access to managed care plans, according to Dillon.
"The intent of this provision is to increase provider participation in managed care," the Department of Social Services said by statement. "The health plans and providers may still negotiate reimbursement arrangements under managed care. It is important to note that managed care plans are required to maintain network adequacy standards to participate in the Medicaid managed care program."
All of the state's 160 hospitals contract with at least one of the three managed care companies and all but 12 have contracts with all three.
The state contracts with the managed care organizations for a per member, per month payment for certain Medicaid beneficiaries, children and pregnant women. But hospitals are still reimbursed for services for all other Medicaid beneficiaries by fee-for-service. FFS covers the most expensive Medicaid beneficiary categories, the aged, blind and disabled.
"To me this is an indication that MCOs seek to have entire population in their plans, not just moms and kids," Dillon said.