Since the HUSKY insurance program for children and low-income families was put out to bid in 2008, health care advocates have warned that combining it with Gov. M. Jodi Rell’s Charter Oak Health Plan for uninsured adults would prompt the three managed care organizations to subsidize their losses.
While that never happened because it would have been a violation of Connecticut’s waiver with the federal Centers for Medicare and Medicaid Services, it did cut into the profits all three companies made in 2009.
One of those managed care companies administering the programs is AmeriChoice. CEO Don Langer said last week that AmeriChoice’s profits for HUSKY were much lower when losses for the Charter Oak Plan were added.
This means that instead of a $3.6 million profit over and above administrative costs, AmeriChoice would instead net more like $800,000.
The other two managed care organizations that administer the program are Aetna and Community Health Network of Connecticut. The three MCOs made a total profit of $18.8 million in the first year of the program. Most of those profits went to Aetna, because Community Health Network is a nonprofit and doesn’t have shareholders. CHN services most of those enrolled in the program, followed by Aetna and then AmeriChoice.
New Haven Legal Aide attorney Sheldon Toubman said the Rell administration “has given extra taxpayer money to the MCOs in order to induce them to run her deeply troubled Charter Oak Plan.”
But Ellen Andrews, executive director of the CT Health Policy Project and a member of the Medicaid Managed Care Counsel, said that what she found disturbing about last week’s presentation by the Department of Social Services was the number of children that had to drop the HUSKY B plan because they could no longer afford it.
She said 1,260 children that werent subsidized by the state were overcharged $27 a month and 1,279 kids dropped out of that plan in the last year because they couldn’t pay the premium.
“Maybe if they weren’t paying hundreds of dollars in profits to the HMOs, those kids would still have coverage,” Andrews said. She further added that if the Rell administration had followed the legislature’s instruction and switched to a self-insured plan, the $18.8 million in profits would be coming back to the state to help solve the budget deficit.
David Dearborn, a spokesman for the Department of Social Services, said that while the reporting of the three programs—HUSKY A, B, and Charter Oak—is combined for the legislature, each program is calculated and negotiated separately.
“While the MCOs may aggregate the programs for their internal reporting, again, these rates (what DSS pays the MCOs for each program) are computed and negotiated independently and reflect professional actuarial projections to sustain three viable programs to meet the needs of our enrollees,” Dearborn said in an email Tuesday.
Dearborn said the payments the three managed care organizations received from the state were based on “professional actuarial analysis that projected utilization, enrollment and other factors.”
“Actuarial determination of the prospective rates does not guarantee that they will be on target for each level of HUSKY, but it does provide the state with the best professional analysis of the available data and trends at the time,” Dearborn said.
Now that DSS has new data it will use the numbers from 2009 to renegotiate the contracts it has with each of the managed care organizations.
Asked about the $18.8 million profit, Sen. Edith Prague, a Democrat from Columbia who sits on the Medicaid Managed Care Counsel, said it was “outrageous.”
She said she also was disturbed by the medical loss ratios and the disparities between the MCOs.
According to data compiled by the Department of Social Services, Aetna’s medical loss ratio was 70.5 percent, AmeriChoice’s was 62 percent, and CHN’s was 71.8 percent. This means that’s how much each organization spent on medical care for its clients.
Rep. Vickie Nardello of Prospect said last week at the meeting that she’s concerned about what the Department of Social Services is doing about the “vast difference in medical loss ratios among the three plans.” She said she cringed at the 62 percent figure, which she felt was quite low.
It means AmeriChoice only spent 62 cents of every dollar it received on medical care.
“The medical loss ratio is so outrageous,” Prague said. “We’ll get a handle on it when we get a Democrat in the governor’s office.”
Republican gubernatorial candidate Tom Foley said earlier this week that he doesn’t think the state should move to a self-insured plan and that it’s better to allow the MCO’s to take the risk.
“The state is negotiating limitations on the administration costs for the MCOs and, with current data, trends and programmatic changes, doing our best to also drive down the overall capitation rate,” Dearborn said. “The combination of these two actions should raise the medical loss ratios of each of the plans.”
However, until a new administration takes office the executive board of the Medicaid Managed Care Counsel decided last month that there’s little it can do to switch the state over to a self-insured model even though the state budget passed by the legislature and signed by Rell mandated it.