By Christopher Guadagnino, Ph.D.

Published January 1999

• React to this article in the Discussion Forum.

PND: What is the scope and timetable of the HealthChoices startup in western Pennsylvania?

CB: Currently we are in the implementation phase for HealthChoices Southwest in ten counties: Allegheny, Armstrong, Beaver, Butler, Fayette, Greene, Lawrence, Indiana, Washington and Westmoreland. We have over 294,000 folks in these counties and a little over half of them are already voluntarily enrolled in an HMO. Those individuals will be transferred into HealthChoices effective January 1, 1999. Those individuals have already received an enrollment information package that tells them all about the differences between the voluntary program and HealthChoices. It includes information on the three plans and their networks: UPMC Health Plan/Best Health Care, Gateway Health Plan and Three Rivers Health Plans/MedPlus. If they wish they can call Benova, which is our independent enrollment assistant broker, and change if they want to.

PND: What problems in HealthChoices Southeast program have you identified?

CB: There were a number of monitoring activities over the two years of HealthChoices Southeast: feedback from consumers, our advisory committees in the Department and those in the plan. We did numerous on-site reviews. We had on-site financial reviews in the summer of 1997 because we determined early in that they were having difficulties in paying bills timely and they were actually sustaining large losses even then. Their systems were not prepared to handle the volume and complexity of the HealthChoices services that they were providing, and the support procedures and controls were not adequate for the volume and scope of what they sustained. Even though they had all been paying bills previously in different venues and there had been readiness reviews, they were not as intensive. That’s certainly one area we changed for the southwest.

Other difficulties included claims processing, special needs supports. We included special needs populations and mandated special needs units. But I don’t think the plans had defined the services specifically enough and there were issues early on with members needing more support than they were able to give. Providers were calling us well into 1997 and saying, "I’m in Philadelphia. How come I can’t operate in the Medicaid program anymore?" And we have to start over and say, "Well you can, but guess what? It’s now managed care. So you need to be in touch with the managed care organizations, become part of their provider network, etc." I think a lot of the resistance, problems and concerns related to outreach to provider groups. For the southwest we took very specific steps to do a lot better provider education and involvement.

We wanted as quickly as possible to have the plans collect encounter data that would actually define the contacts members had with all kinds of medical providers so that we could begin to assess the health status of all our members and assess quality of care better and move to risk adjusted rates in which we would pay different rates for different diagnoses of care.

Also, the education materials for enrollees and providers were often late and not as complete as we would have liked them to be. I think the enrollee packages were probably better than the provider packages actually and often the provider manuals were not complete. The plans and the Department had difficulty getting the proper provider manuals into the hands of providers so they would know what the claims processing procedures were. And maybe if they had had better instructions, fewer would have rejected it.

PND: Specifically, how will the provider education be handled?

CB: In the southwest we have invested in a provider education program. Starting in early 1998 we went around and met with over 50 professional associations of the providers—just about every association we could identify and that would meet with us. We gave the association staff and leadership fact sheets about HealthChoices, asked for their feedback in terms of what their members need. We agreed to go to conferences. We’ll speak anywhere, anytime. And we’ve been doing a good bit of that, particularly in the southwest counties. This has been a coordinated effort with the Office of Mental Health and Substance Abuse. And recently a fact sheet was mailed directly to all medical providers in those ten counties that are part of our fee-for-service program.

PND: A number of red flag issues have been identified in the HealthChoices Southeast program by the Hospital Council of Western Pennsylvania, such as monitoring accounts receivable for prompt payment of claims. How will those problems be handled and overcome?

CB: We have implemented in the southwest and also applied the same requirements to the southeast new financial reporting requirements and claims processing requirements, so that the reports that we receive are more timely. In fact, some of the reports are monthly snapshots so that we can see more quickly how many claims were received, how many were handled, what is pending, which gives us a sense of whether a backlog is growing or not. In the previous program that had happened only quarterly.

We now have implemented core teams. Every plan in the southeast and the southwest now has one core team leader who is an expert assigned to their individual plan, and they have one full time staff person. The core team membership is a multi-disciplinary group of people from clinical staff, financial staff, special needs staff, outreach staff, etc. They will closely be monitoring the southwest during implementation based on what we’ve learned in the southeast to make sure that the HMO they’re responsible for is meeting contractual requirements.

An incredible amount of effort and time were allotted to southwest readiness reviews. In the southeast, readiness reviews only lasted two or three months. Numerous technical assistance sessions, several of them having to do with financial issues, claims process issues, systems issues were held, some of them as early as February, March and April of 1998. We have had intensive sessions in August, some in September, some are still going on as we see problems or questions or confusion. The fee-for-service claims processing staff here were involved in even doing test files, in seeing system documentation. Not just hearing overviews of what they plan to do, but seeing it and verifying as much as we could if procedures and controls were in place to be able to pay claims in the volume that we are predicting. We did not approve the contract until corrections were made. The final go decision was only made on November 30. The core teams are for ongoing monitoring of the programs. Every two or three weeks they sit down and go through the status of each of the plans. They do on-site visits frequently, as needed. There are special focused reviews done if there’s a problem or an issue. There’s a tracking plan of all outstanding issues with the individual plans and, if they need technical assistance, that’s provided. This core team is really a multi-disciplinary monitoring and support group.

PND: How are core team members chosen?

CB: The department chooses them. We have access to our medical directors staff. We have a chief medical director and an assistant medical director for Medical Assistance and a medical director for the office of mental health. The staff, mostly registered nurses, are the actual core team members but our medical clinicians and medical directors supervise their efforts and are personally involved in many of the policy decisions and review of the materials.

PND: Another red flag issue that has been raised is the need for uniform documents and processes. How will that be addressed?

CB: Let me be clear. I understand that a number of hospitals particularly requested that the Department mandate standardized billing from all HMOs. We did not do that and we have no plan to do that. We have looked at that at various points in time. We certainly have similar requirements for encounter data and claims data but we do not have any plans to mandate a single claims form. Quite frankly, all of our plans are different entities, have different computer systems, and it’s a level of control that we don’t think that we need to mandate. We have a minimum data set. And certainly for encounter data and claims that is clear. We’ve contracted out this program. Medicare HMOs each have their own billing form. Commercial HMOs each have their own billing form. Some of them are on-line billing, some are using HCFA forms, some are doing their own. We’re trying to be part of that marketplace. Hospitals and other providers deal with all those multitude of forms everyday. Whether or not at some point the marketplace will alter that I don’t know. But at this point we have no plan to mandate the same billing forms or documents.

PND: There have been complaints, especially by hospitals, that the department underpaid for some patient populations, producing a considerable burden.

CB: The Department obviously did a lot of work in developing rates and there’s been an ongoing debate about whether or not our rates were accurate. When the Legislative Budget Finance Committee had Arthur Andersen do a review, the Department’s read on that is that they were, overall, actuarially sound. Even if you accepted all of Arthur Andersen’s findings, their net result differed from the Department’s by only about one percent, which we think is pretty phenomenal. We offered in 1998 an over seven percent rate increase. Two out of the four HMOs in the southeast have a significantly improved financial status. Oxford Health Plan is exiting Pennsylvania, but their financial problems were national. We are in the final throes of negotiating rates for 1999. We have done extensive analysis of the pharmacy issue and other medical trends. This has been a very volatile year in the managed care business, particularly because of pharmacy. We believe the rates that we’re offering for 1999 are adequate and respond to all changes in the marketplace.