Observers doubt plan to link Medicaid, HMOs

Art Nadler

Tuesday, April 7, 1998 | 10:44 a.m.

A proposed state program that would make it mandatory for Medicaid patients to only use managed care organizations has some health officials and private citizens crying wolf.

The Legislative Committee on Health Care listened intently Monday in Las Vegas, as Christopher Thompson, administrator for the state Division of Health Care Financing and Policy, outlined how the program would work.

By April 1, all individuals on Medicaid would be required to enroll in the managed care program, run by designated health maintenance organizations (HMOs), Thompson said. Recipients would no longer have the option of seeing a physician of their choice on a fee-for-service basis.

The program is scheduled to begin in October.

As of Jan. 1, the Health Care Financing and Policy Department calculated the state Medicaid client base to be 97,852.

Thompson said Medicaid clients could still see a physician of their choice, while they applied to a Medicaid Managed Care HMO. Once they were accepted, future physician appointments would be controlled by an HMO.

"You keep taking away programs that we use to be reimbursed (for)," Bill Hale, chief executive officer at University Medical Center, said at the hearing in the Grant Sawyer State Office Building. "It will be difficult for us to step up to the plate and take care of people.

"UMC could lose a major portion of its patient base, and we'll have to take care of only the really sick people. These are the ones who don't have any (health) insurance."

Hale said UMC would lose lucrative birthing and pediatric business to HMOs. These areas of medicine are traditionally the highest money makers for hospitals.

According to statistics compiled for the SUN by the state Division of Health Care Financing and Policy, Medicaid patients served by hospitals in 1997 included: UMC, 6,987; Sunrise, 5,008; Lake Mead Hospital and Medical Center, 2,095; Valley Hospital Medical Center, 1,301; and Saint Rose Dominican Hospital, 774.

Thompson said switching Medicaid patients to HMOs would only yield a 1 to 3 percent savings in health care costs. He said the state program wasn't designed to save money, but instead to give clients better access to health care.

"There won't be any 15 percent savings like in private industry," Thompson said.

"The proposed changes... will have a profound impact on tax-financed programs involving tens of millions of dollars and could create a ripple effect on the health care of everyone -- rich, poor, insured and uninsured," Adair Dammann, a representative with the state Service Employees Union, said.

Assemblywoman Barbara Buckley, D-Las Vegas, said it's important to make sure HMOs send patients to "safety net providers" such as UMC.

"We need a good deal of dialogue before we approve this," Buckley said. "I'd like to see who the (HMO) providers are."

Hale raised concerns over HMOs having exclusive contracts with hospitals, where they guarantee a certain amount of bed days from their clients.

According to a 1993 "Letter of Agreement Amendment" obtained by the SUN between Sunrise Hospital and Sierra Health Services Inc. (then Health Plan of Nevada), the HMO stated it would direct a minimum of 78 percent of its bed-day utilization to the hospital.

Under a March 18 draft of the state Medicaid Managed Care Program, Temporary Assistance for Needy Families (TANF) and Child Health Assurance Program (CHAP) clients would be required to enroll.

Excluded would be adults diagnosed as being seriously mentally ill, children who are emotionally disturbed and children with special health care needs.

"They are going to do a program and only take the healthy population," Hale said. "The disabled will still be coming to us (UMC) for service."

Because UMC is the Clark County hospital and responsible for providing indigent care, taxpayers will have to pay for these uninsured people, Hale said.