All of us can agree on a few basic tenets of health-care reform.

We want improved access to care, not just in the form of reducing the number of uninsured in the commonwealth, but also by having the medical capacity to care for everyone who needs health care services. We also want a system that can provide the highest quality of care at the lowest price.

As CEO of Greater Philadelphia Health Action, I know that community health centers are part of the health care solution.

GPHA cares for more than 72,000 patients a year. Almost one-third have no insurance, and more than half are enrolled in Medicaid. We work every day to make sure the most vulnerable among us have access to high-quality, affordable health care.

As the health-care reform debate continues in Harrisburg, we appreciate the efforts of the governor and the Legislature to increase access to care and generate more efficiency in our health-care delivery system.

However, we do have concerns with a proposal from the Pennsylvania Department of Public Welfare (DPW) to "carve out" pharmacy services from the private sector Managed Care Organizations and take over providing this benefit for up to 1 million Medicaid patients who are enrolled in these managed-care plans.

DPW says it can provide the same level of care while saving taxpayer dollars. But DPW has yet to say how it plans to implement the new program.

We also worry about whether DPW will have the manpower to implement such a change efficiently and effectively.

Fragmenting this delivery system by "carving out" pharmacy services will take away from this continuum of care.

Ronald Heigler, CEO
Greater Philadelphia Health Action

Read a public plea to lawmakers to reject DPW's proposal.

View the PDF for more information.

View the letter (PDF)

View the PDF here.

Health care reform in Pennsylvania must include access to quality care while containing costs, especially for the most vulnerable among us.

Many of the patients we serve at Hamilton Health Center in Harrisburg are on medical assistance. When our primary care physicians need to coordinate care for our patients, they contact the Medicaid managed care case manager, who is responsible for ensuring that all health care needs of their members are met, including prescription drugs.

If the Legislature approves a drug benefit "carve-out," as proposed by the governor, the state Department of Welfare will be responsible for prescription drug coverage. Physicians will then have to contact DPW in addition to the managed care case manager to address patient health care needs, creating greater challenges and roadblocks to successfully coordinating care.

Carve-outs aren't new to managed care; currently there is a behavioral carve-out with mental health and substance abuse services managed by an organization other than primary health care services. Two bureaucracies have been developed to manage one person's problem. IF THE pharmacy carve-out is approved, we'll have three bureaucracies -- one for physical health, one for behavioral health and one for prescriptions.

The justification for the carve-out is to save taxpayer money by claiming a rebate from the federal government. One has to wonder how much money will really be saved once state staff is hired to manage prescription drug coverage and what impact this change will have on the quality of care provided.

Why is it that, rather than creating systems of care that address individual needs, we create bureaucracies that force our most vulnerable citizens to navigate multiple systems? Clearly, we all need to be concerned about maximizing cost effectiveness but I urge the Legislature and the governor to challenge the existing system to find ways to reduce the cost of care rather than developing additional government processes that will eventually cost the taxpayers more money.

My 30-plus years of health care experience has shown that when insurers, providers and government work together, the commonwealth can save money while improving the quality of care. Let's find the solution that best serves our citizens.

JEANNINE PETERSON is CEO of Hamilton Health Center Inc.

View the bill.

View the resolution (PDF file)

Read the complete memo (PDF file).

Thursday, June 5th
8:00am - 9:30am

Comfort Suites, 120 West 3rd St.
Bethleham, PA

Speakers included:

• State Rep. Stephen Barrar
• State Rep. Thaddeus Kirkland
• Mark Bullosk, Vice President and General Counsel, Mercy Health System
• Sherry Knowlton, General Manager of AmeriHealth Mercy Health Plan
• William George , President and CEO Health Partners
• Ron Heigler, Chair PA Association of Community Health Centers
• Jeff Vermeulen, President Delaware County Chamber of Commerce

Watch the video.

Thursday, April 10, 11am - 1pm

St. Lukes Community Center
320 Tilghman Street, Chester, PA 19013

Download this as a PDF handout

The Three Problems:

1. Carve Out . . . Again

For the third consecutive year, the DPW budget proposes to “carve out” pharmacy benefit management from managed care.

a.         The legislature has rejected this risky proposal – repeatedly.

b.         DPW projects a $9 million savings, but fails to recognize that the Commonwealth would have to absorb $900 million in new insurance risk and higher administrative costs for managing this process.

c.         Data shows the MCOs are more efficient at restraining pharmacy costs when compared to the DPW fee for service system.

d.         Pharmacy management is used as an integral part of our daily medical management and disease management programs to enhance the quality of care provided.

e.         A pharmacy takeover may spark the same chaos for patients we witnessed in the Medicare Part D transition.

2. Realistic Rate Adjustments

The Governor’s mid-year budget briefing recognizes that healthcare inflation has ranged from 9.6% to 14% during the past five years.

a.         According to Price Waterhouse Coopers, the medical cost trend grew at a rate of 11.8% in 2007.

b.         The DPW budget proposes to fund a 2% payment rate increase.

c.         The effect of systematic and continual underfunding of the program will yield restrictions on access and a compromising of the quality that your constituents (our subscribers) deserve.

3. The Payment Shell Game

This year (07-08) the Department has yet to pay the rate adjustment incorporated in this year’s budget enacted eight months ago! MCOs will receive only 11 monthly payments from DPW this year.

a.         The Department proposes that in the Lehigh/Capital and Southeast region, the MCOs accept an additional one-month delay in payments.  This payment delay is also proposed for the new Health Choices Plus zone in Northwest Pennsylvania.

The Three Solutions:

1.         The Legislature should continue to reject the risky pharmacy “carve-out” proposal.

2.         A 5% rate adjustment is half of the health care inflation rate, but will realistically allow for maintenance of high quality, accessible care delivered by cost effective MCOs.

3.         Hold the line on the financial shell game and reject any additional payment delay.

The MCOs have provided affordable, accessible, high quality care for over 1 million Medical Assistance recipients.  Please continue to support our efforts on behalf of your constituents!

For more information, please contact Michael B. Rosenstein at 717-234-1250.

Speakers included:

• State Rep. Todd Eachus, Chairman of the House Democratic Policy Committee
• Sherry Knowlton, General Manager of AmeriHealth Mercy Health Plan
• Jennifer Kessler, President of Unison Health Plan of Pennsylvania.

Watch the video.

Thursday, February 14 2008, 8:30am

Educational Conference Center, Room 130
Luzerne County Community College

View the invitation (PDF file)

Read the full article

Gov. Ed Rendell on Tuesday threatened to withhold state aid to help doctors and other health care providers pay for their medical malpractice insurance unless lawmakers also act on his proposal to expand state health insurance for adults.

Rendell called on lawmakers to set aside at least part of a projected $500 million surplus in the state's medical malpractice fund, known as MCare, as part of legislation to extend the insurance subsidies for 2008. The aid has been approved on a yearly basis for five years.

Read the full article at Chron.com

By Stacey Burling
Inquirer Staff Writer

The growth of outpatient surgical centers is continuing in Pennsylvania, a trend the state's hospitals say is weakening their financial health.

Margins at the surgical centers leveled off during fiscal 2006 at 21 percent after growing 9.4 percentage points between fiscal 2001 and 2004, according to a financial report on specialty health facilities to be released today by the Pennsylvania Health Care Cost Containment Council.

Read the full article at Philly.com

Two Pittsburgh-area insurers are bracing for multimillion-dollar losses following the state Department of Public Welfare's unexpected decision to terminate their contracts in favor of a state-administered fee-for-service health care program for some 71,000 poor people, mostly in Central and Western Pennsylvania.

Gateway Health Plan and Unison Health Plan of Pennsylvania were notified of the cancellation in a Feb. 21 letter. The state's long-term contract with the companies ends June 30. UPMC Health Plan was also notified that its contract would be terminated, but the company says the loss -- 5,000 members -- would have little impact because it had already been losing money on the line of business.

All three companies provided capitated care, meaning they received a flat monthly rate for managing the health care of Medicaid recipients, regardless of actual cost. Starting July 1, the state will bring oversight of the health coverage in-house with a managed fee-for-service program called ACCESS Plus, which eliminates Gateway, Unison and UPMC Health Plan from participation.

"It's an astonishing move," said Michael Blackwood, president and CEO of Gateway, which stands to lose $80 million in revenue from the decision. "We're being hammered as a company. It's a policy disaster, as far as I'm concerned."

An independent study done in 2005 concluded that Pennsylvania had saved $2.7 billion over the previous five years through the capitated approach to providing health care for its Medicaid population, Blackwood said. What's more, the plan has received high marks from members and independent quality rating agencies.

Downtown-based Gateway will lose 24,000 members, or 10 percent of its total membership, mostly in Altoona, Johnstown and Erie, Blackwood said. People with Medicaid health care coverage in Allegheny and the 10 surrounding counties are covered by HealthChoices, an option that allows people to choose from among three plans, including Gateway and Unison.

No layoffs are planned at Gateway, which employs 470 people, Blackwood said, but the state's decision is still too new to gauge the full impact it will have on the company. The DPW has begun implementing the shift called for in the state budget, even though it has not yet gone before legislators for approval.

"The Legislature has no idea the DPW is choosing to do this prior to the new fiscal year," Blackwood said, "and without any serious discussions or hearings or anything else."

'IT's SHOCKING'

Still bigger losses are predicted at Monroeville-based Unison, where the end of the state contract means 40,000 fewer members or 20 percent of the total members covered under its plans, according to company president Jennifer Kessler.

"It's shocking," said Kessler, who said the state's decision will cost the company $100 million in revenue. "It's step one in the state going backward 20 or 30 years.

"We will fight this to the very end because we know the value we can provide."

Blackwood and Kessler say they will take their appeal directly to legislators, who may not be fully aware of the consequences of the change.

Unison expects none of its 1,000 people will be laid off as a result of the contract termination, Kessler said. In recent years, Unison has diversified, including offering a Medicare Advantage product, which will help soften the impact. The state's decision will also accelerate the company's search for business outside Pennsylvania, she said.

An independent study done for the DPW found that the state-run program costs 9.5 percent less to operate than capitated programs like the ones offered by Gateway and Unison, resulting in potential annual

savings of $23 million from the shift without compromising quality of care, according to Mike Nordone, deputy secretary in the DPW's office of medical assistance.

"We've done an analysis: ACCESS Plus is more cost effective and the care is comparable," Nordone said. "We're trying to get the best value for the health care dollar."

There are some 290,000 people enrolled in the state-run program, compared with around 71,000 people in the capitated option, a number that has been falling over the past 18 months from more than 100,000 members, Nordone said.

UPMC Health Plan only provides coverage for 5,000 Medicaid recipients, after reducing its participation in the past year, according to John Lovelace, vice president, medical assistance programs. UPMC had been losing money by providing the coverage, Lovelace said, so the impact of the contract cancellation would be minimal.

'ELIMINATING CHOICE'

Michael Rosenstein, coordinator of the Coalition of Medical Assistance Managed Care Organizations, a Harrisburg-based advocacy group, called the DPW move "a comprehensive attack on a system that's working."

"They're moving from a managed care system to a relatively untested fee-for-service program, which studies have shown is more expensive in the long run," he said.

Ross Township-based Automated Health Systems, which already contracts with the state to help run its ACCESS Plus program, stands to gain from the shift to managed fee-for-service. The company's focus is administering large-scale public health programs for state and local government, and its current contracts total around $70 million. Company officials were not immediately available for comment.

Ross Township-based Automated Health Systems, which already contracts with the state to help run its ACCESS Plus program, stands to gain from the shift to managed fee-for-service. The company's focus is administering large-scale public health programs for state and local government, and its current contracts total around $70 million. Company officials were not immediately available for comment.

The shift will also mean that hospitals, doctors and other health care providers could see revenue cuts of 10 percent to 25 percent starting July 1 because the state's fee-for-service program reimburses at a lower rate than is paid by the managed care organizations, Kessler said. But it may be several months before providers become aware of the change.

The contract cancellation also means that doctors will have fewer choices in the health care plans they participate in for their Medicaid patients, according to Dr. Joseph Sheridan, Unison's medical director.

"Doctors could also choose which program they would participate in," he said. "The state is eliminating a choice for all those people."

Nationwide, 40 percent of the people on Medicaid receive capitated care, according to David Rousseau, an analyst in the Washington D.C. office of the Kaiser Family Foundation, a research group. The predominate platform of care is some form of managed care, like the ACCESS Plus program. Which approach is most cost effective hinges on a host of factors, including provider network and access to health care, which varies state to state, Rousseau said.

Western Pennsylvania's Medicaid managed care providers are lobbying for increases in Gov. Ed Rendell's $6.2 billion welfare budget, which they say threatens access to medical care for poor people.

UPMC For You, Gateway Health Plan and Unison Health Plan are among those seeking the increase. They say state reimbursement is lagging behind the cost of health care, increasing just 2 percent for the current fiscal year and a proposed 4 percent for fiscal 2007 while medical costs are increasing around 8 percent.

"It's an absolute crisis," said Mike Blackwood, CEO of Gateway, which forecasts a loss of $10 million between Jan. 1 and the end of the fiscal year June 30. "It looks like they're trying to bleed us to death."

The state budget is supposed to be adopted before July 1, but deliberations can stretch into the new fiscal year. Until then, the insurers will continue pressing for more money. The three insurers contract with the state on a capitated basis to oversee medical care for nearly 600,000 poor Pennsylvanians, many in the western part of the state. Under capitation, the state pays insurers a flat rate for providing care to a group of people, regardless of actual costs.

"We don't manufacture money," said Mike Rosenstein, coordinator of Pennsylvania Coalition of Medical Assistance Managed Care Organizations, a Harrisburg trade group. "It could have a devastating effect on the health care system, especially in urban areas."

Although none of the insurers say they will leave the market if the reimbursement does not increase, the companies could shrink their networks of doctors and hospitals in order to cut costs, restricting member access to health care, Rosenstein said.

"It's a crisis right now," said Jennifer Kessler, president of Monroeville-based Unison Health Plan, which reported a loss of $201,373 for calendar year 2005. "Something has to give."

Unison declined to release anticipated losses for the current fiscal year, but UPMC is expected to finish $5 million to $6 million in the red.

Izanne Leonard-Haak, chief of staff in the state Department of Public Welfare, defended the 4 percent increase, saying it follows years when the reimbursement for Medicaid managed care providers had been more generous. Between fiscal 1999 and 2004, managed care organizations received reimbursement increases ranging between 5 percent and 9.3 percent, she said. Also, she said, 4 percent is the average increase providers will see; some will see increases of up to 7 percent.

In addition to the 4 percent increase, Rendell's budget delays the last payment due the companies until after the start of the new fiscal year, helping balance the state's budget at the expense of the insurers' income.

The state also plans to assume control of prescription drug purchases and benefit administration effective Jan. 1, 2007, taking away a key tool in improving care while hold down costs, the insurers say.

The changes and restrictions in the proposed budget are necessary, Leonard-Haak said. "The last several years have been particularly difficult for us. Costs are up, federal support is down. That has put tremendous pressure on us."

BY KRIS B. MAMULA

Western Pennsylvania’s leading insurer of the needy is using a social worker’s touch in enhancing care for its members while cutting costs. The move is paying off, with $24 million in pharmacy savings in fiscal 2005 alone. What’s more, by addressing such member needs as adequate housing and regular meals, Gateway Health Plan’s president and CEO Michael Blackwood sees still more savings to wring out of the system.

“If you can’t keep your house warm,” said the 57-year-old Blackwood, a soft accent betraying his Louisiana roots, “it’s hard to talk about the value of a mammogram.”

Medicaid insurers nationwide have long used aggressive case management to control spiraling costs, and David Mitchell, an analyst with A.M. Best, an insurance rating agency based in Oldwick, N.J., said companies have been getting smarter about curbing pharmacy costs in particular.
“There is a lot of opportunity
to control those costs,” he said,
adding that Gateway’s savings
were “significant.”
Gateway’s 267,000 members
in 39 counties are among the
most difficult populations for
control of health care spending;
the emergency room often substitutes
for family doctor visits
and preventive health care is infrequent.
By interviewing members,
Downtown-based Gateway
identifies issues that undermine
health and therefore drive up
treatment costs for members.

These issues include the availability
of transportation to doctor’s
appointments, adequate
housing and regular meals.
The connection between social
needs and health care,
while not yet backed by studies
offering hard data, is also not
far fetched; Blackwood points
out that social isolation, for example,
is the biggest single predictor
of hospitalization.

Gateway’s approach centers
on assessing the social needs of
each member and then matching
members with community
services that will lead to healthier
lives and, it is hoped, fewer
hospitalizations. The insurer
accomplishes the task through
close oversight of members and
early intervention by doctors,
nurses and social workers.
Based on age, medical history
and prescription purchases,
Gateway uses a computer program,
developed internally, to
predict the likelihood of a particular
member being hospitalized
in the next 12 months.
Armed with this data, Gateway
staff can contact the member
and doctor, and in many cases,
head off more serious health
problems.
The economics supporting

Blackwood’s approach are simple.
The average cost of a hospital
admission is $5,500, which
compares to $2,000 for an outpatient
visit.
Spending trends outside
pharmacy are still being measured
and the program continues
to be tweaked, but Blackwood
is so confident about the
software’s potential for savings
that Gateway has plans to eventually
market it to other health
care plans. Revenue for privately-
held Gateway was about
$903 million last year, Blackwood
said, and the return on investment
to its owners, Downtown-
based Highmark and
Mercy Health Plan of Philadelphia,
averaged 36 percent annually
from 1999 until 2004.
Gateway rolled out its
Prospective Care Management
program in May 2005. It targeted
high-cost, chronic conditions
including diabetes, congestive
heart disease and asthma.
The benefits are still being
assessed, but Blackwood believes
the effort will yield big
savings; a similar approach to
pharmacy expenditures that
was implemented in 2004 is
paying off handsomely.
Pharmacy bills, which make
up 40 cents of every medical
dollar that Gateway spends,
have been easier to target because
invoices are available to
the insurer within a month of
a prescription being filled.
Pharmacy records provide a
near real-time view of the patient’s
health and indicate developing
medical problems that
can be costly to treat if ignored.
For example, a patient with diabetes
who is prescribed a
steroid to control blood sugar
has an 80 percent likelihood of
hospitalization in the next 12
months, Blackwood said.
Before intensive case management,
Gateway’s pharmacy
costs of $300 million were rising
13 percent annually. Early
intervention in acute health
problems helped pare that increase
to just 4.9 percent in the
year ending June 30 2005,
Blackwood said. Buoyed by
those results, Gateway anticipates
reducing the annual hospital
admission rate to 118 per
1,000 members from 128 per
1,000 members.
Gateway’s approach to holding
down costs while enhancing
care is not without challenges.
Up to 21 percent of the general
population never fill their original
prescription and as many
as half of patients don’t follow
instructions for taking a medication,
according to the Massachusetts
Medical Society.
Hard data to support the
idea that early medical interventions
result in fewer hospitalizations
also is lacking, according
to Mike Nelson, a
Sewickley-based health care
consultant and former president
of Erie-based Ion Health
Holdings Inc., a Medicaid insurer.
Medicaid recipients can
switch health care carriers at
will, which complicates efforts
to measure outcomes, he said.
“Does their protocol work in
the time period they have
them?” said Nelson. “No one really
has the data.”
Still, Blackwood said the
number of members leaving
Gateway is at an all-time low,
three-tenths of 1 percent a
month, and he’s confident
about the insurer’s approach to
case management. “This isn’t
Gateway saving the world,” he
said. “This is Gateway engaging
the community.”
KRIS B.MAMULA

Pennsylvania's managed health plan for the needy is saving taxpayer money while providing prompt, effective medical care to a vulnerable population, according to a report to be released Tuesday.

Pennsylvania's seven managed care providers saved the state $2.7 billion over the past five years in providing medical care for some 1.1 million people, according to a report by The Lewin Group, a Falls Church, Va.-based health and human services consulting company. What's more, the providers held annual medical cost increases to 7.4 percent over the past several years, which compares to 10.4 percent hikes in fee-for-service programs.

"We're doing the job we hoped that we were doing," said Michael Rosenstein, spokesman for the Harrisburg-based Pennsylvania Coalition of Medical Assistance Managed Care Organizations, which commissioned the study. "We're very proud of the outcomes."

The Lewin Group report was the first of its kind done in Pennsylvania. The 3-year-old Pennsylvania Coalition represents the seven carriers that contract with the state to provide medical care for the needy. These carriers include Gateway, Three Rivers, and UPMC Health plans in Western Pennsylvania.

Mr. Rosenstein said the state has been slowly shifting the medically needy into managed care programs over the past 10 years. Some 1.1 million of the 1.7 million people receiving the medical benefits are already in a managed care plan, he said.

In a prepared statement, Karen Ignagni, president and CEO of Washington D.C.-based America's Health Insurance Plans, said Pennsylvania's record in managed care should "serve as a national model." Pennsylvania's managed care program is called HealthChoices, which private providers bid on to provide coverage.