The Governor’s proposed 2008-2009 budget will jeopardize access to high-quality healthcare for our most vulnerable citizens by damaging Pennsylvania’s nationally recognized managed care organization (MCO) health care delivery system for Medicaid patients.

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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.