Not all MCOs are hot on Medicaid

Smaller and nonprofit organizations exit, consolidating market
Friday, May 17, 2019

YARMOUTH, Maine – The upward trajectory of MCOs managing state Medicaid programs has hit a kink.

Despite 79% of respondents to a recent HME Newspoll reporting that MCOs manage the Medicaid program in their states, 54% report one or more have exited the market in the past year.

“They can’t make money at it, so they don’t want to be in that business going forward,” said Paul Harbaugh of Avera Home Medical Equipment, which serves patients in North and South Dakota, Minnesota, Iowa and Nebraska.

MCOs have exited the market most recently in West Virginia (see story below), Iowa and Illinois.

Another reason MCOs may be exiting Medicaid: slow payments.

“In Illinois, MCOs are dropping out due to slow payments from the state,” said J. David Beshoar of MedServ Equipment.

There are still MCOs entering the Medicaid market, however, like in North Carolina, where industry stakeholders are trying to work preemptively to protect access to and reasonable reimbursement for HME.

“We are in North Carolina, where MCOs will be taking over beginning November 2019,” wrote one respondent. “ACMESA is working to get legislation passed that will prevent some of the challenges experienced by other states as they implemented MCOs.”

Those MCOs that are sticking with Medicaid tend to be the ones offering providers lower reimbursement rates, respondents say.

“(The MCOs) that pay poorly, and for whom we turn many clients away, seem to be doing fine and are not leaving,” said Dave Anderson of Anderson’s Medical Products in Indiana.

MCOs aren’t the only ones doing the exiting, respondents say.

“Providers are not happy with the payment terms of our contracts and are pulling out of MCO networks,” said Shalon James of Access2mobility in Texas.

Case study: West Virginia

CHARLESTON, W.Va. – West Virginia Family Health, one of four MCOs participating in the state’s Mountain Health Trust managed care program, will bow out on June 30, in what’s becoming a growing trend.

Parkersburg-based WVFH, which entered the West Virginia Medicaid market five years ago, covered about 60,000 members in all 55 counties in the state.

“They’re saying they did an analysis and it’s not cost effective for them,” said Regina Gillespie, president and owner of Best Home Medical in Barboursville. “It’s too bad because they were one of the better MCOs to deal with.”

WVFH says it’s working with the Bureau for Medical Services at the West Virginia Department of Health and Human Services on a “smooth transition” of its members to other MCOs. Aetna Better Health of West Virginia, Health Plan of the Upper Ohio Valley and Unicare also participate in the program.

WVFH may have good intentions but Gillespie worries that avoiding lapses in payments for rental equipment like oxygen concentrators and CPAP devices will be nearly impossible.

“Once the patients switch to their new MCO, we’ll have to go through the whole authorization process again,” said Gillespie, who guesstimates her company will have about $10,000 a month tied up during the transition. “We’re going to go months without money waiting for the process to catch up with us.”

Going forward, Gillespie says providers are working with state Medicaid officials to implement changes to the program that will make transitions easier, like requiring MCOs to honor the authorizations of a previous MCO for three months, and requiring members to stay with the same MCO for at least one year.

“Right now, they can switch monthly if they want,” she said.

While a lot of attention has been paid on the increasing number of MCOs participating in Medicaid programs around the country, Laura Williard has seen a number of MCOs deciding to exit the market. Two MCOs recently decided to exit Iowa Medicaid, paving the way for Centene to jump in.

“What it boils down to is, the smaller or not-for-profit plans aren’t able to make money in the market,” said Williard, vice president of payer relations for AAHomecare. “So we’re seeing the giant conglomerates like Centene take over that world.”