A monthly publication that provides analysis of important health care issues under consideration by the legislature, executive branch, and professional associations.

Written by Peter Pratt, Ph.D., Vice President and Senior Consultant for Health Care Policy, Lisa Baragar Katz, Consultant for Health Policy, and Jeff Williams, Senior Consultant.

MIChild Plan Submitted for Federal OK - January

January 1998

MIChild Plan Submitted for Federal OK

by Lisa Baragar

The State of Michigan is one step closer to implementing MIChild—the new health insurance program for children (1) aged under 19, (2) living in a family having income at or below 200 percent of the federal poverty level (the 1997 FPL was $13,330 for a family of three; 1998 guidelines have not yet been issued), and (3) ineligible for any other health insurance program, including Medicaid.

In August, Congress appropriated as part of the 1997 federal budget agreement $24 billion to help states expand health insurance coverage to uninsured kids. Michigan Department of Community Health (MDCH) officials then began work on a plan to spend Michigan’s share of the windfall—$467 million over five years. (Michigan must match 32.49 percent of the federal funds it receives.) State officials announced in October that instead of expanding Medicaid—as some states plan to do—they would base a program on the State of Michigan employees’ health benefit plan. Officials expect MIChild to cover about two-thirds—156,000—of Michigan’s 228,000 uninsured children.

The plan offers comprehensive coverage, including (but not limited to) that for well-child services, doctor and hospital visits, dental care, and prescription drugs. In developing MIChild, MDCH officials maintained their commitment to managed care, specifying that only insurers offering a preferred-provider arrangement and health maintenance organizations (HMOs) will be eligible to extend MIChild benefits. Health plans will not have to compete with one another to receive a MIChild contract; they simply must meet the state’s eligibility requirements and adhere to contract conditions. Participating health plans, in return, will receive from the state a yet-to-be-specified capitated (per child) monthly payment and from participating children’s families a monthly premium. The state will contract with nonprofit dental corporations for dental services, and community mental health service boards—public agencies accountable to the MDCH and local government—will provide mental health and substance abuse services.

In December, Michigan officials submitted to the federal Department of Health and Human Services the MIChild plan that, if approved, they hope will be available in April 1998. The plan includes an estimated fiscal year (FY) 1998 budget (including state and federal funds) of $36 million—far less than the $130 million the 1997 federal budget agreement permits, because the state anticipates a first-year MIChild enrollment of only 25,000. Officials say the first year’s enrollment figure is a conservative estimate, and the remaining funds will be rolled over for next year’s use. The budgets for FY 1999 and 2000 are $94.4 million (based on 110,000 enrollees) and $127.5 million (based on 120,000 enrollees), respectively.

Outreach

From the beginning, government and community leaders have agreed that the success of MIChild depends on outreach. The federal budget agreement specifies that combined spending on direct services, administration, and outreach is limited to 10 percent, and many fear that not enough money will be allocated for outreach. State officials, however, indicate that they plan to launch a broad-based media campaign.

In addition, the state will seek help from local government and community agencies. For example, local public health departments receive state funds for Medicaid outreach, and school-based and school-linked health centers and WIC (Women, Infants, and Children) continually educate the public about their services. When parents come into contact with these programs, they will be advised if their child potentially is eligible for MIChild.

Mark Bertler, executive director of the Michigan Association for Local Public Health, says the MDCH outreach plan still needs work. He thinks the state should build partnerships with community businesses and organizations that traditionally have not been tapped for outreach purposes. For example, if a person uses food stamps, his/her children may be candidates for MIChild, and when the store accepts the food stamps it could give the stamp user information about MIChild.

State officials point out that its plan ensures that multipurpose collaborative bodies (groups of business, government, and community representatives charged with planning and providing community services) will receive grants with which they may devise their own outreach initiatives. Sharon Claytor Peters, president and chief executive officer of Michigan’s Children, believes that even with grants, asking community organizations to conduct outreach to yet another vulnerable population may not work. She hopes that the outreach budget will be generous, pointing out that “You get what you pay for.”

Cost Sharing

Another issue is cost sharing for families having an income of 151–200 percent of the FPL:  They must pay both an $8 per child monthly premium (capped at $16 per family) and a $5 copay for (1) prescriptions filled without prior authorization, (2) glasses or contact lenses, (3) dental extractions and crowns, and (4) physical-therapy visits. Families with incomes at or below 150 percent of the FPL are exempt from cost sharing.

The department believes that parents will feel less that MIChild is “welfare” program—which could cause many to avoid it—if they help to pay for it. Ms. Peters supports the MDCH position but advises that extra care be taken when parents fail to pay the monthly premium (coverage can be revoked if a parent fails to pay a premium within a month after it is due). She takes the position on that a child should not lose his/her health insurance over $8. Mr. Bertler believes that any cost sharing is unnecessary and harmful. “To say ‘Gosh, this is not a lot of money’ is to look at things from the perspective of a government employee—not of those we’re trying to serve.”

Access

Access to MIChild’s services also concerns many. For example, if a child is eligible for any other health insurance program—even if only an employer-sponsored catastrophic-care plan—s/he is not eligible for MIChild. Ms. Peters says children covered by plans less comprehensive than MIChild should have access to the program. State officials indicate that once the program is underway, they will explore ways to expand MIChild coverage to these children.

Another access concern is that MIChild services will be delivered only by managed-care plans. State officials argue this will ensure health care quality and reduce costs. Mr. Bertler believes, however, that providing preventive and other health care to children already is cost effective; there is no need to limit who may provide it. Susan Garcia, deputy director of the Michigan Association of Health Plans supports the managed-care delivery plan; she points out that parents of MIChild eligibles, if they have coverage themselves generally have it from some type of managed-care system (e.g., Medicaid managed care or an employer’s HMO), and their familiarity with how to access and work with such a system will help ensure continuity and consistency of care for their children enrolled in MIChild.

Ms. Garcia is concerned about another access issue: MIChild’s prohibition on covering children who drop out of school. “I do not like tying sanctions to health care,” she says.

Conclusion

Ms. Peters, Mr. Bertler, and Ms. Garcia all believe that the state’s intention to implement MIChild in April is overly ambitious—especially since implementation of the out-state Medicaid managed-care initiative is slated to begin at about the same time. They also believe that it will take some time for the feds to approve MIChild and for the MDCH to work out its administrative details. Still, the three agree that when MIChild finally is up and running, its benefits will outweigh any drawbacks.

Copyright © 1998

Proposed FY 1998–99 MDCH Budget - February

February 1998

Proposed FY 1998–99 MDCH Budget

by Lisa Baragar, Consultant for Public Policy

In a recent appearance before a joint session of the House and Senate appropriations committees, Budget Director Mary Lannoye presented Governor Engler’s FY 1998–99 Executive Budget, which includes proposed funding for the Michigan Department of Community Health (MDCH) and all other state agencies.

The proposed MDCH budget calls for a 3 percent increase over the current year (FY 1997–98) level, raising the total MDCH allocation—federal, state, local, and private funds—from $7.3 billion this year to $7.48 billion. The proposal includes $2.5 billion in general fund/general purpose (GF/GP) monies—an increase over the current year of almost 1.5 percent. The MDCH budget for the coming fiscal year is apportioned as follows:

  • Medicaid (67 percent)
  • Mental health and substance abuse services (26 percent)
  • Public health administration, including funds for child immunizations and the Healthy Michigan Fund (5 percent)
  • Other (2 percent)

The proposed FY 1998–99 MDCH appropriation accounts for 23 percent of the state’s entire budget and almost 30 percent of all state GF/GP dollars. Ms. Lannoye explains that the state has kept MDCH spending in check mainly by implementing captivated Medicaid managed care. Department of Management and Budget (DMB) officials indicate that in FY 1998–99 the initiative will save the state nearly $120 million.

MIChild

In FY 1998–99, the state will spend approximately $95 million on the MIChild program—an initiative to provide health coverage to two-thirds of Michigan’s uninsured children (those aged under 19 and at or below 200 percent of the federal poverty level [FPL]). Nearly $64 million of these funds are federal matching dollars. The state has access to almost $92 million in federal funds during each of the first three years of the program, but state officials decided to draw down less than the full amount in the first two years (this fiscal year and next), because they estimate that enrollment will be insufficient to justify taking more federal dollars.

Michigan’s FY 1998–99 share of the $95 million MIChild program is nearly $31 million; according to Ms. Lannoye, Michigan’s match will come from existing state monies that traditionally have been used to pay for medical and mental health services for children living in low-income families; the legislature will not have to appropriate any GF/GP dollars. This decision concerns some lawmakers, who worry that transferring funds from existing state programs may be illegal under federal law, which prohibits “crowd out”—deliberately excluding children from any private or public health insurance plan with the expectation that MIChild will pick them up.

Other Medicaid Items

The FY 1998–99 budget also includes inflationary and base increases totaling almost $75 million ($35.2 million GF/FP). DMB officials indicate that this 2 percent Medicaid budget expansion includes nearly $18 million to increase payment rates for health care professionals who render fee-for-service care to Medicaid recipients; some rates have not been adjusted in several years. The state did not raise nursing home-and hospital-reimbursement rates, because in recent years they had been increased above inflationary levels (prior to the 1997 repeal of the federal Boren amendment, federal law had required states annually to increase such institutional rates by the rate of inflation plus one percent). The remaining $57 million in inflationary/base increases accounts for increased utilization of the Medicaid system.

Another substantial FY 1998–99 Medicaid budget change is the proposed $67 million GF/GP reduction and $63 million increase in total funds for “new special financing initiatives.” According to DMB officials, the state plans to revise the Indigent Medical Care Program, which provides medical services to single, able-bodied adults without dependents (the former General Assistance population), so that services no longer are provided directly by physicians but by hospitals. This will allow hospitals to collect federal disproportionate-hospital-share payments for services provided to this population and eliminate the necessity for state spending on the program.

Finally, the budget the proposes an $8 million reduction in total graduate medical education (GME) funds (almost $4 million GF/GP) paid to hospitals to educate medical students. Until the current fiscal year, the state had folded GME expenses into the Medicaid rates paid to hospitals for each Medicaid recipient served; this was seen as one way to give some extra compensation to hospitals that serve the state’s poor. Two years ago, the state eliminated the practice and created a separate $166 million GME pool to remunerate hospitals directly for expenses incurred in educating medical students (however, the amount of the remuneration still is tied to the number of Medicaid patients a hospital historically has served). Since its creation, the pool’s funding level has remained unchanged, but the volume of hospital fee-for-service Medicaid recipients has fallen 25 percent. To reflect the reduction, the budget proposes cutting the GME pool by 5 percent.  Perhaps the biggest surprise in the governor’s proposed community health budget is the recommendation that local public health dollars be distributed to counties in the form of block grants. Mark Bertler, executive director of the Michigan Association for Local Public Health, indicates, “We were not aware of [the decision ]. . . surely it exemplifies a misunderstanding of the way local health departments operate.”

State and Local Cost Sharing

Perhaps the biggest surprise in the governor’s proposed community health budget is the recommendation that local public health dollars be distributed to counties in the form of block grants. Mark Bertler, executive director of the Michigan Association for Local Public Health, indicates, “We were not aware of [the decision ]. . . surely it exemplifies a misunderstanding of the way local health departments operate.”

Currently, up to a certain point, the State of Michigan matches every dollar that local health departments spend to provide certain basic and required services. For FY 1998–99, the governor suggests that the state cap its match at just over $37 million (up 2.5 percent from the current fiscal year). Mr. Bertler explains that by requiring counties to provide certain health services before they can receive cost-shared funds, the state ensures that every person, regardless of the county in which s/he lives, has access to a similar standard of care. Although Mr. Bertler hasn’t seen the details of the governor’s plan, his initial reaction is that block-grant funding will allow each county to decide for itself what services it will provide, and the state could end up with 83 individual health systems, each with different rules.

Healthy Michigan Fund

Another issue is how a portion of the Healthy Michigan Fund (HMF) shall be used. The state annually allocates 6 percent of all tobacco tax collections (projected at about $35 million) to the HMF, which, since its 1994 inception, has funded such initiatives as the cardiovascular disease prevention program and several smoking-cessation and community violence-prevention projects.

Each year the state carries forward approximately $10 million to fund special public health projects; state law requires that these projects relate to such public health priorities as combating chronic illness and providing local and child health services. Back in FY 1996–97, the governor had proposed using the $10 million to partially fund the state’s share of the proposed federal Medicaid block grant program. Many people opposed this, claiming that funding Medicaid was not in line with the HMF’s purpose. After the federal block-grant initiative failed to materialize, legislators voted in FY 1997–98 to return the $10 million to the HMF.

For FY 1998–99, another $10 million is being carried forward for special public health purposes, and the governor recommends using a small portion for tuberculosis (TB) surveillance in the deer population. Some experts are fearful that the disease will spread to the state’s bovine population, but public health officials maintain that bovine TB has no health implications for humans, thus it is not a public health concern, and allocation of HMF funds for this purpose would be inappropriate.

Summary

Policymakers generally agree that the FY 1998–99 community health budget is largely business as usual, and they are confident there will not be dissension about the amount of appropriations. Many observers, however, expect considerable debate about the governor’s recommended policy changes in regard to Medicaid, state and local cost sharing, and the Healthy Michigan Fund.

Copyright © 1998

Health Professionals Voice Concerns about Outstate Medicaid Managed-Care Plan - March

March 1998

Health Professionals Voice Concerns About Outstate Medicaid Managed-Care Plan

by Lisa D. Baragar, Consultant for Public Policy

In early March 1998, the State of Michigan announced its selection of 23 qualified health plans (QHPs) to administer the outstate component of the Comprehensive Health Care Plan (CHCP)—Michigan’s capitated Medicaid managed-care initiative. Although the state still has to conduct readiness reviews of the QHPs to ensure they can meet the conditions of their contract (the reviews include on-site evaluations and validation of bid information), officials are certain that the outstate plan will be up and running no later than early May 1998 (it originally was slated to begin in early April).

According to Robert Smedes, chief executive officer of the Medical Services Administration, this is good news for Michigan’s 1.1 million Medicaid eligibles. He argues that managed care is essential for ensuring coordination of patient care and appropriate utilization of services. Furthermore, he contends that managed care will allow state officials to control costs (in fiscal year 1999, state officials expect the plan to save more than $120 million) and improve quality of care, while routinely monitoring and measuring health providers’ performance.

While many agree that managed care has numerous advantages, several of the health plans selected to cover outstate Medicaid services have concerns about their participation in the initiative. These concerns are based on, for the most part, the experiences of the 18 QHPs that were selected to cover Medicaid services in southeast Michigan.

To Err is Costly

Last July the state began implementing the CHCP in five southeast counties—Wayne, Oakland, Macomb, Washtenaw, and Genesee. At present, the delivery of managed-care services to Medicaid recipients in that region seems to be going according to plan; however, this has not always been the case. In fact, many of the QHPs serving southeast Michigan claim that when the state began administering the CHCP, the health plans encountered many costly administrative obstacles.

For example, the Michigan Association of Health Plans (MAHP) points out that, although the southeast Michigan QHPs’ interim contracts took effect July 1, for two months they were not able to enroll the number of recipients they had expected. The reason, they claim, is because MAXIMUS, the Medicaid enrollment broker with which the state contracted, did not begin enrollment until early September.

Smedes points out that between July and September the state enrolled clients in the managed-care program and reimbursed the health plans for services. The MAHP contends, however, that during this time the state did not conduct outreach; therefore, many recipients were not aware they needed to sign up to receive services through a QHP. As a result, many of the QHPs say they incurred substantial financial losses; the Wellness Plan alone claims it lost nearly $28 million.

Judy Martin, government affairs director for Community Choice Michigan—one of the health plans selected to provide outstate coverage—explains that even after MAXIMUS began enrolling Medicaid patients, health plans and providers continued to encounter administrative difficulties: “Some providers fell through the cracks; they were not assigned Medicaid recipients because there was no record that they were part of a QHP. And one QHP was not even listed in the enrollment broker’s printed directory.”

Some people argue that these scenarios likely will not be repeated when Michigan officials implement the CHCP’s outstate component because MAXIMUS already is up and running and has had more time to prepare for its outstate role. Others argue, however, that the state should wait before implementing statewide managed care: “If there are problems in southeast Michigan,” says Christine Shearer, chief of government relations for the Michigan State Medical Society, “we can expect even more problems outstate.”

State officials counter that the main reason they chose to implement Medicaid managed care in a selected region first was to identify any problems and prevent them from occurring elsewhere. Smedes adds that health plans did not lose money when they began providing managed-care services just because MAXIMUS was not yet enrolling: “They lost money because they were not allowed to market [to Medicaid eligibles] anymore. This was a part of their contract—they should have anticipated such losses.”

Contract Concerns

Many outstate health plans also are wary of participating in the Medicaid program because they fear their CHCP contracts will be altered, as happened with QHPs serving southeast Michigan.

For example, Shearer says that after agreeing with the state to cover a specific set of services for a certain price, officials required the QHPs serving southeast Michigan to add smoking cessation products to their list of covered services (currently, Medicaid does not cover such products). Although Shearer acknowledges their benefits, she adds that smoking cessation products are extremely expensive; the per-person cost can exceed $115 a month for a patch and $100 a month for gum.

“For each person who receives coverage for smoking cessation products, another person could obtain comprehensive medical coverage,” she claims.

Southeast Michigan QHPs’ frustration over the contract changes was compounded last November when the state announced its decision to renegotiate reimbursement rates for 1998, which it had approved only months before. In a letter to the plans, the state specified that new bids should fall within a floor and ceiling that, in some cases, differed by only $6.00.

Smedes explains that the state’s decisions to make contract changes and renegotiate rates were meant to ensure the highest level of care for the greatest number of people. “In 1996 the most profitable business for health plans in Michigan was covering the Medicaid population,” he states. “Even at renegotiated rates, there is adequate money to provide very high quality care to these people.”

Smedes adds that the state clearly reserved the right in both its southeast Michigan and outstate requests for proposals to alter the QHPs’ contracts and renegotiate bid rates. He contends that if health plans did not agree with the state’s terms, they should not have bid for a contract. Still, the MAHP argues that the state has overstepped its bounds and has requested a formal grievance process where QHPs can address their concerns.

Other Issues

Administrative difficulties and strained relations with the state are not the only worries that health plans and providers have when it comes to statewide Medicaid managed care. Observers of this transition point out that the very nature of managed care entails some sacrifice on the part of those who deliver health care and those who consume it.

For example, Shearer believes that because the state will reimburse health plans only a certain amount each month per patient, doctors may receive even smaller payments from the plans than they did before managed care. She says this is a substantial concern, especially because doctors’ Medicaid reimbursement rate has not been raised since January 1991. As a result, some doctors may decide they no longer can afford to provide care to the Medicaid population.

Martin worries that Medicaid managed care also will affect the ability of certain patients to choose their providers. She believes that under the state’s plan, people in rural communities may no longer have the choice of traveling to see a provider they like; they will have to accept care from whomever participates in their health plan and is available in their area.

Conclusion

Although participating in the state’s Medicaid managed-care plan may cause headaches for QHPs and their providers, many agree that there are benefits to shifting to such a system. “Recipients will have a medical home—a primary care provider to whom they can always turn for health care,” says Shearer. And Martin adds, “It’s good to have someone besides a state bureaucracy helping those who need care.” Both hope that one day these advantages will outweigh any negative aspects of the state’s managed-care transition.

Copyright © 1998

State Officials and Legislators Finalize Children’s Health Plan - April

April 1998

State Officials and Legislatures Finalize Children’s Health Plan

by Lisa D. Baragar, Consultant for Public Policy

Last August Congress passed the 1997 Budget Reconciliation Act, which included $24 billion in block-grant funds that states could use to extend health insurance to the nation’s 10 million uninsured children (aged 18 and under). In October, Michigan Department of Community Health (MDCH) officials announced how they would spend Michigan’s share of the pool—$467 million over five years.

Rather than expanding Medicaid—an option allowed under the federal initiative—the MDCH decided it would create a new children’s health insurance program called MIChild. The program would cover 156,000 of the state’s 228,000 uninsured children. Although most agreed that this population should be targeted, many disagreed with creating a new, separate, state-run health plan. Opponents of the MDCH initiative argued instead for expanding Medicaid, contending that this would avoid having to allocate limited state and federal resources toward administering a separate health insurance plan.

In December 1997 the state submitted its proposal for a new children’s program to the federal Department of Health and Human Services (DHHS), but legislators continued to discuss alternatives. By April the House and Senate had agreed to legislation requiring the state to both expand Medicaid (the expansion will be known as Mich-Care) and create MIChild. On April 7, 1998, Governor Engler signed the bill—now Public Act (PA) 54 of 1998.

Kathy Tobin, director of the MDCH Quality Improvement, Actuarial and Support Services Bureau, points out that, under PA 54, whether a child receives Medicaid or MIChild benefits depends on his/her family income. Uninsured children aged 16–18 who fall below 150 percent of the federal poverty level (FPL) now will be eligible for Medicaid (currently Medicaid covers these children only up to age 15), while children ages 1–18 who fall within 150–200 percent of FPL can obtain coverage through MIChild.

Some observers are concern that a two-tiered plan will confuse parents seeking health coverage for their children, but many, like Paul Shaheen, executive director of the Michigan Council for Maternal and Child Health, believe that the legislative plan is an improvement over the state’s original proposal.

Public Act 54

Despite their difference concerning the expansion of Medicaid and creation of MIChild, PA 54 and the state’s original initiative have some similarities. For example, both target children who are (1) Michigan residents, (2) aged under 19, and (3) living in a family with income at or below 200 percent of the FPL (the FPL in 1998 is $13,650 for a family of three). Also, under both plans, children are eligible to receive state-sponsored health insurance only if they have not been covered by a comprehensive health insurance plan within six months of applying for benefits.

The two initiatives also ensure that managed care organizations that want to participate in the new children’s health insurance plan can do so if they meet certain criteria. The state has not yet determined these criteria and has decided not to issue a request for proposal or other bidding process to select qualified plans.

PA 54 also includes various provisions meant to ensure easy access to children’s health services and continuity of care that were absent from the state’s proposal. For example, critics of the state’s plan argued that it had no mechanism to prevent “churning,” which many feared would result in some children—those in families with constantly changing incomes—repeatedly having to drop MIChild coverage and enroll in Medicaid, and vice versa.

To address churning, Tobin says legislators included in PA 54 a provision that ensures children up to one year of continuous eligibility for the MIChild program, unless their families report a change in eligibility. Moreover, policymakers point out that although families are not required to report such changes, some may do so (e.g., in cases where their income increases substantially or their employer offers comprehensive coverage), thereby removing their children from MIChild altogether.

In addition, PA 54 specifies that the state shall develop a single eligibility application that families may use to apply for MIChild and Medicaid. (Under the MDCH plan, families were required to apply separately.) The act also requires the state to make Medicaid and MIChild eligibility determination at the same time, which is meant to save families from having to apply for Medicaid or MIChild, then, if denied, go through another application process for the other program.

To ensure continuity of care, PA 54 stipulates that families who experience changes in their MIChild and Medicaid eligibility shall be allowed, if they are receiving a current course of treatment, to stay with their provider for up to one year, subject to MDCH review. “The intent is to keep the child with a provider over time and track him/her during sickness and health,” says Greg Conyers, planning/research associate for the Michigan League for Human Services.

Another concern addressed by the legislative initiative is cost sharing. Originally, the state suggested that all families enrolled in MIChild pay an $8-per-month premium share for each child enrolled in the program, up to $16 per month. The state plan also required copays for certain services. Under PA 54, only families with incomes between 150–200 percent of FPL have to pay a premium share, which is limited to $5 per month, regardless of the number of children receiving state-funded coverage. The legislature also eliminated all copays.

A final facet of PA 54 that differs from the state plan is language that allows the MDCH to seek federal waivers to expand Medicaid and MIChild to adults. Sharon Peters, director of Michigan’s Children, states, “Policymakers have helped children first and now are recognizing them as part of a family unit that also needs access to care.”

Unresolved Issues

Still of concern to many people, however, is whether children who have access to any health insurance, regardless of its cost or level of comprehensiveness, will be eligible for either Medicaid or MIChild. For example, language both in the state’s original plan and PA 54 prohibits children from participating in the initiative if their parents refuse coverage offered by an employer, even if the parent considers the cost unreasonable or coverage insufficient. But children’s advocates argue that if coverage is unaffordable or is limited only to catastrophic care, it should be considered unavailable.

Also, children must wait six months before participating in MIChild if they are dropped from an employer or other insurance plan. The intent is to prevent employers from dropping dependent coverage with the belief that children then would be eligible for the state plan (this is known as “crowd-out”).

Another concern facing PA 54 is outreach. Tobin explains that the MDCH has developed a three-point plan for coordinating Medicaid and MIChild outreach, which includes (1) a state-level media campaign, (2) training about the programs for child-focused organizations, and (3) grants for multi-purpose collaborative bodies that will inform families about and enroll them in Medicaid and MIChild. Peters generally is pleased with the state’s outreach plan, but, she warns, “outreach is the lynch pin . . . if it fails, the initiative fails.”

Finally, although most agree that the MIChild and Medicaid benefits both are comprehensive, some are concerned that the services covered under MIChild fall short of Medicaid. For example, Conyers and Shaheen worry that children who receive MIChild rather than Medicaid benefits will not benefit from the Early and Periodic Screening Diagnosis and Treatment (EPSDT) program, which was established to prevent, detect, and treat certain life-threatening diseases in children up to age 18. MIChild’s benefit package is modeled after that provided to state employees and includes, but is not limited to, well-child services, doctor and hospital visits, dental care, and prescriptions drugs.

Conclusion

The DHHS already has approved the changes to the state plan that resulted from PA 54, and the state hopes to implement the initiative in May. Children’s advocates explain that although they have concerns about the plan, they are anxious to have it in place. “Helping kids is the bottom line,” concludes Peters.

Copyright © 1998

State Officials and Legislators Finalize Children’s Health PlanState Officials and Legislators Finalize Children’s Health PlanState Officials and Legislators Finalize Children’s Health PlanState Officials and Legislators Finalize Children’s Health Plan - May

April 1998

State Officials and Legislatures Finalize Children’s Health Plan

by Lisa D. Baragar, Consultant for Public Policy

Last August Congress passed the 1997 Budget Reconciliation Act, which included $24 billion in block-grant funds that states could use to extend health insurance to the nation’s 10 million uninsured children (aged 18 and under). In October, Michigan Department of Community Health (MDCH) officials announced how they would spend Michigan’s share of the pool—$467 million over five years.

Rather than expanding Medicaid—an option allowed under the federal initiative—the MDCH decided it would create a new children’s health insurance program called MIChild. The program would cover 156,000 of the state’s 228,000 uninsured children. Although most agreed that this population should be targeted, many disagreed with creating a new, separate, state-run health plan. Opponents of the MDCH initiative argued instead for expanding Medicaid, contending that this would avoid having to allocate limited state and federal resources toward administering a separate health insurance plan.

In December 1997 the state submitted its proposal for a new children’s program to the federal Department of Health and Human Services (DHHS), but legislators continued to discuss alternatives. By April the House and Senate had agreed to legislation requiring the state to both expand Medicaid (the expansion will be known as Mich-Care) and create MIChild. On April 7, 1998, Governor Engler signed the bill—now Public Act (PA) 54 of 1998.

Kathy Tobin, director of the MDCH Quality Improvement, Actuarial and Support Services Bureau, points out that, under PA 54, whether a child receives Medicaid or MIChild benefits depends on his/her family income. Uninsured children aged 16–18 who fall below 150 percent of the federal poverty level (FPL) now will be eligible for Medicaid (currently Medicaid covers these children only up to age 15), while children ages 1–18 who fall within 150–200 percent of FPL can obtain coverage through MIChild.

Some observers are concern that a two-tiered plan will confuse parents seeking health coverage for their children, but many, like Paul Shaheen, executive director of the Michigan Council for Maternal and Child Health, believe that the legislative plan is an improvement over the state’s original proposal.

Public Act 54

Despite their difference concerning the expansion of Medicaid and creation of MIChild, PA 54 and the state’s original initiative have some similarities. For example, both target children who are (1) Michigan residents, (2) aged under 19, and (3) living in a family with income at or below 200 percent of the FPL (the FPL in 1998 is $13,650 for a family of three). Also, under both plans, children are eligible to receive state-sponsored health insurance only if they have not been covered by a comprehensive health insurance plan within six months of applying for benefits.

The two initiatives also ensure that managed care organizations that want to participate in the new children’s health insurance plan can do so if they meet certain criteria. The state has not yet determined these criteria and has decided not to issue a request for proposal or other bidding process to select qualified plans.

PA 54 also includes various provisions meant to ensure easy access to children’s health services and continuity of care that were absent from the state’s proposal. For example, critics of the state’s plan argued that it had no mechanism to prevent “churning,” which many feared would result in some children—those in families with constantly changing incomes—repeatedly having to drop MIChild coverage and enroll in Medicaid, and vice versa.

To address churning, Tobin says legislators included in PA 54 a provision that ensures children up to one year of continuous eligibility for the MIChild program, unless their families report a change in eligibility. Moreover, policymakers point out that although families are not required to report such changes, some may do so (e.g., in cases where their income increases substantially or their employer offers comprehensive coverage), thereby removing their children from MIChild altogether.

In addition, PA 54 specifies that the state shall develop a single eligibility application that families may use to apply for MIChild and Medicaid. (Under the MDCH plan, families were required to apply separately.) The act also requires the state to make Medicaid and MIChild eligibility determination at the same time, which is meant to save families from having to apply for Medicaid or MIChild, then, if denied, go through another application process for the other program.

To ensure continuity of care, PA 54 stipulates that families who experience changes in their MIChild and Medicaid eligibility shall be allowed, if they are receiving a current course of treatment, to stay with their provider for up to one year, subject to MDCH review. “The intent is to keep the child with a provider over time and track him/her during sickness and health,” says Greg Conyers, planning/research associate for the Michigan League for Human Services.

Another concern addressed by the legislative initiative is cost sharing. Originally, the state suggested that all families enrolled in MIChild pay an $8-per-month premium share for each child enrolled in the program, up to $16 per month. The state plan also required copays for certain services. Under PA 54, only families with incomes between 150–200 percent of FPL have to pay a premium share, which is limited to $5 per month, regardless of the number of children receiving state-funded coverage. The legislature also eliminated all copays.

A final facet of PA 54 that differs from the state plan is language that allows the MDCH to seek federal waivers to expand Medicaid and MIChild to adults. Sharon Peters, director of Michigan’s Children, states, “Policymakers have helped children first and now are recognizing them as part of a family unit that also needs access to care.”

Unresolved Issues

Still of concern to many people, however, is whether children who have access to any health insurance, regardless of its cost or level of comprehensiveness, will be eligible for either Medicaid or MIChild. For example, language both in the state’s original plan and PA 54 prohibits children from participating in the initiative if their parents refuse coverage offered by an employer, even if the parent considers the cost unreasonable or coverage insufficient. But children’s advocates argue that if coverage is unaffordable or is limited only to catastrophic care, it should be considered unavailable.

Also, children must wait six months before participating in MIChild if they are dropped from an employer or other insurance plan. The intent is to prevent employers from dropping dependent coverage with the belief that children then would be eligible for the state plan (this is known as “crowd-out”).

Another concern facing PA 54 is outreach. Tobin explains that the MDCH has developed a three-point plan for coordinating Medicaid and MIChild outreach, which includes (1) a state-level media campaign, (2) training about the programs for child-focused organizations, and (3) grants for multi-purpose collaborative bodies that will inform families about and enroll them in Medicaid and MIChild. Peters generally is pleased with the state’s outreach plan, but, she warns, “outreach is the lynch pin . . . if it fails, the initiative fails.”

Finally, although most agree that the MIChild and Medicaid benefits both are comprehensive, some are concerned that the services covered under MIChild fall short of Medicaid. For example, Conyers and Shaheen worry that children who receive MIChild rather than Medicaid benefits will not benefit from the Early and Periodic Screening Diagnosis and Treatment (EPSDT) program, which was established to prevent, detect, and treat certain life-threatening diseases in children up to age 18. MIChild’s benefit package is modeled after that provided to state employees and includes, but is not limited to, well-child services, doctor and hospital visits, dental care, and prescriptions drugs.

Conclusion

The DHHS already has approved the changes to the state plan that resulted from PA 54, and the state hopes to implement the initiative in May. Children’s advocates explain that although they have concerns about the plan, they are anxious to have it in place. “Helping kids is the bottom line,” concludes Peters.

Copyright © 1998

Greater Costs, Fewer Options: Prescription Drugs in Michigan - June

June 1998

Greater costs, Fewer Options: Prescription Drugs in Michigan

by Lisa D. Baragar, Consultant for Public Policy

During recent years prescription drug prices have been rising rapidly. According to the U.S. Bureau of Labor Statistics, from 1982 to 1991 pharmaceutical prices climbed an average of 9.3 percent per year. But today many industry gurus claim that the age of raging price increases is over: From 1992 to 1997 the rate climbed only 3.4 percent—far below the 1980’s average. Still, some experts indicate that even though prescription drug prices have stabilized, pharmaceutical costs are another story: Nationally, since 1990 such costs have increased 13.8 percent a year and now account for more than $62 billion annually.

The pharmaceutical inflation rate is determined by comparing prices of similar quantities of goods—in this case, prescription drugs—over time. For example, an economist would compare the prices of drugs A, B, C in 1998 to their prices in 1999. Such calculations do not take into account, however, that perhaps drugs B and C, although still prescribed, generally have been replaced by drugs D and E, which are more expensive but more effective and thus more widely prescribed than their predecessors. For State of Michigan officials, the growing expense of newly introduced drugs partially explains why, despite supposedly tamed inflation rates,

  • in fiscal years 1987 to 1997 the Michigan Medicaid program’s average prescription expenditure more than doubled, surging from $12.57 to $29.38 per person (averaging 9.1 percent annually), and
  • although from FYs 1996 to 1997 the total number of Medicaid-covered prescriptions dropped by 7 percent (to 12.4 million), total prescription expenditures climbed 4 percent (to $365.3 million). NOTE: In July 1997 Michigan shifted to Medicaid managed care in five southeast counties, but the data presented here include expenditures made only under the traditional fee-for-service program.

These trends cause concern among health insurers, providers, and consumers, all of whom would like to strike a balance between health care quality and cost containment.

Why Costs are Rising

Among the most widely accepted reasons for rising prescription drug costs is higher utilization, which is influenced by many factors. For example, Larry Wagenknecht, chief executive officer of the Michigan Pharmacists Association, contends that direct consumer advertising by drug manufacturers has resulted in more patients going to their doctor to see if an advertised drug will ease an affliction that heretofore may have been untreated. He refers to this as the “me too” phenomenon, which he believes leads many doctors and health plans to feel obligated to prescribe/cover quality-of-life drugs that are much in demand, such as Viagra, for combating male impotency, and Rogaine, for stimulating hair regrowth.

Another major factor is that health plans and doctors see value in pharmaceuticals as health-preservation tools. Chris Witting, pharmacy network consultant for the Wellness Plan, believes that when it comes to treating health problems, prescription drugs often provide the biggest bang for the buck. “Pharmaceuticals are one of the major reasons that medical costs have stabilized,” he says. “It is a lot more cost effective to pay for a patient’s heart medication [annually about $1,000] than for open-heart surgery [roughly $40,000].” Still, when it comes to covering new drugs, Witting says that Michigan health plans, particularly those selected to provide Medicaid managed-care services, must choose carefully. “Qualified health plans are mandated to give care at a ‘ceiling’ cost, and there is no inflation adjustment. There will have to be a real benefit for patients before most plans will decide to incur the additional expense of covering a new drug.”

There are other factors besides utilization, however. Andrew Corsig, regional director for Pharmaceutical Researchers and Manufacturers of America (PhRMA), points out that the cost of introducing new drugs has soared by more than 500 percent in the last two decades. A recent PhRMA report shows that in 1976 the average cost of drug discovery, clinical testing, and, finally, Food and Drug Administration approval, was $54 million. By 1990 the figure had escalated nearly sevenfold, to $359 million. And despite all the effort and expense, only a handful of drugs finally reach the market; manufacturers may lose much of their investment in the many that do not, and they claim that pharmaceutical price increases in recent years are necessary to ensure sufficient investment return and thus justify the financial risk they incur.

Despite the rising cost of drug development, in 1996 Fortune magazine declared pharmaceuticals the nation’s most profitable industry. Some observers claim that the reason drug companies have higher drug-development costs is that they choose to invest more in this area because the profit is so great.

Curbing Costs

In the next 5–10 years, managed-care organizations (MCOs), including HMOs, will account for 90 percent of all pharmaceutical purchases, up from the current 55 percent. Restricting drug formularies is one strategy that many MCOs employ to limit prescription drug costs.

A formulary is a list of medications and prescribed drugs that a health plan covers. Many are organized in a manner that allows the provider to determine which drugs are appropriate for certain health problems (their therapeutic class) and the relative (not actual) cost of the drug in comparison to others in that class. Generally, a drug is added to a health plan’s formulary based on its cost and potential patient benefit. There are four general kinds of formularies:

  • OPEN Prescribed products are reimbursable regardless of whether the health plan’s formulary lists or recommends them.
  • CLOSED Limits reimbursement to selected drugs in each therapeutic class; physician compliance with these limits is mandatory.
  • SELECTIVE or PARTIALLY OPEN Limits reimbursement to listed drugs plus certain others subject to prior approval by the health plan.
  • OTHER Some formulary schemes specify upper limits—or maximum allowable costs—for prescriptions; the patient pays out of pocket the cost not covered by the plan.

Spokespersons from Michigan health plans say that the industry already increasingly is moving toward closed formularies, which give insurers the best control over prescription drug costs. Opponents of restricting formularies claim, however, that the practice actually may hike expenses; they point to a study published in the Journal of Managed Care (1996) that finds that HMOs that restrict physician choice of prescription drugs experience higher utilization of such other, more expensive medical services as hospitalization and emergency room visits. Although some question the study’s methodology, many providers who have encountered closed or selective formularies say that they have been put in the position of having to prescribe a drug for a patient not because they thought it was best for the patient, but because it was adequate and listed in the in the health plan’s formulary.

Besides restricting formularies, another cost-reduction practice of many health plans is covering generics in place of more expensive brand-name drugs. Opponents of the practice suggest that a generic drug, because it is only similar—not identical—to the brand-name original, may not be best for a patient. Despite this view, today 94 percent of HMOs employ generic-substitution practices; some estimate that by 2000, 70 percent (compared to 42 percent today) of all prescriptions will be for generic drugs.

In some instances, a health plan’s decision to cover a drug may be influenced by whether such coverage will generate a rebate from the drug’s manufacturer. Some industry observers question the practice because they believe that sometimes a health plan (1) may be guided more by a drug’s special price than its merit in comparison to another already on the market or (2) accept a rebate but fail to pass the savings to their insureds. Health plans counter that rebates often accompany bulk purchases, and they argue that consumers benefit from such savings by having access to “cutting-edge” pharmaceuticals without having to pay more out of pocket.

Conclusion

As prescription drug costs continue to rise, health professionals are scrambling to minimize their financial losses without compromising patient health. Although there is disagreement as to the drawbacks and benefits of some actions being taken, most agree that something must be done about the expense of pharmaceuticals before it reaches epidemic proportions.

Copyright © 1998

MDCH Budget Talks to Resume in September - July

July 1998

MDCH Budget Talks to Resume in September

by Lisa Baragar Katz, Consultant for Public Policy

The debate over the fiscal year (FY) 1998–99 health budget in Michigan supports the contention by many that health care will be a reigning issue during this election year. To date, Senate Bill 908, which sets appropriations for the Michigan Department of Community Health (MDCH), is the only department budget that has not been finalized.

The bill was referred to conference committee on June 30, but despite heated debate, conferees failed to reach an agreement before adjourning for the summer. Talks will resume in September.

The governor-recommended and Senate-approved (substitute S-1) budgets differ substantially from their House counterpart (substitute H-1) both in terms of funding and policy. Unless the differences are resolved by September 30, the current year’s budget will carry over into the new fiscal year until a solution is reached. The following is a discussion of some of the more controversial matters.

Dollar Dance

Funding levels are the most immediate difference among the executive branch recommendations and the two chambers’ versions of SB 908. While Senate-approved appropriations closely resemble Governor Engler’s FY 1998–99 proposal, House-approved appropriations exceed it substantially.

  • The governor recommended total community health appropriations in the amount of $7.48 billion, with the General Fund/General Purpose (GF/GP) portion being $2.52 billion.
  • The total in the Senate substitute (S-1) exceeds the governor’s recommendation by only 0.01 percent, with the GF/GP portion exactly matching the governor’s proposal.
  • The total in the House substitute (H-1) exceeds the governor’s recommendation by 2.3 percent ($171 million), with the GF/GP portion more than 4.1 percent ($104 million) over the governor’s proposal.

>The House substitute also exceeds the community health budget revised “target” ($2.54 billion)—the funding level within which the House, Senate, and executive branch agreed to keep GF/GP appropriations—by 3.3 percent. The Senate and executive GF/GP allocation each is $20 million under the target.

Local Public Health

One major matter of contention between House and Senate conferees is funding for local public health departments.

Currently, the State of Michigan matches every dollar, up to a total of $36.4 million, that local health departments spend to provide such basic required services as immunizations and communicable disease control; this is referred to as cost sharing. Governor Engler recommended that the state, instead of matching local expenditures, give local public health departments their money in the form of operations block grants; he proposed that for FY 1998–99 the state cap these grants at $37.3 million (up 2.5 percent over the current fiscal year’s cost-shared dollars).

According to Mark Bertler, executive director of the Michigan Association for Local Public Health (MALPH), opponents of the proposed block grants say that they undermine the purpose of cost sharing, which is to ensure that every citizen, regardless of where s/he lives, has access to a similar standard of care. Supporters counter that the block grants will give health departments the flexibility they need to best address local health concerns.

The Senate adopted the governor’s funding increase but kept it as a cost-sharing item. To encourage discussion, however, the Senate left intact most of the governor’s block-grant language; the House subsequently eliminated the block-grant language and also raised the cost-sharing cap to $44.7 million ($7.4 million above the governor’s proposal).

MSS/ISS

Another concern is how the state funds Maternal Support Services and Infant Support Services (MSS/ISS) (both Medicaid programs). Some legislators argue that the help people receive through these programs depends on which local public health department serves their area. Many also believe that Medicaid managed-care plans have no incentive to provide MSS/ISS services because (1) payment for them is incorporated into a single capitated fee, and (2) the MDCH does not have their sources to engage in appropriate monitoring.

To address these and related concerns, a House budget work group developed language to create a fee-for-service/bonus payment for qualified health plans (QHPs—plans with which the state has contracted to deliver Medicaid managed care) if their providers appropriately render MSS/ISS services. The provisions include $8.9 million in GF/GP funding for the initiative.

Opponents argue that it is clear in the plans’ contracts with the state that the services are required, and lawmakers should not feel obligated to pay a bonus to QHPs that are properly rendering these services.

Medicaid Reimbursement

The reimbursement level for QHPs that provide Medicaid managed-care services also is in dispute. The governor recommended, and the Senate agreed, that the FY 1998–99 figure be the same as the current FY reimbursement level ($1.25 billion gross, which includes $581 million GF/GP). The House, however, raised QHP funding by $8.4 million GF/GP, which would entitle the health plans to an additional $9.4 million in federal funds.

The main concern, says Susan Garcia, deputy director of the Michigan Association of Health Plans (MAHP), is not whether but where the additional funds should be appropriated: to all QHPs or just to those in the original five-county area (Wayne, Oakland, Genesee, Macomb, and Washtenaw counties), where Medicaid managed care initially was launched. Supporters of appropriating the additional funds to just the five initial health plans say these organizations should be compensated for the losses they incurred during the transitional phase to managed care.

Long-Term Care

“Long-term care (LTC) issues also are highly controversial,” says Patricia Anderson, assistant vice president of reimbursement for the Health Care Association of Michigan, “especially when it comes to wage pass throughs for nursing home employees.”

Last year, a 50-cent wage “pass through” was approved for nursing home employees. This allowed nursing homes, for example, to raise an employee’s wage from $6.91/hour (the 1996 average) to as much as $7.41 an hour. The state then reimbursed the facility for the cost of the wage hike, based on the facility’s Medicaid funding. If, for example, 70 percent of a nursing home’s funding came from Medicaid, the state would reimburse 70 percent of the facility’s 50-cent (or smaller) increase.

For FY 1998–99, the governor and Senate prefer to continue the 50-cent wage pass through, but the House wants to raise it to 75 cents, which would cost an extra $19.1 million GF/GP but would generate an additional $21.3 million in federal funds for nursing homes. Supporters argue that higher wages reduce nursing home employee turnover; opponents say continuing the 50-cent pass through is sufficient.

Another LTC issue is managed care. The governor and Senate support language permiting capitated LTC managed care, but House members are opposed, saying they want more detail on how to implement such a transition.

Other

Paul Reinhart, director of the Office of Health and Human Services for the Michigan Department of Management and Budget (DMB) points out that besides the additional appropriations contained in substitute H-1, the bill differs from the Senate version and governor’s recommendation in that it assumes that the state will see an additional $9 million in savings from early retirements in FY 1998–99; the Senate and governor assume no savings. Also, both the House and Senate substitutes anticipate lower Medicaid inflation ($7.3 million and $6.1 million, respectively) than does the governor ($8.4 million). Reinhart explains that these differences also must be resolved before the budget can move forward.

Conclusion

As Geralyn Lasher, spokeswoman for the MDCH, points out, although policy, money, personalities, and politics all played a role in stalling the community health budget, in the fall the conferees will put the past behind and start anew.

Copyright © 1998

Feds Approve Managed-Care Waivers for Behavioral Health - August

August 1998

Feds Approved Managed-Care Waivers For Behavioral Health

by Lisa Baragar Katz, Consultant for Public Policy

Two years ago, when the state began considering managed care for Medicaid, services for behavioral health and long-term care were excluded for the time being, to ensure more focused discussion on them. This spring, after painstaking efforts to devise a plan, state officials submitted to the U.S. Health Care Financing Administration requests for two waivers, which were approved on June 26 and will make Michigan the first state to offer publicly funded behavioral-health services through managed care.

Specifics

The waivers will be effective for two years (October 1, 1998–September 30, 2000). Both target Medicaid eligibles, but the first specifically addresses behavioral-health care for the mentally ill and substance abusers and the second addresses those with a developmental disability. (The state is pursuing a third waiver that addresses care for children with severe developmental disabilities who live with their families.) Developmental disability may be defined as a mental or physical incapacity, such as mental retardation, autism or cerebral palsy, that arises before adulthood and usually lasts through life.

Some people receive behavioral-health services but are not eligible for Medicaid, and this will continue under the waivers. Included are people with a developmental disability who are eligible for such care regardless of Medicaid eligibility status and mentally ill and substance abuse patients who do not meet certain income/asset or disability tests.

According to Patrick Barrie, director of managed care specialty services for the Michigan Department of Community Health (MDCH), the waivers enable the state to treat its 49 community mental health services programs (CMHSPs) as “prepaid behavioral-health plans” that contract with the state on a capitated, shared-risk basis (see discussion below) to provide behavioral-health services for both Medicaid eligibles and non-eligibles.

The only publicly funded behavioral-health services that CMHSPs will not manage are those that qualified health plans (managed-care plans certified as “qualified” by the state to cover comprehensive health care to the general Medicaid population) must cover under their state contract: (1) assessment, evaluation, limited treatment, and specialty referral services; (2) 20 outpatient behavioral-health visits annually; and (3) pharmaceuticals and laboratory services that relate to behavioral health and are prescribed by the health plan network or a CMHSP provider. The CMHSPs also are not required to manage school-based mental health services.

People eligible for publicly funded behavioral health services must obtain them through the CMHSP serving their region. Enrollees may refer themselves to their designated CMHSP, or they may be referred by their primary care provider or a health and human services agency. The MDCH will require CMHSPs and qualified health plans to develop written agreements defining a referral process and ensuring coordination of services.

The CMHSPs will be reimbursed monthly by the state for their services, including hospitalization, on a capitated basis (that is, they will receive a set amount per person). The MDCH has based the capitation rates on historical regional fee-for-service costs for services provided to mentally ill, substance abuse, and developmentally disabled consumers.

The CMHSP and the state will share financial risk. First, CMHSPs will be able to assume only a small portion of any savings they incur (at least 95 percent of the capitated rate either must go toward rendering care or be returned to the state; they may keep the remainder). Second, they must assume a portion of cost overruns. The CMHSPs must bear all costs up to 105 percent of their monthly capitated rate but only 50 percent of costs between 105 percent and 110 percent of the rate and nothing for costs exceeding 110 percent. Barrie (MDCH) says that the purposes of these provisions are to eliminate financial incentives for undertreating people and also to protect CMHSPs from having to absorb all the cost when there is high utilization of particularly expensive services.

PROs

Kathleen Reynolds, executive director of the Washtenaw CMHSP, believes that flexibility is one advantage that will stem from the managed-care initiative. Currently, Medicaid and other regulatory standards often limit the scope of treatment options; under the waivers, CMHSPs may offer alternatives consistent with recipient preferences and professional care standards. Barrie (MDCH) calls this process “person-centered planning” and says the goal is to take into account many factors, including personal preference, when determining a treatment plan. For example, under the second waiver, all people with a developmental disability may choose to participate in what amounts to an expanded home- and community-based services program, which allows the state to pursue various nontraditional care options (e.g., vocational and family training) that will help consumers live and work in their community and avoid placement in other settings (e.g., group or nursing homes). Before the waiver, slots in this program were limited and federal requirements more rigid.

Mark Reinstein, associate executive director of the Mental Health Association in Michigan, says that another positive facet of the waivers is that people must obtain services through a single gatekeeper: “This will ensure coordination of care among multiple service providers and continuity of treatment over time.” Barrie (MDCH) adds that such coordination will give patients a single point of contact in the system, making it easier for them to obtain services.

Barrie also claims that the waivers allow the state to continue pooling Medicaid and state General Fund dollars, which means it can continue providing services to people who are ineligible for Medicaid or whose Medicaid eligibility continually changes. And Reynolds (Washtenaw CMHSP) says that tying CMHSPs’ payments to individuals receiving care, rather than to institutions/services themselves (as is the case under fee-for-service arrangements), encourages efficiency and accountability in rendering care.

Many also applaud waiver provisions relating to quality assurance, specifically (1) the hiring of an external reviewer to determine whether CMHSPs are meeting desired outcomes, (2) adopting new performance-indicator systems, and (3) requiring CMHSPs to meet certain conditions for participation before their state contract takes effect.

CONs

Concerns about managed care for behavioral health closely mirror those voiced about instituting managed care for the general Medicaid population. For example, Reinstein presents the mental health association’s concern that “economics will drive the system.” He says that in paying CMHSPs only a capped amount per month per enrollee, the state may create incentives for CMHSPs to cut corners and underserve those requiring care. He contends that this is particularly dangerous for the mentally ill, whose care already is underfunded. Another possible drawback, says MDCH’s Barrie, is that CMHSPs may practice selection or retention bias to save money (i.e., rejecting or retaining certain people because of the substantial or minimal cost associated with their required care). He adds that the state will work closely with the CMHSPs to prevent this.

A further concern, shared by many, is the federal requirement that the state develop a plan in the next two years to competitively bid contracts for behavioral-health plans, which currently may be awarded only to CMHSPs. Speaking for the MDCH, Barrie says, “This could raise the bar. If CMHSPs want these contracts down the road, they will have to be effective in delivering care and satisfying families. Competition could put some out of business.” Reinstein (mental health association) points out that many national behavioral-health agencies have vast resources that could help them manage and provide care more efficiently than the CMHSPs.

Conclusion

Most agree that implementing the behavioral-health care waivers will be facilitated by the state’s willingness to move slowly but steadily. Reinstein says that state officials have been working for three years to get where they are today. He points out that officials took care to discuss and address provider and consumer concerns and many compromises have been made. He concludes, “There may be some bugs, but we’ll help the state work things out, and we know they welcome our efforts.”

Copyright © 1998

Medicaid Managed Care: A Year in Review - September

September 1998

Medicaid Managed Care:  A Year in Review

by Lisa Baragar Katz, Consultant for Public Policy

It has been just over one year since MAXIMUS first began enrolling people in qualified health plans (QHPs) selected by the state through competitive bidding to coordinate comprehensive health care services for Medicaid clients. Enrollment began in southeast Michigan (Wayne, Macomb, Oakland, Genesee, and Washtenaw counties) in September 1997 and statewide in July 1998.

The road to statewide Medicaid managed care has been a little bumpy, agree Rick Murdock, director of the comprehensive health plan division for the Michigan Department of Community Health (MDCH), Janice Ruff, project manager for MAXIMUS, and Susan Garcia, deputy director for the Michigan Association of Health Plans (MAHPs). Still, they concur that a good deal of progress has been made in better coordinating the delivery of Medicaid health services while at the same time reducing program costs and improving quality. This article provides an overview of how far Medicaid managed care has come in the past year and where it has to go.

The Basis

Statewide, 30 QHPs currently provide comprehensive Medicaid coverage, which, for the general Medicaid population, includes primary health services but not most behavioral health and long-term care services. Sixteen of the 30 are licensed health maintenance organizations (HMOs). According to Murdock (MDCH), the others are interested in HMO licensure, and each is taking steps towards this goal. Originally, HMO licensure was required by the state QHP contract, but that provision recently was eliminated.

As of September 1, in 55 of the state’s 83 counties there two or more QHPs, which allows Medicaid clients to chose among health plans. In 13 counties, only one QHP is available and Medicaid clients may choose between enrolling in it or continuing with their physician sponsor plan; in the latter, clients are assured access to a primary care provider who directs their care, but there is no established network from which they must receive services. In 15 counties there is no QHP, and Medicaid eligibles must obtain care through the existing physician sponsor plan.

As of August 31, roughly 1.1 million people were enrolled in a Medicaid managed-care plan; about three-quarters of this number are in southeast Michigan. Since implementation of the state’s mandatory Medicaid managed-care initiative, the figures for enrollment in a Medicaid plan have climbed nearly 27 percent.

A Difficult Task

Ruff points out that between September 1997 and August 1998, MAXIMUS completed nearly 238,000 Medicaid enrollments, but total enrollment figures do not reflect this because people’s program-eligibility status continually changes.

State officials say that they plan eventually to have nearly 800,000 enrollees in comprehensive Medicaid managed care. The remaining Medicaid-eligible population will stay in a fee-for-service arrangement because they (1) are a voluntary population (e.g., Medicaid/Medicare dual eligibles) that has opted out of Medicaid managed care, or (2) otherwise are exempt from the state’s Medicaid managed-care initiative

Ruff, Murdock, and Garcia generally are satisfied with the current enrollment level, but they agree that getting there wasn’t necessarily easy.

First, Garcia (MAHP) points out that although the southeast Michigan QHP contracts took effect in July 1997, MAXIMUS could not begin enrolling people until September. Under their state contract, QHPs are not permitted to market to or directly enroll Medicaid clients, and Garcia claims that QHPs lost money during the time when no enrollment was taking place. The state counters that in fact it was enrolling clients in the southeast Michigan health plans, but Garcia says the QHPs lost millions of dollars that could have been avoided.

Another factor that has made MMC implementation difficult is QHP reimbursement. For example, the state reserves the right to alter drug formularies (in this case, the list of drugs that health plans must cover), to ensure that they are in compliance with federal law and up to date with current medical technology. Murdock (MDCH) explains that states that opt to provide Medicaid coverage for prescription drugs must cover any drug approved by the Federal Drug Administration. This means that Michigan QHPs must cover new drugs at their current capitation level. Given rising pharmaceutical costs, claims Garcia (MAHP), QHPs are having trouble keeping up: Nationally, since 1990 pharmaceutical costs have risen an average of 13.8 percent a year.

Another reimbursement concern, says Garcia, is QHP transportation expenses. Currently, QHPs are reimbursed $.48 cents per member per month for nonemergency travel relating to health care (e.g., a trip to doctor or pharmacy), but this also must cover travel costs for such daily outpatient services as kidney dialysis plus lodging and food for the client and his/her caregiver. For fiscal year 1998–99, the legislature approved an additional allocation of $8.5 million to help offset such expenses.

Although there are many concerns relating to the QHPs’ state contracts, Ruff (MAXIMUS) points to a third barrier that the enrollment broker is trying to overcome: improving enrollment-processing accuracy. One problem, claims Ruff, is that women in their third trimester of pregnancy automatically are being enrolled in a QHP if they do not select one themselves. Ruff says that this is hard both on the woman (who already may have been receiving care from someone for months before being switched to a new health plan) and the QHP (which must cover care for a possible high-risk pregnancy). Ruff reports that MAXIMUS, the state, and the QHPs have agreed to a plan they think will solve this problem: Women will not be automatically enrolled if they are more than four months pregnant.

Good Vibrations

Despite the difficulties accompanying the first year of Michigan Medicaid managed care, Murdock, Ruff, and Garcia are quick to remind us that many positives have resulted. For example, Murdock points out that the state has created special reimbursement matrices to help cover the costs QHPs incur in caring for (1) people who are dually eligible for Medicare and Medicaid and (2) high-risk infants. He explains that the matrices are age-, sex-, and program-specific, and this ensures that health plans are appropriately reimbursed for the populations they serve.

All three are pleased to report that their respective organizations meet monthly to discuss concerns relating to managed care and build their working relationship.

The three also agree on the success of the kickoff of statewide child enrollment in MIChild. This is a new health insurance program for uninsured youth aged 1–18 who fall within 150–200 percent of the federal poverty level (which in 1998 is $13,650 for a family of three); prior to September, the program was available in only half of Michigan’s counties. The initial statewide response surprised policymakers—most of the uninsured 1–18-year-olds (nearly 80 percent) qualified for and were enrolled in Medicaid. Ruff (MAXIMUS) reports that as of early September, the percentage of children found eligible for Medicaid rather than MIChild has declined to 55 percent. “Currently we have 386 kids approved for MIChild.. . . The enrollment process is going smoothly.”

Conclusion

Although Medicaid managed care has been in place for more than a year, Murdock (MDCH) points out that “We’re still in the implementation phase of this initiative, and there is much work to be done. ” He says he is eager for the initiative to be up and running in its entirety: “It would be a nice change of pace.”

Copyright © 1998

Patient Bill of Rights: Federal Proposals and Michigan Law - October

October 1998

Patient Bill of Rights: Federal Proposals and Michigan Law

by Lisa Baragar Katz, Consultant for Public Policy

The November elections are just over a week away, and political candidates are scurrying to identify for constituents exactly what Congress did and did not accomplish during this session. Among the items remaining on national policymakers’ “To Do” list is passage of a patient bill of rights (PBR).

Observers and the media list numerous reasons, including the following, why none of the four federal PBR bills—S. 2330 and S. 1890 (introduced by Senate Republicans and Democrats, respectively) and H.R.s 4250 and 3605 (introduced by House Republicans and Democrats, respectively)—has been adopted:

  • Both Republicans and Democrats wanted election-year credit for passing a PBR, so neither party was willing to support the other’s legislation
  • President Clinton, because of the Lewinsky investigation, lacks the political leverage to steer a PBR through a hostile, Republican-controlled Congress
  • Senators, because of partisanship, cannot agree on rules governing debate on the issue
  • Health plans, business, and other special interests are spending millions on a campaign to do in the bills

Federal Patient Bill of Rights

In addition to the political obstacles that block passage of a federal PBR, there also are many fundamental policy differences that legislators cannot resolve. For example, in August, President Clinton vowed to veto the Republican proposals because, he said, they do not cover all Americans: H.R. 4250 applies to only the 123 million in private employer-sponsored health plans but not the 15 million self-insured; S. 2330 applies to the self-insured but not those in employer-sponsored plans. Democrats’ bills cover both populations.

Democrats’ bills also include various provisions, particularly the following, that are not in the Republican legislation:

  • Health plans must cover visits to health care providers outside their network if a patient’s doctor recommends it
  • Health plans have to allow patients to designate specialists as their primary care providers; for example, patients with heart problems could ask their cardiologist to coordinate all their other care too
  • Health plans must allow patients to obtain from their primary care provider a standing referral to a particular specialist
  • Health plans must cover any drug a doctor prescribes, even if it is not on the plan’s coverage list
  • States must ensure that consumers have access to an independent, external ombudsman who can help them through the managed-care system
  • Doctors may not be offered financial incentives for denying certain care
  • Health plans must cover, on a doctor’s recommendation, the cost of patients’ participation in a clinical trial
  • Patients may sue health plans for damages resulting from a coverage decision

The Democrat and Republican bills also have some similarities. For example, all four allow women to see an obstetrician-gynecologist (ob-gyn) without first seeing a primary care doctor, but Democrats’ legislation allows a woman to designate an ob-gyn as her primary care doctor. Also, all four require an external appeals process allowing patients to challenge health plans’ coverage decisions, and each prohibits health plans from imposing “gag clauses,” which proscribe doctors from discussing with patients all treatment options—even those not covered by the plan.

Democrats’ bills require health plans to cover a patient’s emergency room visit—without a doctor’s referral—if the patient reasonably believes there was an immediate threat to his/her health. Republican legislation limits the coverage only to certain hospitals, and House Republicans further stipulate that plans do not have to cover an E.R. visit if the only symptom is pain.

Finally, Democrats and Senate Republicans would allow patients undergoing care from a physician who is terminated from a health plan’s provider network to continue seeing that provider until the care is complete.

This language is not in the House Republican bill.

Michigan Patient Bill of Rights

Michigan consumers are protected in many respects by the state’s own Patient Bill of Rights. The package of laws (Public Acts 515–18 and 472 of 1996), which pertains to HMOs, prudent purchaser organizations, indemnity insurers, and Blue Cross and Blue Shield of Michigan, took effect October 1, 1997, and, among other things, accomplishes the following:

  • Requires extensive disclosure of health plan and provider information to the public, including the plan’s financial relationships with providers, referral limitations, and responsibilities of the patients
  • Prohibits preexisting-condition exclusion of people who move directly from one health plan to another and limits such exclusions to six months for people not previously covered by a group policy
  • Guarantees access to an internal grievance process that allows patients to challenge a health plan’s coverage decisions and requires timely action on patient grievances

Subsequent to Michigan’s PBR, laws also have been enacted that prohibit gag rules on from being imposed on health care providers (P.A.s 66–8 of 1997) and require health plans to cover E.R. visits, even if a person wrongly but reasonably believes that his/her health is in jeopardy (P.A.s 124–5 of 1997 and 136 of 1998).

Sean Gehle, government liaison for the Michigan Health and Hospital Association (MHA), Greg Aronin, government affairs director for the Michigan State Medical Society (MSMS), and Susan Schwandt, public relations manager for Health Alliance Plan (HAP), point out that their organizations supported adoption of Michigan’s PBR. Aronin explains, “Managed care keeps costs down, but balance is needed to help protect patients, and the [Michigan] PBR provides it.”

Schwandt adds that HAP supports the national drive to adopt a PBR, but she says, “The challenge is to find a balance between consumer protection and excessive government regulation of managed-care organizations.”

Beverley McDonald, chair of the Consumer Health Care Coalition, joins the MHA, MSMS, and HAP spokespersons in making the point that despite Michigan’s having a PBR, there is an advantage to federal legislation: Michigan laws cannot help people whose health care coverage is offered through self-insured benefit plans—only federal legislation can.

Because Michigan’s PBR laws were adopted before two years ago, they exclude many protections now being discussed at the federal level. To keep Michigan at the policy forefront, state lawmakers have introduced numerous bills, including the following, that mirror portions of the federal proposals:

  • HBs 6209–11 require health plans to ensure that patients have (1) continuity of care if their provider has been terminated from the plan’s network; (2) direct access to pediatricians; and (3) coverage for any medication that a doctor considers medically necessary even if it is not on the health plan’s coverage list
  • HB 5221 and SB 777 hold health plans financially liable if they delay or deny ordinary covered treatment, thereby causing injury to a patient
  • HBs 4779–81 and SBs 151–3 require health plans to allow women to access care directly from their ob-gyns
  • SB 343, among its other provisions, creates within the Michigan Department of Community Health the Health Care Consumer Advocate, a managed-care ombudsman

Conclusion

According to the MSMS, Michigan Congressman John Dingell, a sponsor of H.R. 3605, intends to introduce new, compromise PBR language when federal lawmakers start the next session in January. Still, the fate of the PBR legislation will remain uncertain until the unless Republicans and Democrats temper their political and policy differences.

Michigan legislators also likely will resume discussion of these issues when their new session begins.

Copyright © 1998

Health Care Policy in the Wake of Term Limits - November

November 1998

Health Care Policy in the Wake of Term Limits

by Lisa Baragar Katz, Consultant for Public Policy

In Michigan, November 3 was not a run-of-the-mill Election Day; rather, it marked the first trial of the state’s constitutional term limits provision—adopted six years earlier by voters.

In the state House of Representatives, 64 of 110 seats were up for grabs because the incumbent was prohibited from running again for that office. The Republicans gained six seats, giving them a 58-52 edge over Democrats in the 1999–2000 session, which begins in January.

Term limits will not hit the Senate until the year 2002, but when it does, 30 of 38 seats will be affected. Meanwhile, the GOP has gained one Senate seat for the next session, increasing its majority to 23 (the Democrats have 15 members) in this chamber.

Certainly, term limits will substantially affect the legislature’s approach to health care policy in coming years.

The Big Picture

Sen. Dale Shugars, chair of the Senate Committee on Health Policy and Senior Citizens, believes that one major effect that term limits will have on the health care debate in Michigan is a loss of institutional memory. While all but one of the five on the upper chamber’s health committee will return to office next session, in the House more than half of the 17-member Health Policy committee, including chairman Rep. Joseph Palamara, will not. With these departing members will go a wealth of knowledge about health policy in Michigan.

Although Representative Palamara agrees that it will take some time before freshmen health committee members are brought up to speed, he is not concerned about the committee’s future: “I think Rep. [Gerald] Law [R-Plymouth, a current committee member] would make an outstanding health policy chair. He works well with both sides of the aisle and has a thorough understanding of [health care] issues.” Representative Law has not yet officially been appointed committee chair for the next session, but health policy experts think he will. Another possible contender for the position is Rep. Judith Scranton (R- Brighton), also a current House health committee member.

Greg Aronin, director of government affairs for the Michigan State Medical Society (MSMS) believes that another major effect of term limits on the Michigan legislature, including the health committees, will be to diversify the agenda. “[Term limits] will create a constant influx of new ideas and agendas; this is a positive change,” he says.

Sean Gehle, government liaison for the Michigan Health and Hospital Association (MHA), and Nancy McKeague, vice president of human resources for the Michigan Chamber of Commerce agree that the combined loss of institutional memory and diversity of interests may require legislators to invest considerable time and effort in developing the agenda for the new session.

The1999–2000 Agenda

At the end of every two-year legislative session, no matter how hard or long policymakers work, there always is some unfinished business left to be resolved in the new session. Senator Shugars and Representative Palamara agree that among the issues that will carry over to 1999–2000 are continued monitoring and revision of Medicaid managed care.

Senator Shugars also believes that long-term care issues will be critical. He would like to see next session’s legislators address tax credits and deductions for health and long-term care insurance premiums, as well as other health-related tax issues, and also update the Emergency Medical Services law.

Although he will not be returning next year, Representative Palamara says that if pain-management legislation (HBs 4681–6) is not adopted before the end of the current session, he hopes his successor will reintroduce it in the next. The bills create a special pain-management commission and compel pain-management education for physicians.

MSMS, MHA, and Michigan Chamber of Commerce officials say that revisions to certificate of need requirements also will be an important matter. And although MSMS officials suggest that while hospital merger/acquisitions policy remains important, they are uncertain that it will be a priority, but the MHA believes that hospital conversions will be a salient issue during the next session.

The MHA also sees access to health care, including implementation of the MIChoice program for the state’s elderly population, as critical, along with Medicaid funding, managed care, and health care data collection. The Chamber’s McKeague adds mandated benefits to the list.

Finally, MSMS, the Michigan Chamber, and Senator Shugars point out that during the next session, lawmakers must determine how to allocate tobacco settlement funds, which, beginning in spring 2000, will bring Michigan an estimated $104–365 million a year, totaling $8.1 billion over 25 years.

Wealth of Information

Of course, the issues that freshmen House members and other legislators choose to address beginning next year will depend greatly on their own background, beliefs, and knowledge of health care. Lawmakers Shugars and Palamara and the MSMS, MHA, and Michigan Chamber of Commerce are encouraged by the health care experience of incoming legislators.

For example, a possible candidate for the open position on the Senate health committee is current Rep. Bev Hammerstrom (R-Temperance), now a member of the House health committee; she will begin her first term as a senator in January.

On the House side, several freshmen will enter the House with extensive health care knowledge, including a physician, a nurse, and a hospital board member. Kevin Kelly, associate director of the MSMS comments, “We are very pleased that there is a physician in each house of the legislature: Senator Schwarz [R-Battle Creek] in the Senate and Representative DeWeese [R-Williamson] in the House.” The Chamber’s McKeague adds that several elected legislators have extensive business experience and understand the costs of mandated benefits and health insurance premiums.

Aronin (MSMS) notes that although legislators will look to each other for information about health care, they also will look to Michigan Department of Community Health officials as well as those from the Michigan Department of Consumer and Industry Services. Gehle (MHA) adds that interest groups also will be important sources of information, and Representative Palamara touts the importance of knowledgeable legislative staff. Senator Shugars notes that “A wise freshman legislator will listen to everybody.”

Key to Success

Aronin of the MSMS says that special interest groups that want to succeed in influencing incoming freshman legislators will have to keep in mind that with term limits, House members may serve a maximum of six years (three two-year terms), and Senators a maximum of eight (two four-year terms). This means that legislators will pay especially close attention to their home constituencies, which makes grassroots organization very important. NOTE: Because of Senate turnover in 2002, many House members may serve only two of their possible three terms, opting to seek a Senate seat instead; this also could affect the House’s health-care knowledge base.

Representative Palamara adds that the groups most able to influence his views were those that explained all sides of an issue and gave him the tools he needed to make his own decision. He points out that when lawmakers hear only one side of a story, they find it hard to trust the source, and he adds that new legislators will be particularly skeptical of special interests because the groups will not yet have earned the lawmakers’ confidence.

Conclusion

Senator Shugars believes that Michigan’s legislative turnover presents a great opportunity for new, dynamic leaders to make Michigan the best place for health care. Representative Palamara says he will miss the role he played as a 14-year-member of the House Health Policy Committee but is looking forward to continuing elective life, albeit in a different venue (he was elected to the Wayne County Board of Commissioners).

Copyright © 1998

1997–98 Legislative Session Comes to a Close - December

December 1998

1997–98 Legislative Session Comes to a Close

by Lisa Baragar Katz, Consultant for Health Policy

On December 10, legislators closed out the 1997–98 legislative session, which, after a two-year run, adjourned sine die on December 22 (legislators left for the year before sine die but returned for a formal ceremony ending the session). Any bills not passed by both chambers before sine die now are void, and, to be considered again for passage, they must be reintroduced during the new 1999–2000 session.

As for bills that did make it through both the House and Senate, those that have yet to be presented to the governor (there are 17) will be presented over the next several weeks, and he has 14 days from the time he receives the bills to sign them. Any legislation the governor fails to sign within that time is considered the subject of a pocket veto and will not take effect.

Even though legislators have gone home for the year, many health policy pundits remain in their offices, assessing legislative activity over the last 12 months.

The Tally

Over the past two years Public Sector Consultants, Inc., tracked and analyzed 398 health policy bills—246 from the House and 152 from the Senate. As of this bulletin’s writing, the governor had signed 44 of the bills into law—13 in 1997 and 31 in 1998.

Concerning the number of enactments, the totals differ little from previous sessions. It is common for the legislature to pass and the governor to sign more bills in the second half of a session than the first.

1998 Accomplishments

Health care pundits have much to say about the 1998 session. James Haveman, Jr., director of the Michigan Department of Community Health (MDCH), claims that the legislature’s greatest 1998 accomplishment was Public Act (PA) 54, which appropriated funds for and set the parameters of MIChild, a health care coverage program for many of the state’s uninsured children. The act

  • Expanded Medicaid (for uninsured children whose family income falls below 150 percent of the federal poverty level). The FPL in 1998 is $13,650 for a family of three.
  • Created the new MIChild program (for uninsured children whose family income is 150–200 percent of the FPL).

Haveman adds that between Medicaid, MIChild, and private health insurance, 99 percent of Michigan residents under 18 years have some kind of health insurance coverage.

Judy Pendergast, director of government affairs for the Michigan Nurses Association (MNA), asserts that, in addition to MIChild, legislators’ passage of anatomical gift legislation (PAs 118, 120, and 226) was a top 1998 accomplishment. The new laws clarify how to indicate organ and tissue donations on drivers licenses and state-employee identification; they also require the secretary of state to provide related information to licensees.

Another 1998 success, says Gene Farnum, executive director of the Michigan Association of Health Plans (MAHP), are statutes (PAs 401–2 and 412) requiring health plans to allow female enrollees to see an obstetrician-gynecologist without prior authorization or referral from their primary care provider. Supporters say the new laws will reduce patients’ out-of-pocket costs, prevent unnecessary treatment delays, and encourage women to receive appropriate preventive care.

Farnum also indicates his pleasure with the fate of HB 5221, which would have imposed financial liability on certain health plans for delaying or denying ordinary covered treatment, thereby causing injury to a patient. The MAHP opposed the bill, which passed the House but died in Senate committee. Farnum argues that Michigan already has an effective, state-regulated process to resolve health coverage disagreements, and it is less expensive than the court system.

Nancy McKeague, vice president of human resources for the Michigan Chamber of Commerce (MCC), adds that her organization is satisfied that the legislature defeated various pieces of mandated-benefit legislation: “The burden of mandates falls squarely on small business and their employees. It takes away from funds available for wages and discourages businesses from offering health benefits at all.”

McKeague agrees with Bill Zaagman, manager of external relations for the Michigan Osteopathic Association (MOA), and Greg Aronin, director of government affairs for the Michigan State Medical Society (MSMS), that passage of the pain-management package (HBs 4681–6) was a step in the right direction. The package, also heralded as a success by Haveman (MDCH), Pendergast (MNA), and Farnum (MAHP), creates a special pain-management commission and requires relevant education for physicians. Because he disagrees with certain amendments to the bills, Governor Engler is threatening a veto.

Zaagman (MOA) and Pendergast (MNA) argue that SB 479, which passed the legislature but has not yet been presented to the governor, will encourage people’s access to health care. MSMS also supports the bill, which permits qualified, tax-paying health professionals, including physicians and advanced practice nurses (APNs), to claim a tax credit for providing care in underserved areas.

Some Disappointments

For every group pleased with the above legislative actions, another is not. For example, while there was broad support for the children’s health initiative, many groups would have preferred a simple Medicaid expansion, without the MIChild component. Many consumer groups supported the HMO liability bill and hope to see similar legislation next session. Consumers also tended to support mandated-benefit legislation (e.g., coverage for experimental treatment).

Pendergast adds that the MNA was disappointed by lawmakers’ failure to pass SB 104 (passed the Senate but died in House committee), which would have given APNs independent authority to prescribe certain drugs after they had completed certain training/education and met other requirements. Currently, the nurses may not prescribe unless a physician delegates the authority to them. Aronin (MSMS) argues that legislators made the right move when they added language that would have allowed APNs to prescribe without a physician’s delegation, but specifically required a physician’s supervision. The amendment contributed to the bill’s demise.

Pendergast, Aronin, and Haveman (MDCH) agree that another 1998 disappointment was the failure of HB 4280 (passed the House but died in Senate committee), which provided for primary enforcement of Michigan’s seatbelt law.

Down the Road

Haveman (MDCH) reports that 1998 was a year of mainly wins for his department. He predicts that the next legislative session will be as busy as ever, and that among policymakers’ priorities will be resolving some of 1998’s unfinished business.

Zaagman (MOA) and Pendergast (MNA) agree that scope of practice issues, such as granting APNs authority to prescribe, will be a top priority next year—for both the legislature and health professionals. Farnum (MAHP) adds that policymakers also will have to address rising health care costs (particularly medical inflation and the expense of pharmaceuticals), which puts pressure on health plans to raise insurance rates: “The [issue] will drive collaborations and consolidations between various healthcare entities.” McKeague (MCC) and Farnum both express concern that the mandated-benefits issue may rear its head again, and McKeague joins Aronin (MSMS) in predicting that legislators will likely address pain management further.

Haveman (MDCH) predicts that one new issue policymakers will address next year is how to allocate Michigan’s share—$8.1 billion over 25 years—of the recent tobacco settlement money. He points out that beginning in Spring 2000, the state will be paid an estimated $104–365 million a year, as reimbursement for public dollars spent caring for smoking-related illness.

Conclusion

Haveman (MDCH) concludes that any health care reforms that occurred during 1997–98 were the beginning of a health care industry realignment that will bring many more health policy changes: “If you think 1998 was interesting, just wait for the next two years.”

NOTE: The November Health Policy Bulletin incorrectly stated that Kevin A. Kelly is an associate director for the Michigan State Medical Society. Mr. Kelly is the managing director.

Copyright © 1998

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