Medicaid now a bright spot for Priority Health

January 4, 2009
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Over the past two years, Priority Health's Medicaid HMO has seen a renaissance.

Priority Health has turned the corner on the program's financial stability by assigning and training staff to work exclusively with Medicaid, combined with a re-basing of rates across the state which occurred in 2006.

"We operate like a fee-for-service, but the big piece that really has impacted Michigan over the last few years is our ability to manage care," said Diana Criss, senior manager of Priority Health's Medicaid program.

The results of internal changes in Priority Health Government Programs and in the state's level of reimbursement have found their way onto financial statements filed with the Michigan Office of Financial and Insurance Regulation. Government Programs posted net income of $3.5 million for the first nine months of 2008, compared to a loss of $2.8 million for all of 2006.

"We started to think of this as a strategic business unit, behaving like a unit, instead of as a stepchild to a commercial plan," said Vice President of Government Programs Leon Lamoreaux.

Financial outcomes are considered by the health plan to be secondary to serving the people of West Michigan, those who are chronically low-income as well as those who have been buffeted by the state's economy.

"The way we have begun to think about this is, we want people to be with Priority Health for life, regardless of their circumstance," Criss said. "What was once our commercial customers may become our Medicaid member while en route to their career to become a commercial member again. We are mission-driven."

Medicaid provides health care for children and adults with low incomes who meet certain income or asset limits under a variety of programs. Medicaid is funded and administered by the federal and state governments.

Michigan authorizes private firms to provide managed care for the Medicaid population, by county. In Kent, Muskegon and Ottawa counties, four companies are available: CareSource Michigan, Health Plan of Michigan, Molina Healthcare of Michigan and Priority Health Government Programs. In December, the companies served 101,568 in those three counties.

Priority Health, majority-owned by Spectrum Health, is the largest Medicaid plan locally, serving 48,610 people, or 47.8 percent of the three-county market. However, Molina Healthcare of Michigan and Health Plan of Michigan lead in Muskegon County. Priority Health counted a total of 52,412 Medicaid recipients in 10 West Michigan counties in its membership at the end of the third quarter.

Two years ago, Lamoreaux joined Priority Health and took a hard look at Medicaid services. He found a disjointed approach that spread decision-making among a variety of staff members who were not necessarily familiar with Medicaid's government-regulated provisions. He convened a day-long planning session with about 30 Priority Health staff members whose work touched the Medicaid program.

Lamoreaux and Criss, who has been involved with Medicaid at Priority Health over two decades, used the ideas generated at the meeting and came up with a more coordinated approach. One of the biggest issues was making sure that staff members, who deal primarily with more generous commercial plans, understand what is covered and what isn't under Medicaid rules. It's easy for staff members to confuse plan provisions and grant approvals that aren't part of the government program, Criss said.

"There were some really simple things," Lamoreaux said of changes implemented by Priority Health. "The Medicaid support staff used to be in a different building than the medical management staff. We moved them to be adjacent. There's where I saw improvements. They have been in proximity to case management nurses making decisions."

For example, Criss said, plastic surgery may be a covered, albeit high co-pay, benefit under a Priority Health commercial plan. But it's not covered under Medicaid.

To address those issues, Criss said, Priority Health harnessed education and training. Informational software tools about Medicaid were developed for every department.

"We put a manual out on our internal Web page so staff could go right to the sources. We gave them tools so they don't have to guess," Criss said.

The nonprofit health plan developed a core team of five in-house Medicaid experts, she said.

"We only have a staff of five people and myself. We are all are dedicated 100 percent to Medicaid," Criss said. "We moved into the medical department and became their resources."

The Medicaid staff includes one transportation person, who makes sure patients get to their appointments; two field service staff members, who work directly with Medicaid recipients by phone or in person to educate them about their health issues and help connect them with other community resources for help; and two people recently hired to implement the new requirement that pregnant Medicaid recipients must be in a managed care program.

Many Medicaid HMOs have done away with field service representatives as a cost savings measure, Criss said, but Priority Health is convinced that the representatives save money and improve quality of care in the long run.

Priority Health CFO Greg Hawkins has said that better management has been a key to turning around financial statements for the Government Programs unit.

Another big factor was the state's decision in 2006 to realign rates for Medicaid. With health care costs lower in West Michigan, thanks to a history of preventive care and lower hospitalization rates, Medicaid reimbursement rates were the lowest of the 10 regions in the state.

Rick Murdock, executive director of the Michigan Association of Health Plans, explained that the state was persuaded to review newer data and found shifts in those trends. The state then updated, or rebased, its rates, Murdock explained. That process is expected to occur again in 2009, he added.

"We were very actively involved with the state to have the fees realigned so that West Michigan is getting a proportionate share," Criss said.

Medicaid Recipients, Priority Health, December 2008



Market Share
Kent County
29,788
47.6%
Muskegon County
24,97
19%
Ottawa County
14,070
60%
 Source: Michigan Department of Community Health Web site

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