Moderate Republicans unveil Medicaid compromise that expands coverage, dramatically reforms system

Roger Katz
Troy R. Bennett | BDN
Roger Katz
By Mario Moretto, BDN Staff
Posted Feb. 25, 2014, at 9:48 a.m.

AUGUSTA, Maine — A bill drafted by two moderate Republican senators, meant to be a compromise on the divisive issue of Medicaid expansion, was unveiled to lawmakers Tuesday.

The plan combines House Speaker Mark Eves’ planned expansion of Medicaid, known here as MaineCare, to roughly 70,000 low-income Mainers under the auspices of the Affordable Care Act, with a plan by Sen. Roger Katz, R-Augusta, to reform the state’s MaineCare program.

Katz and Sen. Tom Saviello, R-Wilton drafted the proposal, which they hope will sway enough of their GOP colleagues to make expansion happen. It accepts federal funds in exchange for expanding Medicaid — a top Democratic priority this legislative session — and incorporates several other proposals meant to alleviate concerns by Republicans wary of expanded welfare costs.

A bipartisan expansion effort was thwarted last year when a veto from Republican Gov. Paul LePage was sustained by GOP lawmakers. LePage is sure to veto again if the measure passes this year, and Republican leadership — aside from Katz, who is the assistant Senate minority leader — has pledged to oppose any bill that expands Medicaid.

“This is what we need, we hope, to get a veto-proof majority to come on board,” Saviello said Tuesday.

Katz said Tuesday that the plan is an effort to reconcile two interests: Reforming a MaineCare system that he said is a “disaster,” and accepting roughly $1 million a day in federal funding for the next three years.

“This money doesn’t go to pay people to sit on their couch and eat Twinkies. It goes to pay middle-class salaries of health care providers like nurses and therapists,” Katz said. “If we had a Boeing plant that wanted to come into Maine and employ 2,000 more people, we’d be jumping at the opportunity. This is even better than that, because it’s jobs all over the state.

“It’s not enough for Democrats to say they want to add millions of dollars in new MaineCare dollars on top of this rickety system, nor is it enough for Republicans to turn our backs on the potential jobs and health benefits” of expansion, he said.

Central to addressing the first interest is the plan’s core: implementation of “managed care,” under which the state would contract three or four managed care organizations, or MCOs — both for-profit and nonprofit — that would take over care of the entire Medicaid population. The organizations would be paid a flat rate per patient served, rather than the current model, in which the state pays providers on a per-procedure basis.

The MCOs would be responsible for taking an active role in each MaineCare recipient’s health, Saviello said, such as phone calls to check in on chronic conditions, assistance with transportation and more. The idea is that by adopting a preventive, proactive approach to each patient’s health, costs will be contained.

Implementing managed care throughout the MaineCare program could take up to five years, Katz said Tuesday.

Katz and Saviello say their plan would also realize 5 percent cost savings in MaineCare. It would use those savings to provide in-home and community services to mentally and physically disabled MaineCare recipients who are currently on waitlists for additional services.

Those waitlists have been greatly politicized in recent months, with Republicans questioning the morality of expanding Medicaid without first addressing those patients.

Another major provision of the Republicans’ plan is a directive to the Department of Health and Human Services to study the financial feasibility of moving the new MaineCare population into a program that would see the state provide subsidies for those low-income Mainers to purchase private insurance. This proposal is modeled off similar systems that are being implemented in Iowa and Arkansas.

Under the Affordable Care Act, the federal government would cover 100 percent of expansion costs for three years before ratcheting down to 90 percent thereafter. Democrats cite several studies showing that expansion will save the state millions of dollars, but Republican lawmakers and the governor are skeptical that the federal government will hold up its end of the bargain, and cite administrative costs the state would have to shoulder despite the federal government’s pledge to pay the cost of coverage for newly eligible MaineCare recipients. Opponents also point to a taxpayer-funded report by the controversial Alexander Group, which said expansion will cost the state more than $800 million over 10 years.

The proposal by Katz and Saviello features several other proposals, including some that have been floated in the past. They include:

• A three-year sunset, meaning the expansion would expire when federal funding declines from 100 percent. A vote by the Legislature would be required to continue the program.

• An automatic cancellation of Medicaid expansion if the federal government reneges on its funding promise.

• The creation of a nonpartisan commission to monitor and study the expansion effort.

• Another commission, that would study ways to “transition people off MaineCare by finding sufficient employment.”

• A directive to the managed care organizations to work with current cost-saving DHHS initiatives.

• Additional fraud investigators for the Office of the Attorney General, to investigate and prosecute fraud by both consumers and providers of MaineCare service.

• Letters to every new MaineCare recipient, outlining the initial three-year limit on expansion of services and encouraging the beneficiaries to immediately establish a relationship with a primary care provider.

Democrats and other stakeholders, such as Maine Equal Justice Partners, a nonprofit that advocates for low-income Mainers, and the Maine Hospital Association are supportive of Katz and Saviello’s plan, but are cautious about managed care implementation. The devil, they say, is in the details.

“Managed care needs to be done in a very thoughtful, methodical way if it’s going to be done right,” said Sara Gagne-Holmes, MEJP’s executive director.

“Our priority has always been securing life-saving health care for 70,000 Maine people,” said Eves in a statement. “While we have been skeptical of managed care programs in the past, we look forward to hearing the details of the Republican proposal. We will want to make sure that the emphasis is on quality treatment; not simply denying care.”

However, many Republicans are sure to oppose any proposal that accepts the federal money in exchange for expansion. LePage and others in recent weeks have turned to increasingly dire rhetoric in their opposition.

The official line from House Republicans and the LePage administration is that MaineCare spending — which represents 25 percent of General Fund expenditures, and is expected to grow by about 1 percent each year for the next two years — is crowding out other state programs. LePage says that situation will only worsen if the state accepts Medicaid expansion.

On Tuesday, LePage’s spokeswoman, Adrienne Bennett, called the compromise an “unaffordable solution,” and said “liberals are playing politics with the state’s future.”

She said the governor was taking a long-term view on the cost of Medicaid expansion. While the federal government is providing the bulk of funding for three years, LePage sees only skyrocketing costs thereafter.

“Many times, legislators are looking for a quick fix,” Bennett said. “But this isn’t a short-term decision. It’s a long-term decision that everyone upstairs [in the Legislature] needs to consider.”

And while Katz and Saviello have a handful of fellow Republicans on board — such as Reps. Corey Wilson of Augusta and Carol McElwee of Caribou — others on Tuesday came out in strong opposition to the plan.

“If welfare created prosperity, Maine would be one of the richest states in the nation,” said Sen. Garrett Mason, R-Lisbon. “This is the single largest proposed expansion of welfare in our state’s history. The facts remain; We cannot afford this program at the federal or state level.”

Saviello said Tuesday that those who oppose the compromise bill will mobilize swiftly.

“They’ve already got the big guns out there,” he said. “[DHHS Commissioner] Mary Mayhew is in the Senate right now trying to talk to the people we’ve talked to.”

Katz said he knows that not everyone will be swayed by the compromise proposal.

“It’s attempting to thread the needle,” he said. “There are certainly those who have very legitimate, philosophical opposition to any expansion of this public program, and we respect that. But there others who I believe are concerned the system is out of control, and will welcome the opportunity to put in place some major reforms.”

Katz and Saviello will present their plan to the Legislature’s Health and Human Services Committee on Wednesday.

Follow Mario Moretto on Twitter at @riocarmine.

http://bangordailynews.com/2014/02/25/politics/medicaid-compromise-drafted-by-two-gop-senators-to-hit-state-house-this-week/ printed on August 21, 2014