Michigan purchasing alliance and state Medicaid join forces on RFP to purchase managed care
MI Medicaid Managed Care
June 30, 1997
Once worlds apart in their approach to providing for the health care needs of their clients and employees, Medicaid programs and private employers increasingly are finding common ground as purchasers of managed care.
Collaborations between employer purchasing alliances and Medicaid for the most part have been limited to data-sharing and consumer satisfaction surveys.
So far, no state has been ready to plunge ahead with joint purchasing, although public and private purchasers in Massachusetts seriously considered the idea last year. But Michigan, which is about to expand Medicaid managed care to 78 counties, may take an important step in that direction this summer in at least two counties.
The Southwest Michigan Purchasing Coalition, which has about 45 business members, and Calhoun and Kalamazoo counties have joined forces to form the Southwest Michigan Purchasing Alliance. The alliance and the state are currently working to coordinate their requests for proposals (RFPs) to managed care plans in an upcoming procurement process.
According to Marilyn Bell, executive director of the new alliance, health plans would bid separately for the public and private business, and the benefits specified in the RFPs would differ, but criteria used to judge the bids would be comparable. "Preference points" would be given to health plans that responded to both the public and private RFPs, says Denise Holmes, acting director of plan development for the state’s Medicaid program.
The state also is talking with some nine other purchasing coalitions about more limited collaborations, such as setting quality standards and monitoring health plans.
One of the goals of the Southwest Michigan Purchasing Alliance is to combine the purchasing process for the two programs entirely, says Dr. Joseph Alberding, vice president of medical affairs for Kellogg Corp., a leading member of the purchasing coalition and a supporter of closer collaboration with the state.
Ms. Holmes is more cautious about predicting where the effort will head in the future. But she stresses that one benefit of the collaboration is that it should help improve access for Medicaid beneficiaries by mainstreaming them into health plans that serve the commercially insured.
In areas where Medicaid is the predominant population, the state "may have sufficient leverage" to gain access on its own, but in areas where the Medicaid population is small, such collaboration could play a key role, she says.
The collaboration benefits both private and public purchasers by sending a more consistent signal to health plans about what is expected from them in terms of both quality and access, Ms. Holmes says. Ms. Bell agrees, saying that "in the past, we have dealt with these battles individually."
Managed care organizations should welcome the collaboration in the long run, says Ms. Holmes, since they often express frustration at the different accountability standards set by public and private purchasers, particularly those with operations in several states.
Currently, however, Ms. Holmes says there "is some consternation in the provider community about the newly formed coalition" resulting from confusion about how it will relate to the state program. Since the state plans to get out its RFPs within a few weeks, timing could be a stumbling block, Ms. Holmes says.
Dr. Alberding says savings generated by the combined program could then be used to cover the uninsured.
"If they aren’t paid for in some manner, they get cost-shifted to us as a large employer. This will help take some of the unnecessary expenditure (eg. unnecessary ER visits) out of the public side," he says.
Other areas that should be explored, he says, include the possibility of Medicaid paying subsidies for employer-sponsored coverage for low-income employees. Such an arrangement could prevent the single mother from losing benefits she needs when she takes a low-paying job, he says.
But Ms. Holmes suggests that none of these ideas are likely to be implemented soon. The purchasing coalitions would need to create a much larger structure to take on purchasing for the state, she says. And before any savings could be used for the uninsured there would have to be an agreement on what constituted savings and on what kind of coverage would be provided, she says.
Meanwhile, the state is talking with some nine other purchasing coalitions about less ambitious collaborations on such issues as quality standards and monitoring of health plans, she says.
Massachusetts backs off
Elsewhere, the Massachusetts Healthcare Purchaser Group, which includes public and private purchasers, considered the possibility of joint purchasing last fall, but public purchasers backed away for several reasons including their "very different timetable" and benefit design.
"The risk pool for Medicaid, which includes so many women and children, looks very different," says Paula Breslin, executive director of the coalition. "Also, it never looked like it was going to result in huge savings for public purchasers because they already have tremendous leverage—they are very sophisticated," she says.
The purchaser group has taken a leading role, however, in collaborating on "purchasing specs" that can be used by public and private purchasers to compare plan performance.
The specs, which are used by members individually in their negotiations with health plans, have already had a notable impact in several areas, including improving access to primary care providers on evenings and weekends and in getting health plans to send reminders to members about important immunizations and check-ups, she says.
In Iowa, the Community Health Purchasing Corp. (CHPC), a coalition of 30 large employers who are contracting directly with providers, has been talking with the state for six months about ways to collaborate with Medicaid and state employees programs. Plans call for the development of uniform performance standards that purchasers agree to use in the selection and contracting process, says CHPC Vice President Linda Jones.
CHPC and the state also are working together on an evaluation of patient satisfaction among state employees, Medicaid beneficiaries and private sector employees.
Gerd Clabaugh, assistant to the director for health policy, Iowa Dept. of Personnel, says the three groups also are looking at doing a quality of care survey among patient groups with particular conditions, such as diabetes.
Paul Pietzsch, CHPC president, told a meeting of the Academy of Consumer-Choice Health Purchasing Groups in San Francisco last month that CHPC will be doing a pilot project between public and private purchasers that will include collaboration on enrollment, eligibility determination, administration and data collection. No timetable has been disclosed.
The first goal, Ms. Jones says, is for the purchasers to exhibit a "united front" in their negotiations with health plans.
Contact Ms. Holmes at 517-335-5178; Dr. Alberding at 616-961-2000; Ms. Jones at 515-277-1210; Ms. Breslin at 617-270-4911; and Mr. Bailit at 617-444-8559.
Michigan purchasing alliance and state Medicaid join forces on RFP to purchase managed care
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