As Clyde Reese begins his new tenure as commissioner of the state Department of Community Health, he has no time for a slow transition. He faces two big issues that many people had expected to be resolved by now.
The first is the hospital provider fee, a financing mechanism that’s designed to fill a nearly $500 million hole in the state Medicaid program. Legislation to facilitate the renewal of the current provider fee was fast-tracked through the General Assembly earlier this year with the backing of Gov. Nathan Deal.
Industry leaders had expected the federal Centers for Medicare and Medicaid Services (CMS) to approve the fee before the end of June — the end of the state’s fiscal year. That did not happen.
It is still expected to get federal approval, but the wait has become uncomfortable for some officials in the industry.
The previous provider fee ran out June 30, and Community Health has continued to pay hospitals a related 11.8 percent additional Medicaid reimbursement, the same as under the old formula.
Community Health said Monday in an email to GHN that it is not concerned about the delay in federal approval. The Georgia Hospital Association said it’s not worried, either, noting that CMS has months to approve it.
But Jimmy Lewis of HomeTown Health, an organization of rural hospitals in Georgia, admitted he’s concerned about the wait.
The longer the approval is delayed, the more worried that hospitals will be, Lewis said. “Any time you’re seeking approval for something after the deadline has passed, there’s always a high risk of an error or a problem.’’
CMS said Monday that the Georgia hospital provider fee is under review.
The second big issue that Reese and his staff face is the new contract for the State Health Benefit Plan (SHBP), which covers more than 650,000 state employees, teachers, school personnel, retirees and dependents.
Currently, UnitedHealthcare and Cigna hold the contract, with United covering more than 90 percent of members. Community Health had been expected to announce the winner of the new contract early in July. The winner would begin serving members Jan. 1.
Speculation on the winning bidder has centered on a single vendor — Blue Cross and Blue Shield of Georgia, the state’s largest health insurer.
But some industry officials say they fear that Blue Cross’ reimbursements for services will be lower than the current rates, and lead to a financial squeeze for some medical providers.
Now that it’s mid-July, contract concerns are swirling. Community Health said it anticipates making an announcement on the winning vendor soon. But beyond that, it said, it “cannot comment on open and ongoing procurements.’’
Blue Cross said in an email that the state agency has not issued any notification to the company regarding the bid.
Reese took over as commissioner of Community Health on July 1 after the former chief, David Cook, resigned to take the post of secretary of the state Senate.
The provider fee — known among critics as a “bed tax’’ — raises money from hospitals and returns funds to them through reimbursements. Individual hospitals get different amounts based on how much Medicaid business they do, so some hospitals come out ahead under the formula while others lose money.
Almost all states use such assessments to help cover the costs of their Medicaid programs.
There are two parts to the fee proposal currently under review at CMS. The first is a continuation of the past fee, and the second aims to draw down federal money for private hospitals. The latter would help even out the losses for organizations such as Piedmont Healthcare and Northside Hospital, two large health care systems.
Two-thirds of the provider fee money generated in Georgia goes to shore up Medicaid’s budget. The rest goes to increase Medicaid reimbursements to hospitals.
Medicaid, jointly financed by the federal government and individual state governments, covers 1.5 million poor and disabled Georgians.
Blue Cross, meanwhile, has moved aggressively in the Georgia market over the past few months. The company signed up to cover Georgians in the upcoming state insurance marketplace — part of the health reform law — and created a physician quality incentive plan in Athens, Rome, Columbus and Savannah.
The SHBP contract would give Blue Cross even more clout than it has now in dealing with medical providers in Georgia, experts say.
Blue Cross already has been tough on hospital reimbursement rates, said Dave Smith, a consultant with Kearny Street Consulting.
“They’ve dug deep into the pocketbooks of the hospitals,’’ Smith said.
UnitedHealthcare, if it loses the contract as expected, would suffer a major setback in Georgia, he added.
The Georgia Hospital Association said in an email to GHN, “We would be concerned with the selection of any vendor that fails to provide fair and reasonable payment for services provided to SHBP members.”
And the Medical Association of Georgia’s CEO, Donald J. Palmisano Jr., said the doctors organization “has concerns with any action that stunts competition in the health insurance arena, including the State Health Benefit Plan.”
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