Coalition fights fee plan for insurers

Urges alternative of mandatory managed care

A coalition of business and insurance groups is vigorously lobbying lawmakers against Governor Deval Patrick's plan to collect millions of dollars from them to help close a $130 million gap this year in funding of the state's landmark health insurance law.

The coalition is pushing an alternative that would require all Massachusetts Medicaid patients to join managed care plans, which try to achieve savings in part by restricting patients' choice of providers and services. The coalition says mandatory managed care would save the state $160 million this fiscal year and between $690 million and $1 billion by 2013.

The proposal for placing all patients in managed care plans was originally advanced in December in a report commissioned by the four health plans that now serve about 400,000 of the 1.1 million people in the state's Medicaid program, also known as MassHealth.

"There is potentially hundreds of millions of dollars in savings in this plan, and I have been perplexed as to why the administration has backed away from doing this in the midst of saying there is a shortfall in healthcare," said Michael Widmer, president of the Massachusetts Taxpayers Foundation, a business-funded public policy group.

Last night, the Patrick administration disputed the contention that the managed care proposal would save money. A statement from the Executive Office of Health and Human Services said its analysis showed that the plan would be more expensive than the current program. The managed care plans "have served the healthiest members of MassHealth and have not yet demonstrated the capacity to serve large numbers of disabled members," the statement said.

The issue is expected to come to a head in the coming days when lawmakers vote on the governor's supplemental budget request, which includes his plan to keep the health insurance law afloat.

Widmer's group is among the two-dozen that sent a strongly worded letter yesterday to House Speaker Salvatore F. DiMasi and Senate President Therese Murray, urging them to reject the governor's financial bailout plan.

"With the Commonwealth facing a bleak fiscal reality and employers and consumers struggling with rising healthcare costs, the governor's proposal is the wrong approach," the letter states, adding that the governor should be focusing on ways to control healthcare costs.

Patrick's proposal would tap an additional $28 million from hospitals this year and $66 million more from employers and insurance companies to finance the near-universal health insurance law.

He said earlier this month that consumers were already asked to pay more this year in higher health insurance premiums and copayments, and that it is only fair to ask other members of the coalition that originally supported the state's two-year-old law to contribute more, too.

The state pays the Medicaid managed care plans a fixed monthly fee per patient, and these plans in turn typically pay physicians and other providers in their networks lower rates than they would receive from other health plans.

Requiring thousands of Medicaid recipients to enroll in managed care, however, may not be a popular idea, especially among those who are disabled, said Brian Rosman, research director of Health Care for All, a consumer group.

"The current plan gives choices to consumers," Rosman said. "Particularly, people who are disabled really need a health structure that focuses on their needs, and a lot of disabled people we know pick the [other plans] because of the freedom from strict constraints."

He also questioned whether such a massive overhaul of the Medicaid system could be done quickly enough to raise the $130 million the governor said is needed this year to cover a funding shortfall.

The December report by the health plans pointed out that a number of other states have retooled their Medicaid programs to require most of their residents to enroll in managed care plans. It concluded that a similar shift in Massachusetts could help persuade federal officials that the state is pursuing cost controls.

That is one factor the federal government is considering as it decides, probably by early next week, whether it should continue to pay the state hundreds of millions of dollars per year to help fund its insurance experiment.

In the statement last night, the Patrick administration pointed to $340 million in MassHealth savings that are contained in the budget for the fiscal year that started July 1.

On Beacon Hill, spokesmen for House and Senate leaders said they are reviewing the coalition's letter and proposal.

"As we move forward with quality and cost-control measures, we remain open to all ideas that could improve the Commonwealth's healthcare system and help ensure the success of healthcare reform," said David Falcone, the Senate president's spokesman.

Kay Lazar can be reached at klazar@globe.com.