A provision of the Human Services Code bill moving its way through the General Assembly as part of the final package of budget-related bills could bring dramatic changes to Pennsylvania’s Medicaid managed care system.

According to a Senate-drafted summary relative to this portion of the Human Services Code, the proposal – originally incorporated as a statewide plan in Senate Bill 600, introduced by Sen. Scott Martin (R-Lancaster) – would require the Department of Human Services to enter into a contract for the management services for a pilot program in one of Pennsylvania’s five Medicaid managed care regions “to incorporate evidence-based medicine into physical and behavioral health decisions for Medicaid recipients.”

The bill prohibits the department from paying a fee to the vendor, who will have to agree to act on a contingency fee basis, getting paid out of any accrued savings from their new plan.

While the legislation requires the department to put out a request for proposal for the contract, many in the Medicaid community believe the process is set up for only one provider to enter into the pilot program contract with Pennsylvania: a company called MedExpert.

MedExpert is a northern California managed care organization that provides its flagship product, Quality Medical Management System, to governments running Medicaid programs to essentially take over Medicaid managed care operations.

The company testified earlier this spring before the Senate Republican Policy Committee about its success in lowering Alaska’s Medicaid budget through the implementation of its service model, a “dynamic evidence-based platform” that ensures patients are cared for by their on-staff medical team and coordinators and which “infuses evidence-based medicine” into treatment decisions for medical conditions and pharmaceuticals.

The company says there is a need for such a service because of a “medical information gap” causing 50 percent of current health care decisions to be wrong or wasteful. In support of this claim, MedExpert noted that when its model was implemented in Alaska, the state saw a 50 percent reduction in emergency room cases and a 14 percent reduction in Medicaid-related costs.

Pennsylvania’s own savings estimates have been put as high as $2 billion should MedExpert’s model be implemented statewide.

In evaluating patients and their expected outcomes, MedExpert employs a mainly telephone-based model of evaluation but also uses technologies such as Skype, text messaging and email.

In essence, the company would be a liaison between a Medicaid recipient and their medical treatment, using their model to push for which services they feel are needed or not necessary based upon their assessment of the patient and devising a planned course of action developed through the use of evidence-based medicine.

“Unless current medical knowledge is interjected in a matter of hours, a patient will default to a course of treatment that may be ineffective and often damaging,” reads a portion of a fact sheet on MedExpert's website.

That being said, with the RFP process and the inability of the General Assembly to craft legislation designed for one specific entity, it is possible a similar company could bid and win the pilot program contract.

According to Sen. Martin, the time is ripe for MedExpert’s style of Medicaid management to take root in Pennsylvania.

“No one should fear trying something different because, the last time I checked, the health care system and how we deliver it aren’t actually functioning at optimal levels now and are becoming quite costly,” he said in a recent interview. “When you are talking about a 50 percent misdiagnosis rate in medicine and the largest complainant we have is Medicaid, when you have the ability to do a pilot to see if you can do things differently that’s not going to cost you money, but could potentially lead to better health outcomes for those you are serving who truly need it, I think that’s a win for everybody.”

Those in Pennsylvania’s already-established Medicaid managed care industry aren’t so sure that MedExpert’s model is right for Pennsylvania.

First, they point to the anomaly of Alaska’s savings: The state moved from a fee-for-service model – a costlier way of running a Medicaid program – to a managed care model only in the last few years and MedExpert had the proverbial first bite at the apple to accumulate savings and efficiencies that have already been seen in Pennsylvania’s well-established managed care system.

Studies have shown that moving to a managed care model more than 20 years ago saved Pennsylvanians nearly $9 billion over the previous fee-for-service model – a number likely to grow by more than $3.5 billion over the next four years.

Second, they point to MedExpert’s telephonic and internet communications model of service, noting that the nearly 2.3 million Pennsylvanians receiving Medicaid services are a highly transient population, making telephone and internet contact difficult to maintain.

Rather, they say, having a medical home where a primary care physician is making the treatment decisions that present themselves upon evaluation is the proper way to work through a managed care system, rather than having a situation first evaluated over the telephone, then liaisoned with the managed care company and the physician.

Finally, they note the duplication of services that can lead to unnecessary costs for implementation and confusing service direction on the part of the consumer. They argue that they already incorporate the most up-to-date technology in helping divine treatment strategies for Medicaid recipients and such practices are already followed by the Department of Human Services.

They also point to the fact that a patient’s primary care physician and MedExpert might give conflicting treatment plans, leading to confusion and lower morale on behalf of the consumer.

“Our managed care plans have efficiently served the Pennsylvania Medicaid population for 20 years, providing access to quality health care at the most affordable cost to the taxpayer,” said Bob Archibald, a Senior Government Affairs Consultant with the Pennsylvania Association of Medicaid Managed Care Organizations. “We believe that implementing this redundant service will be extremely disruptive to the health care received by hundreds of thousands of Medicaid recipients while producing no demonstrable Medicaid savings for the Commonwealth.”

Currently, there are eight Medicaid managed care operators in Pennsylvania that contract with the Department of Human Services to provide Medicaid managed care services in five managed care zones.

Martin disputed these assertions, arguing that as a Lancaster County commissioner, he had experience in implementing a MedExpert-type model that provided savings, despite Pennsylvania being a managed care state.

“This model has shown that it can produce savings in managed care environments,” he said. “Since the pilot program will have no negative fiscal impact, I just don’t see the harm in trying to do something that could potentially save money.”

While the new managed care system in the Human Services Code is only set to be a pilot program in the initial stages, the plan has already been panned by Democratic lawmakers.

In late July, when the bill cleared the Senate Rules and Executive Nominations Committee, Senate Appropriations Committee Minority Chairman Vincent Hughes (D-Philadelphia), called the proposal “nonsensical” as well as “ungrounded and unfounded.”

“That is very troubling to me,” he said of the proposal. “It provides an extra, very unnecessary overlay to create a pilot program to really wind up reducing the provision of health care services for low-income people.”

A fiscal note produced by the Office of the Budget on the potential statewide rollout of the program offered in Senate Bill 600 questions whether there will be much savings to come from the program and, instead, points to a $168 million per year administrative cost, $84 million of which would be borne by the state.

“Due to the duplication of services already provided by the existing Managed Care Organizations, we believe savings would be very limited,” the note reads. “Although some savings could potentially be available from the limited fee-for-service program we still operate, most of these will also be limited since most fee-for-service clients are dual-eligible elderly and disabled clients being moved, over the next couple of years, into a new Community HealthChoices program. Community HealthChoices also includes intensive care management services.”

A later fiscal analysis conducted by the House Republican caucus looking at the pilot program model currently in the Human Services Code anticipated there being no negative fiscal impact due to the contingency fee nature of the program that would take the contractor’s pay out of a portion of any savings found by regional managed care organizations evidenced by lower capitation rates.

The bill currently awaits action in the House where, as recently as last week, House Majority Leader Dave Reed (R-Indiana) said that Medicaid reform encompassed in the Human Services Code is likely to remain intact.

“I think Medicaid reform, just from the vantage point that it’s one of our top cost-drivers, we’re going to have to figure out how to get that cost under control,” he said. “We obviously looked at a work requirement and things like that in the House, the Senate has thrown out a couple of things…but Medicaid reform is going to have to be a part of the discussion if we are ever going to get control of our costs.”


Jason Gottesman is the Harrisburg Bureau Chief of The PLS Reporter, a news website dedicated to covering Pennsylvania’s government.