Medicaid Managed Care - U.S. Senate Special Committee on Aging

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point and say that Patsy comes from a State that is the exception
to everything that I've just said, and she is going to talk to you
about what States that are the exception are doing. Minnesota is
the exception in everything, from specifications to market experience
to payment level, and I'll let her talk to you about that. So
it can be done, and we do have an example of what the future can
look like, but for most States, that future is still pretty far away.
In terms of medical necessity, what we find is that the contracts
typically do not have a medical necessity definition which mirrors
the <strong>Medicaid</strong> statutory definition of medical necessity. They have
what are commercial insurance definitions of medical necessity. A
lot of that is tied, again, to treatment for injuries or illnesses, but
not conditions, and that does not even get down to the sub-issue
that Bill addressed, of whether you are treating a condition or you
are providing support services for a condition. That is a level of
analysis, which is two or three stages beyond where medical necessity
is in these contracts, and frequently, they will include definitions
of medical necessity that are not only not coextensive but in
fact are inconsistent with the <strong>Medicaid</strong> definition. For example, the
treatment has to be cost-effective. Part of the problem with that is
that-I have been in health policy for some period of time, and I
do not know how one defines cost-effective medical care. There
really is not a consensus on how you evaluate cost-effectiveness.
The other issue, of course, is that under <strong>Medicaid</strong>, the definition
is that the care has got to be reasonably designed to achieve its
purpose, and cost-effectiveness is not a consideration. So then, you
are left with the States essentially having to pay for care outside
the managed care context, so they have paid a capitation, and then
they have got to pay for other care that is not covered by the capitation,
whether that is intentional or not intentional on the part of
the States.
So the medical necessity issue-not only how it is defined, but
how it is applied-is a very important issue for the disabled population,
and unfortunately, I can say that none of the contracts addresses
the issue of evaluating-well, let me back off of "none"very
few-plans are applying medical necessity standards.
I want to talk about some other issues just in terms of accountability
that are in pending legislation right now regarding <strong>Medicaid</strong>
and I think Medicare, but certainly <strong>Medicaid</strong> managed care. In the
<strong>Senate</strong> version of the bill, States must give plans pre-termination
hearing rights before a State can terminate a plan for lack of performance.
This is unprecedented. We have never in <strong>Medicaid</strong> or
Medicare law given providers pre-termination rights. They are entitled
to termination hearing rights, but not pre-termination hearing
rights, because of the fact that they may be delivering care in a
way that endangers life, and so the need for the State to move-
"the State" meaning the sovereign-quickly has always been recognized.
The cases in litigation at the State level indicate that when you
give plans pre-termination rights, it is very hard to get them out,
to terminate them summarily or to get them out quickly, and in
fact it is very hard to get them out before the end of the contract
term at all with pre-termination rights.