Ceci Connolly, president of the organization, told Becker’s a “perfect storm” has created a sicker Medicaid patient population, and in many states, rates are not adequate to cover their care.
“So far, a number of states, mysteriously, are not making adjustments. We know of local, community health plans that have been on the ground serving Medicaid beneficiaries for years, if not decades, are looking at losing hundreds of millions of dollars this year, and potentially the same next year,” Ms. Connolly said.
The Alliance represents 29 non-profit health plans. Most are integrated with health systems.
Most major insurers have said Medicaid costs are rising as a result of redeterminations. In 2023, states began redetermining members’ eligibility for Medicaid for the first time since continuous coverage requirements took effect during the COVID-19 pandemic.
Since redeterminations began, Medicaid enrollment nationwide has dropped 15%, according to KFF. The members who are remaining in Medicaid tend to have more health needs, insurers have said, raising costs.
States are also basing some current payment rates on data from 2022, when utilization was suppressed by the pandemic, Ms. Connolly said.
The Alliance met with members of the Biden Administration to discuss their concerns over Medicaid rates, according to an Oct. 4 news release.
Ms. Connolly said administration officials “spent a great deal of time” listening to plan CEOs.
“At a minimum, we very much hope that the administration can encourage their state partners to really take a second look at the numbers, and to work with the data that our plans are providing to them to come up with adjustments that accurately reflect the acuity and the needs of these beneficiaries,” she said.
At the meeting, executives told of “huge financial shortfalls” in several states, including Michigan, Minnesota, Pennsylvania, Virginia and New Mexico.
A spokesperson for Pennsylvania’s Department of Health Services told Becker’s its Medicaid program is fully capitated, meaning managed care organizations assume risk understanding losses can occur.
“Financial reserve and equity requirements and opportunities to retain earnings for previous years’ revenue are explicitly designed to help managed care organizations navigate years where the managed care organization does not have excess revenue. Given these safeguards and recent experience with excess revenues, a single year of poor financial outcomes should not threaten viability,” the spokesperson said.
In the past five years, overall profitability has ranged from 2.5% to 5.9%, the spokesperson said.
“Pennsylvania is not seeking a mid-year rate adjustment in Physical HealthChoices for 2024, and we will continue to work together with our managed care organizations to provide care and support to Pennsylvanians served through Medicaid,” the spokesperson said.
A spokesperson for Minnesota’s Department of Human Services said the company could not comment on ongoing contract negotiations or the solvency of managed care organizations.
“DHS, working with its contracted actuaries, is committed to establishing appropriate capitation rates employing sound processes,” the spokesperson said.
A spokesperson for the Michigan Department of Health and Human Services said that “the complexities surrounding Medicaid rate setting have become even more pronounced throughout and coming out of the COVID-19 pandemic.”
“MDHHS has partnered with our contracted managed care plans throughout this unprecedented Public Health Emergency unwinding process and continues to explore the resultant enrollment and utilization changes to determine whether rate adjustments are necessitated,” the department said in a statement shared with Becker’s.
Becker’s has reached out to representatives for New Mexico and Virginia’s Medicaid programs and will update this article if more information becomes available.
Other insurers have said inadequate rates are putting pressure on their Medicaid margins. Elevance Health lowered its earnings guidance based on what CEO Gail Goudreaux called an “unprecedented” shift in Medicaid membership.
Many organizations in the Alliance do not have the deep pockets of national for-profit carriers, Ms. Connolly said.
“Those losses are so significant, especially if they are primarily in the Medicaid business, that we are very concerned state regulators will say the plans don’t have adequate reserves. Then they will have a solvency problem,” she said. “The last thing we want to happen is for local communities and Medicaid beneficiaries to lose their plan and their coverage because of inadequate rates.”
