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Missouri Senate approves budget that would expand Medicaid managed care

The most contentious issue Tuesday night and into the wee hours Wednesday morning was a plan slipped into the budget by Sen. Kurt Schaefer, a Columbia Republican and chairman of the Senate appropriations committee, that would shift about 200,000 Medicaid recipients to privatized managed-care plans.
The most contentious issue Tuesday night and into the wee hours Wednesday morning was a plan slipped into the budget by Sen. Kurt Schaefer, a Columbia Republican and chairman of the Senate appropriations committee, that would shift about 200,000 Medicaid recipients to privatized managed-care plans.

Shortly before 4 a.m. Wednesday, after a six-hour filibuster and bipartisan resistance nearly derailed the process, the Missouri Senate finished its work on the state’s $26 billion budget.

Perhaps.

Major differences in how the state will fund its social welfare programs, as well as how much money should be divvied out to public schools and colleges, must be worked out with the Missouri House. The debate is complicated by a dramatic proposal to turn over most management of Medicaid to private companies.

Meanwhile, Gov. Jay Nixon has expressed serious concerns, setting the table for potential budget battles between the Democratic governor and a Republican-dominated General Assembly.

“I’m adamant in the fact that we’re going to rein in welfare growth,” said Sen. Kurt Schaefer, a Columbia Republican and chairman of the Senate appropriations committee.

The most contentious issue Tuesday night and into the wee hours Wednesday morning was a plan slipped into the budget by Schaefer that would shift about 200,000 Medicaid recipients to privatized managed-care plans.

Currently, three managed-care companies provide services in about half the state’s 114 counties to children and pregnant women, covering roughly one in two of the state’s 800,000 Medicaid participants.

Schaefer’s plan would extend managed-care coverage statewide while continuing to exempt the elderly, blind and disabled.

The plan was part of a massive change pushed by Schaefer that would budget lump-sum amounts to the departments of mental health, social services, and health and senior services rather than specific amounts for each program.

Sens. Rob Schaaf of St. Joseph and Bob Onder of Lake St. Louis objected to expanding managed care through the budget. The pair of GOP lawmakers, along with Republican Sen. Ed Emery of Lamar, set out to thwart the effort with a filibuster.

Managed care allows for-profit companies to oversee health benefits for Medicaid recipients. Insurance companies are paid a fixed amount per member each month and set up networks of doctors and hospitals to provide services. Supporters argue that system is more cost effective and helps guarantee better health outcomes.

In the rest of Missouri — outside the Interstate 70 corridor — traditional Medicaid reimburses providers directly for whatever services they perform.

Schaaf, a longtime critic of managed care, questioned why this change was made through the budget, with no public hearing and no testimony from managed-care companies. Essentially, he said, the state would be guaranteeing more customers for private managed-care companies.

“Who is it that wants this?” Schaaf asked. “It’s these managed-care companies.”

Missouri awarded its managed-care contracts to subsidiaries of Centene Corp., Coventry Healthcare Inc. and WellCare Health Plans Inc. Of those companies, St. Louis-based Centene has been the most active in Missouri politics, employing 10 lobbyists and donating more than $325,000 to various campaigns during the 2014 election cycle.

In fiscal year 2014, the state spent about $1.2 billion on managed-care services, although the majority of that came from federal funds.

A spokeswoman for Centene did not respond to a request for comment.

The Office of Administration, which handles contracts for the state, said Tuesday that the contracts would have to be rebid if managed care was expanded statewide.

Schaefer defended his proposal, saying expanded managed care has been thoroughly vetted by legislative committees in previous years. Ultimately, he said, it would save the state money.

A study performed by Mercer and Associates reported 2.7 percent annual savings for the current Medicaid managed-care groups in Missouri. But Dave Dillon, spokesman for the Missouri Hospital Association, said any savings would probably be wiped out by a looming federal tax on managed-care plans.

The Department of Social Services reported earlier this year that managed-care enrollees were more likely to use the emergency room and performed worse than traditional Medicaid recipients on five out of six clinical quality measures.

“Is managed care delivering value for the dollar?” Dillon asked. “In Missouri, it’s hard to make that argument.”

Eventually, a compromise was struck that persuaded Schaaf and Onder to end their filibuster. The managed-care expansion moved forward, but companies would be prohibited from refusing to contract with any eligible doctor.

Even with the compromise, the Senate initially voted to reject Schaefer’s budget for the Department of Social Services, with Republicans and Democrats joining together in opposition.

After a few minutes of discussion, Republican Sen. Will Kraus of Lee’s Summit agreed to change his vote and allow the bill to move forward, and the social services budget passed with 18 votes — the exact number needed for a majority.

The House and Senate will now convene conference committees on all 13 budget bills to reconcile differences between the two chambers. The budget then goes to Nixon. In addition to changing how social welfare programs are funded, the Senate also boosted spending on public schools and higher education.

The deadline to complete the budget is May 8.

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