2014 was a particularly difficult year for the health plans that participate in the MassHealth Medicaid Managed Care Organization (MCO) Program. Major growth in MassHealth, unanticipated challenges from the failed Health Connector website, and the introduction of Sovaldi contributed to a reported $137 million in losses. Without an immediate solution in sight, Speaker of the House, Robert A. DeLeo, charged a working group to identify cost drivers and potential savings within the MCO program.
As chair of the Working Group, I knew it was important to keep the patient perspective at the forefront of this work. MassHealth is the public payer for medical care for the state's low and middle-income residents and covers one in four Massachusetts residents. MassHealth members are greatly in need of both medical and social services, since an estimated 60 percent have a chronic or disabling condition. These patients are often marginalized, despite efforts to improve access and quality of care. This endeavor would not be worthwhile unless we made sure that every recommendation reflected what was best for MassHealth patients.
Throughout Working Group discussions, the MCOs expressed the need for longer enrollment periods in order to provide more stability and care coordination for patients. Currently, MassHealth members are able to move freely in and out of the managed care program, as well as switch MCOs daily, called "churn". In 2014, 36 percent of MassHealth members churned, with 6 percent due to voluntary MCO plan changes. This surprised me and many members of the Working Group since the commercial market prohibits members from changing plans until the annual open enrollment period. This lack of consistency poses financial problems for MCOs and potentially poorer health outcomes for patients. We balanced the plans' need for stability with the needs of patients, who sometimes require switching plans to remain with their provider or seek necessary care. In response, we recommended longer enrollment periods, such as monthly, quarterly or annually, with room for exceptions when necessary.
Anyone who has been paying attention to the media in the last year has heard the name Sovaldi. The introduction of this miraculous drug caused quite a stir in the industry, as well as among providers, payers, and patients. The outrageous list price for just one individual pill was particularly shocking. These large upfront costs and the prevalence of Hepatitis C among MassHealth patients, paired with a mid-year entrance to the market, resulted in large losses for the MCOs. The annual MCO capitated rates had already been set by MassHealth and did not take into account additional pharmaceutical costs. We clearly recognized the importance of patient access to innovative drugs and technology. However, we also noted that while they may prove effective in reducing long-term healthcare costs, these therapies pose an immediate financial challenge. Due to the nature of MassHealth eligibility, the long-term cost-savings may not be realized by either MassHealth or the MCOs. To address these concerns, we suggested several strategies, such as exploring multi-state bulk purchasing and encouraging further collaboration between stakeholders to better plan for the introduction of new treatments into the market.
These two issues, as well as others covered by the Working Group's recent report, are indicative of challenges facing the broader healthcare system. While brainstorming solutions, I soon realized that crosscutting all these issues and the Working Group's recommendations were several recurring themes including: a need for greater collaboration and information sharing, the need for greater clarity and transparency, and the need for further support and resources for insurers and providers taking on reform efforts. These are motifs that have featured in almost every discussion of healthcare in the last few years—certainly the conversations that I have had with my colleagues and staff. This work also reinforced the notion that MassHealth plays an essential role in the Commonwealth's push toward value-based care. Over the course of three months, we recognized that this work was merely a starting point for further dialogue. With a promised redesign of MassHealth on the horizon, I look forward to being a part of that conversation.
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