Last week, the Michigan Department of Health and Human Services issued Medicaid contract recommendations for the state. A Nov. hearing before the State Administrative Board will determine whether Michigan takes the recommendations and converts from a county-based Medicaid approach to a 10-region system. The decision could cut the number of Medicaid HMOs, which cover 1.7 Medicaid members in the state, to 11 from 13. The HMOs risk losing six-year contracts worth a total of $42 billion.
Michigan plans to review decisions with Medicaid HMOs that have been appealed, but the recommendations were based on a comprehensive review, according to state Medicaid Director Chris Priest.
HAP Midwest had a net income of $19.1 million on revenue of $381.7 million in 2014, according to the Michigan Department of Financial and Insurance Services. So far this year, it has posted $12 million in profits on revenue of $238.8 million.
Taking the recommendations could cause major financial problems for Henry Ford, according to Allan Baumgarten, publisher of the Michigan Health Market Review. “It could affect their [strategic] plans” for expanding operations and potential partnerships, said Mr. Baumgarten.
Though on a smaller scale, the recommendations could also harm Sparrow Health System, which owns Sparrow PHP, a 20,000-member Medicaid HMO.
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