Nine questions with State Health Officer Don Williamson about the Medicaid overhaul

Kim Chandler | By Kim Chandler |
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on May 05, 2013 at 6:00 AM, updated May 05, 2013 at 3:33 PM
"This is really about blunting the rate of growth. But even more importantly I think itâs about improving quality of care," Williamson said
Don Williamson.JPG
MONTGOMERY, Alabama -- Alabama lawmakers on Tuesday could give final passage to an overhaul of the state's Medicaid program that has been months in the making.

The legislation would ditch Alabama's fee-for-service model -- in which doctors and hospitals get paid for every procedure and office visit -- to a network of regional care organizations that will manage patient care. The state will be divided into regions with an organization in each one.

"It should be poised for passage unless there are surprises out there,” said Rep. Jim McClendon, R-Springville.

“There are a lot of folks impacted by this. You are talking about a six billion dollar program,” McClendon said of total yearly Medicaid expenditures in Alabama.

McClendon said "something had to be done" to try to control costs in the program, and advocates are hopeful that it will result in better health care for the 930,000 people -- about 20 percent of the state's population -- who use Medicaid.

“It’s not a magic solution, but we think it’s a move in the right direction,” said Jim Carnes, communications director for Alabama Arise, an advocacy group for low-income families.

State Health Officer Don Williamson describes the program in a Q&A with

1. If I'm not on Medicaid, why is this important to me?

Medicaid is 16 to 18 percent of the total healthcare spending in the state of Alabama. If Medicaid fails it is not a failure for Medicaid patients alone, it is failure for all of us. If that rural hospital closes because Medicaid can't pay them, that hospital is not there for Blue Cross patients. It's not there for Medicare patients. If the nursing home fails because Medicaid doesn't pay it, it's not there for private insurance patients or private pay patients. ... Medicaid is a foundational portion of our healthcare system. If we were to lose Medicaid, we lose more than just coverage for our low-income population.

2. What is a regional care organization? Is it going to be the biggest hospital near you?

Not necessarily. A regional care organization will be the doctors and the hospitals in a group of counties in the state. They will come together and they will form an organization – an LLC (limited liability corporation,) a for-profit, whatever they choose to form. That group of doctors and hospitals will provide care for throughout that region. The reality for most people is -- except that they’ll have some additional services that they haven’t had before – they won’t notice a difference. They’ll go to the same doctor. They’ll go to the same hospital. They’ll go to the same drugstore. None of that changes.

3. What changes?

What changes is that instead of the state of Alabama paying the doctor and paying the hospital every time that you go to the doctor or have to be hospitalized, the state of Alabama is going to be paying this entity a fixed amount for you every month. It’s then the responsibility of this regional care organization to manage your care so that you only go to the doctor when you need to, you only go to the ER when you need to. It serves to keep you out of the hospital if you don’t need to go to the hospital. It serves to make sure you get your medicine and take your medicine. The net result of that is it will save money because people will use less health care. It also will improve outcomes. People will get health care when they need it, where they need it, and not just bouncing from ER to ER to ER.”

4. How do the RCOs make money?

The RCOs make money because we give them a fixed amount per month. If they are able to take care of patients for less than what we give them, they make money.

The reason we require them to have a solvency requirement is because if they aren’t successful, if they lose money, they need to have a reserve so they can pay for the care.

This is really shifting the risk, shifting the burden from the state of Alabama to these third parties. It’s like shifting it to a commercial managed care company except instead of being an out-of-state managed care company, it’s an entity that is developed locally and is run locally.

5. If I am a Medicaid patient and someone will make money based off the amount of care that I receive, shouldn't I be fearful they will cut or deny my services?

That’s a good point. The reason that doesn’t work is not only are the RCOs given money on a per patient basis, they are graded and their ability to stay an RCO, is dependent on the quality of care they provide and the outcomes they deliver.

Let me use an example. If you are diabetic and you’ve had to go to the ER three times a month to get your blood sugar under control, the fact that you only have to go to the ER once every six months because the rest of the time your blood sugar is under control -- the state has spent a lot less money on you but you’re in much better health because you’ve got better healthcare.

It serves to ensure the patients get better outcomes and that we have an incentive, which we’ve never had in Medicaid before, to make sure that the care is integrated and organized.

(Williamson said there is also a grievance procedure if the patient thinks they were wrongly denied a service)

This doesn’t change the basic rules of Medicaid. The same benefits that we have to provide to Medicaid beneficiaries today in our fee-for -service model, we’ll still have to provide to Medicaid beneficiaries in this managed care environment. If you were eligible for a knee replacement, nothing changes that. ……”

6. What will be the impact on pharmacy benefits and prescriptions?

There’s nothing in this bill that will affect pharmacy.

7. Will this impact nursing home patients and dental patients?

Dental services are expressly carved out and nursing home services are carved out until 2016 and between now and then we have to do studies on what’s the best way to bring those services in.

8. How many regions are we going to have?

We don’t know. We know we are going to have more than one. We know they have to be actuarially based so that if one fails we can replace it with another one or another delivery model. There are geographic considerations and there are referral considerations.

9. Is this going to solve our Medicaid funding woes?

No. No. Anyone who thinks this does, the reality is it just won’t. … What this program will do is it is projected to save $50-$75 million state dollars a year, each year for five years under what we would otherwise have to spend. ...  It’s if we did nothing we might need $800 million and this brings it down to $750 million. This is really about blunting the rate of growth. But even more importantly I think it’s about improving quality of care and improving outcomes.