Bill Aims to Block HMO Cuts in Medicaid Reimbursements

Joe Tyrrell | October 16, 2012 | Health Care
Senate panel hears emotional testimony on potential harm to children, elderly and disabled

A state Senate committee has moved to set up roadblocks in the face of reimbursement cuts planned by HMOs that oversee New Jersey’s Medicaid program.

Often-emotional testimony by health-care providers and workers helped convince the Senate Health, Human Services and Senior Citizens Committee that cuts by Horizon NJ Health and the other HMOs would hit services for the frail elderly, children with disabilities and other vulnerable populations.

The committee already was inclined to act as its chairman, Sen. Joseph Vitale (D-Middlesex) sponsored legislation — S2241 — with Sen. Loretta Weinberg (D-Bergen) to require state administrative approval before the HMOs can lower reimbursements.

Weinberg declared that the issue is of “increasing importance” to the state as it tries to encourage keeping people in their own homes instead of nursing homes, while shifting Medicaid clients into managed care. Last year, the state moved almost 155,000 people from fee-for-service Medicaid programs into the HMOs, with almost half going to Horizon.

The company notified health-care agencies that it was cutting the reimbursement rate for personal-care aides by 10 percent, from $15.50 per hour to $13.95 per hour.

“To its credit, Horizon delayed the cut and reduced it to 4.5 percent” after public outcry, Weinberg said. “While we appreciate their willingness to sit down and discuss this… that’s something that should have occurred before their rate-cut announcement.”

A parade of representatives from hospitals, medical day care, adult day care and home care agencies supported the bill’s requirement of a public hearing and approval from the state commissioner of human services before reimbursements could be cut.

Pay for Home Health Aides Called Already Too Low

Many said the previous reimbursement rate already was too low.

Weinberg said HMOs would be required to show they had taken other steps to reduce costs and that the lower rates “would not adversely affect the quality and quantity of health-care services.”

Reimbursement rates already are so low that many agencies are challenged to recruit and keep home health aides, said Irma Camaglian, vice president of Accredited Health Services in Franklin Township.

With any further cuts, she said, “We will be competing with the pay rates at McDonald’s or Burger King,” she said.

Speaking through an interpreter from 1199 Service Employees International Union, Belen Jaramillo told the committee she is paid only $9.75 as a home health care worker in Union County.

“Low wages and unstable working hours make it hard to do the work I love and survive,” she said.

Many of her patients are elderly, frail and lonely, Jaramillo said. She told of finding one, a 73-year-old man, lying in a fetal position, unable to rise and greet her as usual. Only after she convinced him that he would not be alone in the hospital because she would visit him did he consent to go for treatment, she said.

“We cannot look the sick and elderly in the eyes and turn our backs and abandon them,” Jaramillo said.

Legislators and providers said Jaramillo’s salary is about average for the roughly 30,000 home health aides working across the state, and amounts to about $20,000 a year. Reimbursement rates for such services were $14 an hour two decades ago, according to some.

State Sen. Barbara Buono (D-Middlesex), told of driving a health aide caring for her late mother and seeing the woman falling asleep. It turned out, Buono said, “She was working two jobs because she was not making enough to support herself” as an aide.

Insurance reimbursement cuts could force program cuts

Officials of the Voorhees Pediatric Facility, which assists “medically fragile” children, said their services could also be hurt by a reduction in rates. The facility accepts “children that could not be cared for in a regular day-care program,” said administrator Scott Goldberg.

In a quavering voice, admissions director Susan Muracco read a letter from a parent who wrote she “would not be able to work full-time” without such a program for her child. “It was not our choice to have children with disabilities,” but they deserve attention, the parent wrote.

Prodded by a sympathetic Sen. Diana Allen (R-Burlington), Goldberg eventually said the reimbursement reduction could result in elimination of some programs, although he was unwilling to say that about Voorhees. If anything, Allen said, more resources are needed, because “we already have so many children who are not being served.”

State Sen. Ron Rice (D-Essex), said he was about to fly to Texas to make arrangements for his late brother, who lived alone and whose decomposing body was found only when neighbors became concerned. His brother might have benefitted from having a health aide to check on him, Rice said.

In the face of what he acknowledged was “compelling and very emotional testimony,” Ward Sanders, president of the New Jersey Association of Health Plans, said the HMOs are only trying to provide “quality and cost-effective” care.

“Soon, over 98 percent of Medicaid patients will be in managed care,” he said.

The industry has launched education and prevention programs to help patients take better care of themselves, Sanders said.

But reining in costs remains a key tool, he said. While well-intended, he said the legislation would “set up a sort of extreme bureaucratic process that would divert resources away from care.”

“A hospital contract is a very complicated document,” Sanders said. “There are cases where there are going to be rate increases and rate decreases within the same plan.”

He did convince Rice to question the need for hearings.

“We’re the Legislature, and ought to be able to do this directly” without punting to administrative procedures, Rice said.

But Buono said the process “will add more transparency.”

The HMOs should not separate “the human impacts on a patient from the monetary issues,” she said.

The committee made a slight language change to clarify the kinds of health institutions and services affected, but then passed the bill unanimously, although Rice and Sen. Samuel Thompson (R-Middlesex) both said they did so merely to move it out of committee.

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