Detroit Free Press Profiles Michigan’s Five-Year-Old Medicaid Managed Care Program

The Detroit Free Press on Aug. 22 profiled Michigan's five-year-old Medicaid managed care program. In 1997, Michigan required two-thirds of the state's 1.2 million Medicaid beneficiaries to enroll in a new managed care program. The program has experienced "growing pains" over the past five years, and "its relative success or failure depends on who the judge is," the Free Press reports. "By some measures," the quality of care and access to health services has improved for Medicaid beneficiaries, the Free Press reports. The program also allows the state to measure the level of care that HMOs administer to Medicaid beneficiaries. HMOs that meet the state's requirements "are rewarded financially," and those that "fall short are held accountable," James Haveman, director of the Michigan Department of Community Health, said. In addition, the program has saved the state money -- about $115 million in the first year of operation -- through a focus on preventive care, which has reduced Medicaid costs. Although most HMOs in the program have posted a profit -- 15 of 20 HMOs that offered Medicaid managed care plans reported a profit in 2001 -- they have criticized the program as "underfunded" and "badly broken." HMOs in the program face "insurance rates that are the lowest of any payer, significant regulatory and reporting requirements" and patients with "unique needs and characteristics," the Free Press reports. Don Drew, a spokesperson for the Detroit-based Wellness Plan, the state's largest Medicaid HMO, said, "The system is like a one-legged man at a dance contest. We're doing a pretty good job with some serious constraints. But we're not about to quit the contest." Physicians, hospitals and other health care providers also have criticized the program. They maintain that the money the state saves through the program has "come at their expense" and that they "are taking the biggest risks and reaping the fewest rewards." Providers who treat Medicaid managed care patients receive low reimbursements, often do not receive reimbursements "on a timely basis" and face the "complexity of billing created by the participation of multiple HMOs rather than one centralized payer," James Connelly, chief financial officer of the Henry Ford Health System, said. Nick Vitale, CFO of the Detroit Medical Center, added, "If we started with a clean slate, would it make sense to have the HMOs in the picture? Probably not" (Norris, Detroit Free Press, 8/22).