NHP eager player in Medicaid reform

When Mark E. Reynolds became CEO of Neighborhood Health Plan of Rhode Island in October 2005, he took the helm of a very unusual business.

For starters, Neighborhood is an HMO in a state that doesn’t really do HMOs; while in California or even Massachusetts, people are used to hands-on managed care, Rhode Islanders have historically preferred insurers that pay the bills and stay out of the way.

But Neighborhood is different in a more fundamental way. Unlike any of its competitors, it has a single focus: Medicaid. Every one of its roughly 78,000 members is in the program, covered through contracts with the state.

“We grew up in response to the state’s needs,” Reynolds said. And in fact, Neighborhood was created by local community health centers in 1993 in direct response to the establishment of RIte Care, the Medicaid managed care program for children and families.

Since then, Neighborhood has helped shape RIte Care and the health care delivery system, building a model that is intensely primary care-oriented but also rich with social supports: a large, multicultural team of nurses and case managers, extensive educational efforts, transportation help, interpreters and more.

In recent years, Neighborhood has begun expanding its reach into new Medicaid populations, including children with special health care needs, elders covered by both Medicaid and Medicare, and most recently, adults with special needs.

Now, as the state sets out to overhaul long-term care under a Medicaid global waiver approved in January by the federal government, Neighborhood is eager to be part of that endeavor as well, both by taking on new business, and by sharing lessons it’s learned in other areas.

Neighborhood “has always tried to step in wherever the state needed some assistance in the Medicaid world,” Reynolds said, and it has done well with one key priority for the state, creating community-based services to keep people out of hospitals and other institutions.

“We believe that same model can be employed and deliver the same kinds of results in long-term care,” he said.

Reynolds is a veteran of Medicaid reform. Before Neighborhood, he was deputy commissioner and acting commissioner of the Mass. Division of Medical Assistance, which runs the state Medicaid program, and then he spent two years as director of TennCare, Tennessee’s Medicaid program. He also advised Boston Mayor Thomas Menino on health care.

As CEO, Reynolds has recruited nationally for his senior leadership team, bringing in a new level of expertise and connections at a time of real sea change in Medicaid. Still, far more than even Blue Cross & Blue Shield of Rhode Island – another homegrown nonprofit, with an actual state charter – Neighborhood is shaped by Rhode Island’s needs and its leaders’ policy choices.

When RIte Care eligibility was reduced in 2007 and 2008, Neighborhood lost members – nearly 9 percent from December 2006 to December 2008, dropping to 62,294. Conversely, as the state has begun testing managed care models for a growing range of Medicaid beneficiaries, Neighborhood has been able to create new lines of business.

As a result, despite the sharp drop in RIte Care membership, Neighborhood actually has more members now than ever, 77,944 as of last December, up from 75,559 in 2005, when the RIte Care numbers peaked. And total revenue has grown steadily, from $170.3 million in 2005 to $189.9 million in 2007 and $256.4 million in 2008, after Neighborhood went from just administering claims for several smaller populations to assuming the risk of their health care costs.

Neighborhood – and RIte Care as a whole – has always cost substantially less per person than commercial insurance, and its costs have grown more slowly, but until these new populations were brought into the fold, it was easy to dismiss the cost savings as a result of demographics: children and mostly young parents, even low-income ones, are generally cheap to care for.

When Neighborhood took on children with special health care needs, starting in September 2003, it got a chance to dispel that notion.

Those children were being hospitalized at high rates, Reynolds said, because they didn’t have access to good community-based programs, and many specialists wouldn’t see them because Medicaid rates were too low. So Neighborhood started by ensuring they had good primary care, but also expanded community services and boosted specialists’ pay rates.

From 2005 to 2008, the strategy reduced hospitalizations by 38 percent, from 2,439 hospital days per 1,000 members to 1,478. Specialist visits rose by 19 percent, but the overall per-member-per-month spending rate only rose by 1.4 percent, effectively a decrease given that Rhode Island’s Medicaid costs rose by an average of 6.6 percent per year in that time period.

Now Neighborhood is testing its strategies with an even-tougher population, adults with disabilities. First it worked with 268 people for nine months, ending in March 2008; then, in April 2008, it took on more than 4,900 such members as part of a pilot program by the state called Rhody Health Partners (UnitedHealthcare of New England has an equally big group, and another 1,000 people are in a program called Connect CARRE Choice).

Even more than with RIte Care, Neighborhood is focusing on these new members’ social needs – from transportation, to finding a doctor, to language issues. And it’s looking at adding substance-abuse programs and new care-management initiatives, for chronic obstructive pulmonary disease, for example, which isn’t very prevalent among RIte Care beneficiaries.

“We’ve bested all of our own targets in terms of cost so far,” Reynolds said. “We expect to save the state a lot of money.”

Gary Alexander, director of the R.I. Department of Human Services, said Neighborhood’s operations are so closely intertwined with the state’s that the successes are a credit to both – along with the other health plans’ contributions. But he hailed Neighborhood’s “very outcome-driven” approach and its focus on quality, a factor in its being rated one of the nation’s top 10 Medicaid health plans for several years in a row.

Looking ahead at long-term care reform, Alexander said Neighborhood could be a valuable player in efforts to “rebalance” the system and shift it away from institutional care.

“They have to make their own decisions as to whether they want to get involved with more populations – sometimes a business will do too much too soon and it sort of breaks down the operation,” he said. “But I think NHP would do a great job if they decided to go that route.”

Elizabeth Burke Bryant, executive director of Rhode Island Kids Count, the state’s leading policy analysis and advocacy organization on children’s issues, said Neighborhood has “had the ability to be nimble and to really meet needs as they arise … so the fact that they’re moving to serve other populations is good news.”

It’s also, she added, a good financial move for the state to keep going on this path, because the cost of health care – whether it’s covered by Medicaid or bouncing back from the uninsured – is a major burden. “It’s in the state’s interest to have high-quality health insurance plans,” she said, “so we are providing care in a way that’s as efficient and high-quality as possible. This has been a model for that.”

Source:

Providence Business News
Marion Davis, Contributing Writer
Posted June 8, 2009