Forging a new alliance for health

Published 12:00 am Friday, January 12, 2001

By next May, Freeborn County Medical Assistance and General Medical Assistance Program recipients will likely be dealing with a new health care provider.

Friday, January 12, 2001

By next May, Freeborn County Medical Assistance and General Medical Assistance Program recipients will likely be dealing with a new health care provider.

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The South Country Health Alliance, a managed care system that will replace traditional medical assistance providers, is in the final stages of planning. It should be up and running within the next five months despite the recent loss of a major player, said Darryl Meyer, Director of the Freeborn County Department of Human Services.

Nine counties have formed a joint powers agreement to develop SCHA, to afford them more local control over covered services and providers. SCHA will enable counties to cover more services for medical assistance recipients, and for less money.

Participating counties include Freeborn, Brown, Dodge, Goodhue, Kanabec, Sibley, Steele, Wabasha and Waseca. Mower County filed last November to withdraw from the organization.

Through SCHA, counties can act as an insurance company for medical assistance or general medical assistance enrollees covered under the Prepaid Medical Assistance Program (PMAP). Some MinnesotaCare enrollees will also be eligible.

&uot;It has a lot of similarities to an HMO but would be governed basically by nine counties rather than the health plan board of directors,&uot; Meyer said.

A representative from each county sits on the joint powers committee. Each reports to their respective county boards.

&uot;You’ve got nine independent counties and they’re creating an independent corporation,&uot; he said.

Freeborn and other counties began the process in 1995, when legislation was introduced that would give counties the option of running their own health plans.

Many other states are also experimenting with some type of alternate health coverage plans, Meyer said. Alternate coverage plans allow regions to take a proactive attitude toward health care — to address the root causes of mental health, chemical dependency and family service problems.

Through SCHA, participating counties will be able to expand their provider network, making it easier for medical assistance recipients to receive care. SCHA could provide incentives for enrollees to keep their appointments, or participate in preventative medical treatment like early childhood screening and prenatal care.

&uot;Something the counties have no control over under the current fee for service system,&uot; he said.

Providers could benefit, too. Over the next few years, SCHA will use surplus funds to create a reserve contingency to improve reimbursement to providers, who can receive as little as 55 percent reimbursement for services to medical assistance recipients. Better reimbursement rates will encourage more providers to attend to those recipients.

Safe investment

Freeborn County’s start-up investment will be around $100,000 of the $730,000 needed to start SCHA. As of December 2000, the county had already contributed nearly $90,000. Operating surpluses will be used to reimburse counties’ start-up costs.

&uot;We’re looking at being able to reimburse the counties for their investment cost in the first three years of operation,&uot; Meyer said.

Actuarial firms have projected the SCHA’s feasibility for the next five years including variables such as funding sources, future health care costs, and probability of utilization by enrollees. The SCHA has had periodic actuarial reviews to make sure they have stayed on course.

&uot;That kind of review indicated that we should be able to operate in the black,&uot; he said.

Every step has been carefully placed and analyzed, so Meyer doesn’t foresee any major surprises this year.

&uot;We’re expecting that we’ll make some mistakes along the way,&uot; he said. &uot;We’ll learn.&uot;

The way the alliance is set up, the course can be altered rapidly to correct for mistakes, he said. The only concern at this point is that the level of service needed for enrollees will exceed funding. SCHA will keep a close watch on the numbers to avoid overburdening the system.

&uot;There will be constant analysis of what’s going on,&uot; he said.

OK without Mower?

Mower county’s withdrawal will have a slight effect on the administrative costs of running the program, but financially, the project is still viable with nine participating counties, Meyer said.

&uot;For the overall cost of operation it will not be more expensive,&uot; he said.

Mower county submitted a letter to SCHA in early November withdrawing from the association. They are contractually obligated until Dec. 31, 2001, but will not be enrolling any participants. A Mower County judge is now deciding what Mower County’s financial obligation to SCHA will be.

Mower was, with Freeborn County, one of the largest counties in the alliance, and its withdrawal has caused some discussion among Freeborn County Commissioners as to the feasibility of SCHA.

Freeborn County Commissioner Dan Belshan, Chair of the Department of Human Services board, called the SCHA &uot;risky&uot; and asked to have Mower County address the board with their concerns and reasons for withdrawals.

&uot;It hurts us, no doubt, that Mower County dropped out, because they are probably one of the larger people,&uot; said County Board Chair Commissioner Dave Mullenbach, representative to SCHA.

But SCHA will have so many benefits over PMAP, it would be inappropriate to drop out before the program even starts, he said.

&uot;I don’t think its time to get out now that we have $80,000 invested,&uot; he said.

Representatives will meet with the Health care Finance Organization in Washington D.C. in early February to get the official go ahead to mobilize the SCHA.

&uot;As soon as that comes, we’ll plan to finalize the contract between the joint powers board and the state,&uot;Meyer said.