Cuts, Policy Changes at Healthy Families Program

The most recent state budget proposal includes a variety of cost-saving measures in the Healthy Families program — reduced reimbursement rates, higher premium prices, higher copays and a transition of its 877,859 children into managed care plans by the end of June 2013.

At yesterday’s monthly meeting of the Managed Risk Medical Insurance Board, chief deputy director Terresa Krum broached the bad news.

“There are a number of significant budget assumptions,” Krum said. “So first, the budget proposes to reduce the per-member, per-month rates paid to health plans in Healthy Families to the average Medi-Cal rate.”

That means that money for plans covering health, dental and vision services dips from the current Healthy Families average of $103.44 down to $76.86 per person.

To Verne Brizendine of Blue Shield of California, that was unacceptable.

“I don’t even know where to begin. There is so much here on the table with so many unknowns,” Brizendine said at yesterday’s MRMIB meeting. “Blue Shield is being asked to take the big loss — we’re talking about millions of dollars of loss here — and smile.”

Brizendine paused for a second. “I don’t have the authority to say that Blue Shield will do that,” he said.

Krum also pointed out that Healthy Families recipients would need to pay more for premiums (a $14 to $18 increase) and would need to pony up more in copayments for emergency department visits and inpatient hospital stays.

The copayment and premium increases are expected to save the state almost $23 million in general fund dollars, Krum said. The rate reduction for health plans is estimated to shave $71 million from the budget.

The shift of more than 877,000 kids to managed care plans is also a cost-saver, she said. It will be phased in over the next 18 months. The estimate for that cost savings is $148 million in the next fiscal year.

The grand total for all of these changes: about $242 million in savings.

But first, Krum said, all of them will require federal CMS approval.

There’s one more budget proposal, Krum said, that is a little more general. “The budget also proposes to transfer AIM (Access for Infants and Mothers), MRMIP (the Major Risk Medical Insurance Program), PCIP (the Pre-Existing Condition Insurance Plan) and the CHIM (the County Children’s Health Initiative Match) programs to the Department of Health Care Services by July 2013,” Krum said, “though we don’t have specifics at this time of how that would work or when it would begin.”

Related Topics

Capitol Desk