MCS and Mi Salud butt heads in contract negotiations

By Stefan Antonmattei

Of the Daily Sun Staff

santonmattei@prdailysun.net

Negotiations between the government and the private health insurers managing Mi Salud will most likely be extended to July 15. This fiscal year’s renewal of the three-year contract was scheduled to be completed by July 1. An industry source told the Daily Sun on Tuesday that two of the parties are in disagreement as to how much should be paid per each of the 1.3 million Mi Salud beneficiaries. The cost of the Mi Salud program is estimated at $1.7 billion per year.

According to the industry source, the deadlock is between the government and Medical Card Systems, the largest insurer covering 800,000 of the 1.3 million insured. MCS wants a higher per-person per-month fee, arguing that their original estimated costs for managing the program, factored back in October 2010, have far surpassed what they had budgeted. This, according to MCS, has been the reason why MCS owes more than $60 million to hospitals throughout the island, and another $60 million to preferred medical providers known as IPAs. By the time the Daily Sun went to press, MCS and an association of IPAs were meeting to discuss a way out of the debt mess.

The reasoning for government hiring the insurance companies is that they, and not the government, assume the all cost risk associated with providing health benefits to the insured.

Different health care industry sources have speculated about MCS walking away from the program, others have said they are just playing hardball in the negotiations with the government. The government contract brings MCS an estimated revenue of $1 billion per year.

The negotiators include the government’s health plan administration (ASES for its Spanish acronym) and the Health Department. The private sector parties include MCS, Humana, and APS, Inc. 

ASES has reinforced its negotiating team by including the Treasury Secretary, the director of the Office of Management and Budget, and the director of the government’s mental health administrator.

A senior government official confirmed to the Daily Sun that the only sticking point in the negotiations was MCS. Asked if other insurance companies could compete in the negotiations, the official said yes, but only if MCS opts out.

What if MCS walks away

MCS could opt out of its contract with the government if it wanted to. The process following a statement of intent to renege on the contract would take place in a period of about three months. The government could declare a state of emergency to avoid having to go through a long process of a request for proposal — estimated to take at least a year. By declaring an emergency, the government could contract directly with a number of insurance companies including companies that are not currently based in Puerto Rico. 

Several companies could be interested in competing for the billion dollar contract including Triple-S (and its subsidiary American Health), MMM Healthcare, and Centene Corp.