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.

Federal funds are endangered

http://www.prdailysun.com/news/Federal-funds-are-endangered

July 24, 2010 by Juan A. Hernandez jhernandez@prdailysun.net

If the bill to reorganize the several government advocate offices goes through, there would be “terrible consequences” to people over 60, Puerto Rico Advocate for the Elderly said Friday.
Rossana López León reiterated her opposition to the reorganization plan, calling it “an indisputable laceration to the rights of the elderly.”
According to López León, should the House Substitute bill to the 2010 Reorganization Plan No. 1 become law, there would be “terrible consequences” and “an indisputable laceration to the rights of the elderly.”
“Current state law delegates our office the authority to act as administrator and recipient of whatever federal funds and appropriations are allowed by this [Older American Act of 1965] and other federal laws and programs for the elderly,” said López León during the hearings of the Senate Government Committee
López León explained that the mandate is also contained in a contract between the Commonwealth and the federal government known as the “State Plan on Aging.”
“Any changes to this plan have to be submitted to the federal government for its approval before going into effect,” López León told the Committee.
The Advocate said she has consistently requested from the chairman of the Modernization Council –State Secretary Kenneth McClintock – any evidence of meetings with federal officials to discuss the proposed changes to this plan. Because no such evidence has been provided, the Advocate said she assumed the meetings have not taken place.
The proposed substitute bill, like the original one, calls for the merging of all advocacy offices into one umbrella-type agency under the authority of the Citizens’ Ombudsman.
López León noted that failure to comply with regulations in the past had led to the loss of several million dollars in federal funding that would have benefited Puerto Rico’s elderly.
“The severity in the breach of federal regulations by the Health Department and the Department of the Family led to the government’s classifying Puerto Rico being classified as a ‘high-risk agency’ by the federal government,” López León said.
Government Committee Chairman Sen. Carmelo Ríos admitted to having several doubts regarding the federal funds the agency now receives.
“We cannot lose federal funds. If anything, we should be looking for ways to get more,” Ríos said.
The Advocate also argued that the merging of the advocacy offices into the proposed suprastructure “eliminates the autonomy and independence of the advocates as specialists on different populations.”
“Also, there’s an insurmountable conflict because, while [the plan] states that the advocates will keep their power to protect the populations they serve, it also limits them to whatever the Citizens' Ombudsman decides.” The proposed substitute bill, like the original one, calls for the merging of all advocacy offices into one umbrella-type agency under the authority of the Citizens’ Ombudsman,” López León said.
Ríos said that his committee is in the process of hearing out every advocate to gather as much information as possible and then start a process to reconcile possible differences with the House and the governor, who may have different views on how the merger should take place.