State to open bidding on $17B in Medicaid business

The Pennsylvania Department of Human Services on Wednesday took steps to put $17 billion worth of Medicaid business out for bid to private companies.

At a time when the insurance industry considers goverment programs a growth sector, the moves are expected to attract new national competitors to Pennsylvania, where home-grown firms, such as AmeriHealth Caritas, have dominated for years.

"When fully implemented, these new changes will mark the most significant changes to Medicaid in Pennsylvania since the department first moved to mandatory managed care 18 years ago," DHS Secretary Ted Dallas said.

First, officials opened the bidding for new managed Medicaid contracts, which will require the winners to ensure that at least 30 percent of their Medicaid payments to providers are based on value or quality, not strictly on the amount of care provided.

The contracts will cover $12 billion in spending, a DHS spokeswoman said.

The push echoes a goal of federal Medicare regulators and will force billions of dollars through networks of hospitals and doctors who emphasize care coordination and into bundled, or lump, payments for knee replacements and other procedures.

Since Gov. Wolf exanded Medicaid in April, 200,000 Pennsylvania residents have obtained coverage.

Second, the human services department, in conjunction with the department of aging, released its plan turn over to private companies the management of $5 billion worth of long-term services for seniors and disabled adults.

One of the goals of the proposal, called Community HealthChoices, is to shift money toward home- and community-based services and away from institutions, such as nursing homes.

In 2013, the latest data available, Pennsylvania spent 41.9 percent of its long-term services and supports budget on home and community services, rather than on nursing homes or other institutions. That was an increase from 37.3 percent in 2011, but lagged the national average of 51 percent, DHS said.

DHS expects to put the long-term services contract, covering $5 billion in spending, out to bid in November. Services under the new contract are scheduled to start on Jan. 1, 2017, in southwestern Pennsylvania. The start date in southeastern Pennsylvania is a year later, but all the contracts will be awarded at the same time.

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