Problems with Managed Health Care in Texas Lead to Sanctions

The state has levied more than $1.2 million in sanctions against the three contractors providing managed healthcare services for low-income residents in Tarrant County for failing to meet performance standards for paying and handling claims.

The three companies -- Aetna, Amerigroup and Cook Children's Health Plan -- handle claims through a state contract for patients who receive care under the Children's Health Insurance Program and Medicaid in a six-county area, including Tarrant County.

Amerigroup led the entire state in fines among current contractors with $864,797 since 2007 through May. Cook Children's Health Plan, the nonprofit provider based in Fort Worth under the Cook Children's Health System, ranked sixth in the state with $243,375 in fines. Aetna ranked ninth with $96,280 in sanctions through May.

This year, the state terminated the contract of Evercare, a managed-care provider that had been hit with more than $1.5 million in sanctions. The state changed its regulations in 2006 to stiffen sanctions against managed-care providers.

"One of the major issues we faced across the state -- and led us to start issuing financial penalties against health plans -- was delays in paying claims to doctors and other health care providers," said Stephanie Goodman, a spokesperson for the Texas Health and Human Services Commission, in a written response to questions from the Star-Telegram.

"We've seen significant improvement in the past year or two from Amerigroup and most health plans in getting claims paid on time."

The three companies handle services for eligible residents in Tarrant, Hood, Johnson, Parker, Wise and Denton counties. Aetna and Amerigroup also provide managed-care services through contracts with the state in other parts of Texas.

The state paid more than $365 million for Medicaid and CHIP services to the three Tarrant contractors in 2008.

Cook Children's

Cook Children's Health Plan has faced sanctions largely for failing to pay claims on time, state officials said.

"We believe that's primarily a system issue, and Cook is working to upgrade its claims payment system," said Goodman. "We're optimistic that [they] will resolve the issue."

Health Plan President David Lamkin said Cook Children's is replacing an antiquated system with new technology that should speed up processing and handling. The new system should begin its phased-in operations early next year, he said.

"It's a much more modern, flexible system," he said.

The Cook Children's plan will also begin processing claims in-house beginning Oct. 1, he said. Cook Children's is canceling its contract with Texas Children's Health Plan, based in Houston, for that service.

In May, Cook Children's Health Plan had nearly 63,000 members in the Tarrant area. It handles about 60 percent of area CHIP members, while Amerigroup handles about 75 percent of those enrolled in Medicaid, according to May figures.

In addition to children, Cook Children's plan also handles services for pregnant women and some other adults eligible for Medicaid.

The program has not been particularly lucrative for Cook Children's. It was paid more than $84 million in 2008 and more than $112 million in fiscal 2009, although those payments have not been finalized, state officials said. But the system reported a net loss of nearly $3 million for the 2008-09 fiscal year through May, and a net loss of about $270,000 in the Medicaid program during that period.

Lamkin, however, says costs savings in June, July and August have reduced losses to about $850,000 for the two programs combined.

Lamkin, who was brought in about three years ago from California to run the health plan, said he expects overhead costs to diminish as the program adds new members and reduces costs. The system will save about $1 million a year by handling claims in-house, and at least $100,000 a year by switching to the new technology, he said.

"We are not just a claims processing and payment operation," Lamkin said in a written statement. "The true value of the health plan is that it provides care management of its members so that we can assure access to good quality of care, reduce and/or prevent the impact of chronic conditions, and ultimately reduce the costs of care."

Amerigroup

Amerigroup, which also provides managed-care services around Dallas, Harris, Nueces, Travis and Bexar counties, was largely sanctioned for problems in the Harris County area, which includes Houston, and in Bexar County, which includes San Antonio.

State records reflect some problems with claims for behavioral health treatment in Tarrant County in the CHIP program.

Amerigroup spokesman Kent Jenkins said the company is working to improve its service delivery, and noted the fines have dropped from more than $550,000 in 2007 to just $22,475 in 2009 through May.

"We're worked very hard to improve our claims processing, and we're doing a much better job," Jenkins said in a written statement.

Amerigroup is the largest Medicaid managed-care plan in Texas. It represented 13,440 members under CHIP and 81,929 in Medicaid as of May. It received nearly $240 million in state payments in 2008 and nearly $229 million so far in fiscal 2009. Amerigroup reported net income of nearly $2.5 million for the CHIP program and $16.7 million for the Medicaid program this year.

Aetna

Aetna, which handles CHIP and Medicaid claims in Tarrant and Bexar counties, was sanctioned for late claims, for failing to answer calls quickly and for keeping callers on hold longer than two minutes. It also failed to meet state standards by allowing more than 7 percent of calls to a behavioral crisis hot line and the provider hot line to be abandoned before being resolved.

aig Bass, senior vice president for Aetna's Medicaid unit, said the fines assessed in early 2009 were the result of a system conversion that caused a change in performance.

"At Aetna, we take our responsibility to our members very seriously," Bass said in a written statement. He said that "11 hotline performance measures were resolved as of 3/01/09. All system issues regarding timely claims payment and other identified issues were resolved as of 6/01/09. Since June 2009, Aetna Better Health continues to remain in compliance with state standards."

Aetna represented 5,619 members under the CHIP program and about 15,021 under Medicaid in Tarrant County in May, state records show.

The company received about $41 million in payments from the state in 2008 and has received about $64 million in 2009 so far for providing those services in Tarrant County. The company reported net profits here of $1.7 million for Medicaid and $1.2 million for CHIP through May.