The Jindal administration is moving toward a program in which the state pays premiums for a private health insurance program for two-thirds of the state’s 1.4 million Medicaid recipients.

State Department of Health and Hospitals Secretary Kathy Kliebert announced the change Thursday.

Kliebert said the move will provide for more budget predictability and increased savings while giving health plans more flexibility in services they can offer patients.

“It was a decision based on the data we have … based on both cost and quality indicators,” Kliebert said.

Today, the state uses two models in its privatized Bayou Health program: one prepaid, premium-based, which is offered by three companies; and the other “shared savings,” with two companies receiving a small management fee and providers being paid directly for services.

The shared savings model has proven to cost $13 more per month, per patient than the prepaid model, Kliebert said. DHH statistics, which have been reviewed by the program’s outside actuary, show the prepaid costs have been $232 per month while the shared savings have been running $245 per month.

“We have not predicted out what the savings will be,” Kliebert said.

She said the prepaid plan also has been hitting or bypassing performance standards when it comes to patient care.

The change will come as the state solicits proposals for private companies that want to take over the state business. Current contracts — with five insurance companies — end in February 2015.

Kliebert said the request for proposals is scheduled to go out July 28, with contract awards announced Oct. 24. She said three to five companies will be selected based on the proposals they make.

In November, a statewide open enrollment period will begin during which the Medicaid recipients the program covers — mainly pregnant women and children — will be able to choose the health plan they want to join. Recipients usually choose based on the physicians, hospitals and others that provide services through the insurance plan. If a plan is not chosen, the individual is auto-enrolled.

The Joint Legislative Committee on the Budget is scheduled to hear a report on the status of Bayou Health on Friday. The committee’s chairman, state Rep. Jim Fannin, R-Jonesboro, has been particularly interested in its financial status compared with costs of care delivery before the privatization effort kicked in.

Besides moving to the prepaid plan, the program will be expanded to offer more benefits and cover more people, Kliebert said.

Added will be hospice care and services; in-home personal care assistance for children under age 21; and nonemergency medical transportation for all services including dental appointments and behavioral health care. Three different groups will have the opportunity to opt in for coverage: certain recipients of home- and community-based waiver services; children between age 3 and 21 on a waiting list for home- and community-based services; and members who chose to begin receiving hospice care.

All participating plans must adopt the same drug formulary so there will be consistency in pharmaceutical offerings.

No change will be made in certain key areas. Remaining will be an 85 percent medical loss ratio to ensure dollars are spent on health care; absolute rate floors for providers; a prompt payment requirement; and a grievance and appeals process for providers and members.

There will be 20 new performance measures added to the existing 25 performance and 10 administrative measures.

There will be financial and other incentives for health plans to encourage providers to find more ways to improve their patients’ health.

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