D.C. Council member Kenyan R. McDuffie called for an urgent meeting on the Medicaid contracts. (Jahi Chikwendiu/The Washington Post)

The D.C. Council is scrutinizing a move by the Bowser administration that would reshuffle health coverage for hundreds of thousands of the District’s sickest and poorest residents.

At a hastily scheduled meeting on Thursday, lawmakers grilled administration officials about the city’s plan to cut costs by assigning all Medicaid patients to managed-care plans and splitting them randomly among three health-care providers: MedStar, AmeriHealth and CareFirst.

Council members, medical professionals and patients have all raised concerns about the proposal, which would place about 100,000 patients this fall onto new health-care plans, some of which do not cover the patients’ current doctors.

“There are questions that need to be answered by the Department of Health Care Finance about why they decided to essentially reallocate these patients during this global pandemic and this public health emergency,” said Council member Kenyan R. McDuffie (D-Ward 5), who called for the meeting amid the council’s August recess.

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The three contracts, totaling $1.5 billion, are together one of the biggest outlays of money by the D.C. government and one of the most contentious, as health-care companies jostle for a share of the funds.

Right now, most of the city’s nearly 250,000 Medicaid recipients are covered by what’s known as a “managed care organization,” in which the city pays a set rate — based on a person’s health conditions — to a private health-care company and the company acts as the patient’s insurer.

About 1 in 5 Medicaid patients, including many with complex health needs, are on a “fee-for-service” plan instead of managed care. They simply go to the doctor, and the District pays. According to a Health Care Finance presentation, these 22 percent of patients account for 53 percent of the District’s Medicaid spending — more than $24,000 per person annually, compared with $6,000 per person on managed care.

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Under the new contracts, the District would phase out fee-for-service, eventually putting every patient — except a small number who live in long-term care facilities — on a managed-care plan. For 19,000 patients, that change would take effect Oct. 1.

“You’ll have access to care managers who will help to develop an individualized care plan that is person-centered, that will help you to work through or maneuver through the health-care system, and gain access to all of the necessary services that you need to enhance or improve your health care,” Lisa Truitt, a top official with Health Care Finance, told a meeting of Medicaid participants this week.

Deputy Mayor for Health and Human Services Wayne Turnage said during Thursday’s meeting that he does not expect cost savings from the switch right away, but that by cutting down on unnecessary emergency room visits and hospital admissions, ending fee-for-service could eventually save the District $100 million annually.

Nationally, more than two-thirds of Medicaid recipients are covered by managed-care plans, according to data from the Kaiser Family Foundation. The District plans to join Hawaii, Kansas, Nebraska, Tennessee and Virginia as one of the few jurisdictions that use managed care for at least 98 percent of their Medicaid patients.

The new contracts replace Amerigroup with MedStar, and randomly distribute about 70,000 patients to each of the three companies.

MedStar lost the District’s business to Amerigroup in 2017, after the city faulted it for spending significantly more than AmeriHealth spent insuring the highest-risk patients — $404 per person, per month, compared with $358. Turnage said MedStar’s patients also ended up in the hospital more often than those on other plans, and wouldn’t arrange a contract with the city’s other two insurers, AmeriHealth and Trusted, to allow their Medicaid patients to see doctors or use the two hospitals that MedStar operates, Georgetown University Hospital and Washington Hospital Center.

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Over the past two years, Turnage said, Medstar’s hospital and specialists contracted with AmeriHealth, not Trusted and Amerigroup — leading flocks of patients to switch to the AmeriHealth plan so they could visit MedStar doctors. The other two plans were left with fewer patients, and thus unexpectedly large profits.

Continuing that imbalance “would have pushed the program toward insolvency,” Turnage said. “To wait another year, to wait two more years, to wait three more years is frankly nonsense. It would be us turning a blind eye to a real problem.”

Because Amerigroup lost most of its sicker patients, he added, the company ending up making huge profits — at the city’s expense.

The new contracts require all hospitals and all Federally Qualified Health Centers in the District — including nonprofits like Unity Health Care and Mary’s Center that already treat many Medicaid patients — to take any of the managed-care plans in order to keep participating in the Medicaid program.

Council members expressed concern that the hospital agreement rests on the District’s threat that it won’t send any fee-for-service patients to a hospital unless the hospital accepts all managed-care patients. Because the city plans to phase out fee-for-service within five years, that incentive will diminish.

Turnage said at least 3,000 patients, most of them with severe disabilities and thus lucrative to hospitals, will remain on fee-for-service, and the hospitals will want their business. And MedStar’s new contract to provide managed care will specifically require that its hospital be open to all Medicaid patients.

But the contract will bring change. Private medical offices have no rules about which insurers they must accept, which could mean patients who get reassigned to a different insurer this fall would be unable to go to their current doctors.

That worries people like Jason Henderson, whose D.C.-based company provides in-home health services including physical therapy, speech therapy and nursing care, mostly for poor patients. He said 75 percent of his patients are covered by Amerigroup, the plan that won’t be included in the new contracts. Others are fee-for-service patients who might be assigned to a managed-care insurer.

If Henderson’s company can’t work out a contract with his patients’ new insurers, it could wipe out his business.

Patients who don’t like their random assignment to an insurer will be allowed to request a switch until the end of the year. Ambrose Lane Jr., chair of the Ward 7 Health Alliance Network, said he is trying to inform patients of that right, and hearing from many who are concerned.

“Once people get familiar with their doctor and they like their doctor, it’s kind of hard to switch to another doctor,” he said. “If they switch me, I’m switching back the first day.”

But Turnage said he thinks few patients will find the switch to be a disruption, since most get their primary care from the Federally Qualified Health Centers.

The council has until Sept. 3 to vote to block the contracts, which would force the city to return to negotiating. It would be unusual for the council to take such a step. To do so, the council would have to formally end its summer recess.

McDuffie, who chairs the council’s committee on business and economic development, spent the bulk of the four-hour meeting grilling officials about the details of the procurement process, trying to determine whether it followed the city’s rules on giving extra weight to local minority- and women-owned small businesses.

Trusted, a qualifying minority-owned D.C. business, was acquired by the larger company CareFirst, but was scored during the procurement process as if it were still a locally owned business. Under McDuffie’s questioning, Chief Procurement Officer George Schutter said that the nine points awarded to Trusted would have dropped to four points if it had been scored based on its status after the merger -- but that the company still would have won the contract in that scenario.

“You have my word that I will propose a change to this law," McDuffie responded. "And I hope it is zealously supported by the executive to avoid what happened in this case happening in the future.”

Lola Fadulu contributed to this report.

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