LINCOLN — For Jody Faltys, the revamp of Nebraska’s Medicaid system meant she was virtually trapped at home for a month.
Her wheelchair battery threatened to die and leave her stranded if she were to venture outside her Lincoln house.
In the past, getting Medicaid authorization for a new battery took a week or two, Faltys said. But this year the state had contracted with new private companies to manage and pay for the bulk of Medicaid services, and the authorization took much longer.
“I have never had to wait as long as I did this time,” Faltys said. “That whole month, I really did not go anywhere.”
Nebraska’s new Medicaid system, called Heritage Health, was launched on Jan. 1. Courtney Phillips, the chief executive officer of Nebraska’s Department of Health and Human Services, says that despite some challenges, the program overall has been a success.
Nevertheless, more than 11 months later, unpaid claims and balky authorization processes continue to frustrate health care providers and delay care for patients. Improvements have been made, but the problems have left some providers struggling to survive.
“It’s been a disaster, no doubt about it,” said Mary Walsh-Sterup, an occupational therapist with Central Nebraska Rehabilitation Services.
The problems reached such levels that HHS has taken action against the private contractors eight times so far. HHS has imposed financial sanctions once, required corrective action plans three times and issued four written warnings.
Each contractor has received at least a warning. The financial sanctions were waived when the company showed progress in correcting its problems.
Still, Phillips described the system’s implementation as “very successful.”
“We saw services and payments continue without interruption,” she said, though she acknowledged there have been some issues to work through. “Any major implementation for a large and complex program is going to have problems,” Phillips said.
Thomas “Rocky” Thompson, the interim state Medicaid director, is also bullish on the new system.
“Heritage Health has been serving — and serving well — more than 230,000 of Nebraska’s most vulnerable citizens,” he said. “The vast majority of our state’s 30,000 Medicaid providers are experiencing a business-as-usual relationship with Heritage Health.”
The new system expanded upon Nebraska’s previous Medicaid managed care programs.
Under the system, three private contractors — United Healthcare Community Plan, Nebraska Total Care and WellCare of Nebraska — are responsible for administering $1.2 billion worth of physical health, behavioral health and pharmacy services for almost all Medicaid recipients.
State officials said the goals are to improve care for patients, control the growth of Medicaid costs and make state government more efficient.
Thompson said Heritage Health has brought more predictability to the Medicaid budget.
The state pays the contractors a flat amount for each person, similar to an insurance premium. The contractors then bear the risk of paying for that person’s care with the money available.
Nebraska also required the companies to set up care management programs that work with people who have complex health issues.
For some Medicaid patients, the results have been a blessing.
Brent Blythe of Omaha said the care manager whom United Healthcare assigned to his son was key to getting the 20-year-old into a safe living arrangement, with developmental disability and mental health services.
The care manager reached out early in the year to offer help. When a crisis landed Blythe’s son in a psychiatric ward, the care manager spent hours working with various agencies and officials to get him treatment.
“It was nice to have someone in my corner,” Blythe said. “She just went out of the way to be an advocate for him.”
State officials frequently point to such stories as evidence of Heritage Health’s success.
But health care providers and other Medicaid patients have their own stories, about difficulties they have encountered with the new system. Among them:
» It took nearly nine months for United Healthcare to process the paperwork so Key Complete Therapies in Omaha could be in the company’s network.
In the meantime, physical therapist Vicky McHugh said the clinic had to turn away eight United Healthcare clients a month.
That delay, coupled with the hours required to get authorization for care and with Medicaid’s low payment rates, prompted McHugh to consider no longer taking Medicaid patients.
“I’m in a huge financial and moral dilemma,” she said.
» Midyear, WellCare started sending statements to First Step, a behavioral health clinic in Lincoln, showing claims had been paid. The clinic, however, never got the money.
Complaints from First Step and other providers led the state to issue a warning to the company.
WellCare State President Lauralie Rubel said the company eventually discovered that the problem affected 11 providers, including Nebraska Medicine. She said it has been fixed.
» When one small-town hospital was mistakenly left off the state’s list of critical-access hospitals — a designation that determines how hospitals are paid — two contractors continued paying the critical access rates. Nebraska Total Care instead rejected claims submitted by that hospital, said Elisabeth Hurst, vice president of the Nebraska Hospital Association. She said the problem has now been corrected.
» Months went by before the contractors figured out how to process claims for a special Medicaid program that covers prenatal care for the unborn babies of illegal immigrant women.
The contractors are now paying current claims, said Amy Behnke, CEO of the Health Care Association of Nebraska, which represents health clinics that care for many of those babies.
But she said the clinics have yet to receive full payments for older claims, some dating back to January and February.
“It’s getting better, but it’s been a long process, and it’s stretched our health centers thin,” she said.
» CenterPointe, a Lincoln behavioral health treatment center, had to take out a line of credit for the first time after unpaid claims topped $300,000 this past spring. More recently, CEO Topher Hansen said the process is improving and the backlog of unpaid claims is dwindling.
But he said the center had to hire a person to work full time just to handle the additional administrative work that came with Heritage Health. Other providers have had to absorb the administrative costs.
Nebraska’s experience launching Heritage Health is not uncommon, according to Matt Salo, executive director of the National Association of Medicaid Directors.
Nationally, nearly 75 percent of Medicaid recipients are in managed care programs.
States implementing new Medicaid managed care programs typically encounter some bumps, hiccups and resistance to change, he said.
In Iowa, one of three companies abruptly pulled out of its contract this fall in a dispute over the amount it was being paid by the state. The company contended it had lost hundreds of millions of dollars since the managed care program launched in 2016. The withdrawal threw the program into turmoil and left 215,000 Iowans with only one company willing to cover their care.
In Kansas, complaints about increased red tape and reductions in services under managed care have diminished but have not disappeared since that program began in 2013.
Joe Reblando, a spokesman for Medicaid Health Plans of America, a trade association based in Washington, D.C., said he couldn’t comment on the experiences of individual companies, but he wondered whether Nebraska’s problems were more systemic in nature.
“We do find it unusual that all three plans would have such problems,” he said.
Thompson, Nebraska’s interim Medicaid director, acknowledged there have been “growing pains” with Heritage Health, as the contractors adjusted to the Nebraska Medicaid structure and the norms of the state’s health care community.
But he said complaints about the new system are coming from a “small number of providers” and mostly concern problems that are specific to those providers. In addition, he said, many complaints are about issues that were fixed months ago or are in the process of getting fixed.
Thompson said state officials have been working closely with the three contractors to make sure problems get addressed as they arise.
“If there are issues, we want to know about them,” he said. “I respond to emails personally about these issues, and if they are brought to my team’s attention, we will address them.”
Thompson said the contracts give HHS plenty of enforcement tools if companies fail to fix problems. Those range from written warnings up to monetary penalties and suspension of state payments to the contractors.
The contracts also offer incentives for the companies to meet customer service standards.
Rubel, of WellCare, is overseeing her fifth launch of a Medicaid managed care program. She said the first year is always a challenge, but a good relationship between state officials and private companies is a key factor in success.
She called WellCare’s relationship with HHS and Nebraska providers “very collegial and collaborative.”
“Did we have opportunities for improvement?” Rubel said. “Absolutely, but overall it’s one of the smoother implementations I’ve seen.”
Based on her experience, Rubel predicted that problems with Heritage Health will be worked out within six months.
A Nebraska Total Care spokeswoman said the company “continues to work collaboratively and transparently with the key stakeholders” to improve processes and make the program successful.
United Healthcare “absolutely recognizes” there have been concerns, a spokeswoman said. The company has addressed those concerns when they learn about them.
Walsh-Sterup, who has been vocal about her clinic’s problems with Heritage Health, said she is pleased with the responses from WellCare and Nebraska Total Care.
Both changed authorization requirements for physical, occupational and speech therapy services after realizing the difficulties they were creating for patients, one in July, one last month.
The experience renewed her hopes that the new Medicaid system will get back to the stability of the previous system.
“We have really, really struggled this year,” Walsh-Sterup said. “The last few months, it feels like we are headed in the right direction.”
Nebraska’s new Medicaid system got off to a rocky start, but state says ‘growing pains’ are healing
