On Oct. 1, Mark Reynolds took the helm at Neighborhood Health, the HMO created and owned by Rhode Island’s community health centers that serves about 75,000 RIte Care beneficiaries. Reynolds succeeded Christopher F. Koller, who stepped down in March to become the state’s health insurance commissioner. He’s arrived at a challenging time, with Congress poised to cut $10 billion out of Medicaid and growing concerns about program costs locally as well.
PBN: How worried are you about the $10 billion Congress wants to cut out of Medicaid?
REYNOLDS: In the short term I’m not that worried. In the long term I think we have a lot to worry about. In the short term, I don’t believe Congress will make too many cuts that directly affect members in a substantial way, particularly for Rhode Island. Rhode Island, because of the waiver, is at least partially insulated from some of the federal cuts.
PBN: Explain the waiver. This is the contract Rhode Island has with the federal government, a customized set of Medicaid services?
REYNOLDS: Right. The state has proposed to provide a different plan of service for certain Medicaid members, using managed care. It allows the state to provide slightly different benefits, but in return, it has to do so in a manner that is cost-efficient. And as part of that, it has only agreed to only have costs per member grow by 6 percent (annually) over the next three years. Although because Rhode Island has saved money earlier in the waiver term, it can actually have growth that’s greater than 6 percent and still stay within the boundaries.
PBN: What does this mean for Neighborhood: Are your revenues safe?
REYNOLDS: Well, we’re never entirely safe. Congress could break out of the box and do something fundamentally different; I don’t expect that they’ll be as aggressive. Secondly, we still depend on what happens here in the governor’s budget and in the legislative process.
PBN: Are you concerned there’s pressure to cut Medicaid at the state level?
REYNOLDS: Absolutely. With the RIPEC study and the national discussion, I think a lot of people at the state level will be looking at expenditures in Medicaid, and the state faces a budget deficit this year, so they will look at every area of state expenditures. So we’re definitely worried.
PBN: Could you also benefit, for example, if they extend managed care across Medicaid?
REYNOLDS: Absolutely. I just meant the overall budget would have pressure on Medicaid. But there’s a lot of discussion now about expanding the use of care management beyond the current RIte Care population to a broader Medicaid population, and we support that. … We believe that there’s a lot more to be done in providing care coordination, which will improve their care and make it more efficient and less costly.
PBN: Florida has just been approved for a dramatic change in its Medicaid program that federal officials have said could be a model for other states. What do you think of their plan?
REYNOLDS: On the one hand, I believe that Florida’s effort to use care management for a broader Medicaid population is a positive thing. I also believe their effort to give Medicaid consumers more information to make their health plan choices is also a good thing. But I believe the way Florida has arranged their waiver will end up putting financial pressure on health plans to reduce the benefits they offer over time, and that will be a bad thing. … Some members are going to be left, probably, not able to find the services they need.
PBN: So how do you control the growth of Medicaid?
REYNOLDS: First, Medicaid is growing much slower than private health insurance rates (or Medicare). … It costs less per member than commercial insurance does, and the rate of growth is lower. And for states it brings in a lot of federal money. For Rhode Island, for every dollar spent, 50 cents comes in from the federal government, so it’s a good deal. Secondly, we need to focus on overall health spending, and not just Medicaid. … What we need is a unified effort in the state, private purchasers such as businesses, and insurers, along with providers, to think about what needs to be changed, reduce errors, improve quality and drive increased efficiency in the system.
PBN: What role do you see for Neighborhood in that process?
REYNOLDS: I think Neighborhood has to be a key participant. I just came from a conversation with people at the Rhode Island Quality Institute, and I think we need to be at the table. … I think Neighborhood can also offer services to special populations that can use more coordinated care. We can work with the providers that we partner with to try to make sure they have what they need to modify how they deliver care so that care is more systemic, so they can better treat people with chronic diseases.
PBN: It took Neighborhood awhile to become profitable. Are you going to stay that way?
REYNOLDS: Yes. Our first order of business has to be to remain financially solvent. We have set ourselves some solvency goals, we have achieved them. We plan to maintain that level of commitment to our reserves. We think that’s very important, not just for us, but for our members and for our primary customer, which is the state.
PBN: Last year, Neighborhood got out of commercial insurance. Is that irreversible?
REYNOLDS: Neighborhood is never going to try to be a mainstream commercial health plan. That isn’t who we are. I don’t have any interest, the board doesn’t have any interest, in trying to jump into the commercial marketplace. Frankly I’m not sure it’s good business. It’s declining business right now. Does that mean Neighborhood wouldn’t try to develop a product to serve a niche in the commercial marketplace? No. We might try that at some other point, if we had a population that could benefit from our unique services, if we’d done sufficient actuarial work to know that it’s affordable, if we’d done the planning to make sure we’d have a high enough volume…. Moving forward, we might eventually look at providing care to some unique populations in the commercial sector, but it would require passing all of those tests. And we are never going to pursue mainstream commercial populations.
