InnovaCare opts in big to Mi Salud bidding

Reposted from Caribbean Business

Of nine companies to file RFPs, three are InnovaCare subsidiaries

While it didn’t enter initial bids for the government’s Mi Salud program, InnovaCare Inc. is opting in big in the second round of bidding, with three company subsidiaries—Medicare y Mucho Más (MMM) Health Plans, Preferred Medicare Choice Inc. and MMM Multi-Health— among the nine companies that submitted deposits to file final proposals Aug. 11.

Other companies scheduled to file final proposals for new three-year contracts under the MiSalud program that will begin operations April 1, 2015 include newcomer Humana Health Plan and Medical Card System Inc., as well as previous bidders California-based Molina Healthcare, First Medical and Triple-S, reported the Health Insurance Administration (ASES by its Spanish acronym).

“Until now, everything is good. These companies have until Aug. 11 to submit final proposals,” said ASES Executive Director Ricardo Rivera, adding that he expects this second round of bidding to glean contracts for all eight Mi Salud regions.

In May, ASES scrapped the first round of request for proposals (RFPs) because only one company out of four finalists qualified to serve four of the program’s eight regions. First Medical qualified for contracts to serve Mi Salud’s western, southwestern, eastern and San Juan regions, but the north, southeastern, metro north, and northeast regions were left uncovered—representing about 724,000 of Mi Salud’s 1.4 million medically indigent beneficiaries—because California-based Molina Healthcare and Triple-S were disqualified.

Molina Healthcare was disqualified because it has yet to obtain a local insurance license, while Triple-S was disqualified because it tried to negotiate certain clauses of the contract, which was prohibited under the bidding process.

Molina Healthcare has until Aug. 11 to get its insurance license or else it won’t be able to submit a final proposal. “The last I heard was that when the last RFP closed [beginning of May] it was in the final phase of getting its insurance license,” Rivera said.

To make Mi Salud contracts more attractive, ASES liberalized financial conditions for insurers, including increasing the cap on their maximum profit margin from 1.5% to 2.5% of total premiums; reducing capital requirements from $1 in capital for every $7 in premiums to a lower requirement of maintaining twice the amount of risk-based capital required under law; and dropping funds retained for later reimbursement once quality compliance requirements have been fulfilled from 5% to 2% of the total contract.

The agency also scaled back the manner in which these funds will be retained. Insurers will have to get 50% of these funds within nine months of the contract’s start and have another six months to come up with the remaining funds. This is a substantial change from the previous RFP, when 100% upfront was needed once the contract was up and running.

ASES plans to announce contract winners in October, giving new providers six months to transition into the new managed-care model in which the provider has all the risk, including reinsurance that is compliant with the mandates of the Patient Protection & Affordable Care Act (ACA or Obamacare). Under the failed bidding process, would-be providers were given only three months to transition into the new system.

“While we have made changes to attract more bids, 95% of the RFP we are putting out for the new contracts hasn’t changed for all intents and purposes,” Rivera said.

Implementing a more rigorous contract is among the changes Rivera is making to ensure Mi Salud is a healthier and more-cost-effective system that qualifies for about $6.3 billion in federal funding available through 2019 under Obamacare. With this aim, ASES also will fuse mental and physical healthcare services under one provider and require providers to include coverage for medication, among other ACA mandates.

Rivera rebuffed press reports that ASES is in a critical financial situation, saying the agency will reduce its operational deficit by $140 million this year, from $200 million at the close of 2012 to $60 million.

“Next year, we also plan to reduce Mi Salud’s expenses by reducing spending by super-users, which totals more than $500 million a year, by 10% or $50 million, by making these people healthier. With this, we will have almost completely bridged the operational deficit by the end of next year,” he said.

“We have been challenging conventional wisdom that to save, you must cut services or increase deductibles because we have been creating savings through efficiencies and better health of patients. This is the hardest way to glean savings, but it is the right way because we aren’t managing batteries, boxes or books—we are managing the lives of people who can’t afford a health plan,” he added.