dept of Community Health Makes Continued Improvements to Medicaid

Michigan Community Health Director James K. Haveman Jr. today announced further Medicaid managed care patient protection measures to assure that low income Michigan citizens always get appropriate hospital care when and where they need it. "These measures are one more step we are taking to assure that Michigan's Medicaid beneficiaries have strong consumer protection when they join a managed care plan," said Haveman.

The Department released the final Conditions of Participation Medicaid Policy Bulletin, which will take effect May 1, 2001. The policy will prevent any hospital in Michigan that participates in the Medicaid program from denying admission to a Medicaid beneficiary because the hospital does not have a contract with the beneficiary's health plan. The bulletin also guarantees the hospital a fair payment rate for each day the Medicaid beneficiary stays in the hospital. The bulletin requires health plans to pay the hospital a per diem rate established by the Department within 45 days of being billed by the hospital.

"I believe this policy will head off a lot of potential disputes between hospitals and health plans over how much the health plan owes the hospital whenever a health plan member goes to a hospital that is not under contract with the health plan," said Haveman. "We cannot risk patient safety by having low income Medicaid beneficiaries caught in the middle of these disputes."

"Ideally hospitals and health plans will work out contracts between themselves that spell out payment arrangements. When this does not happen, the state has set the daily rate that must be paid. It is fair to both the health plan and the hospital because the hospital will be paid for each day of care provided and the health plan will pay at a fair rate set by the state."

This policy builds on the prompt payment legislation passed by the Michigan legislature and signed into law by Governor Engler last year. Under this law, Medicaid health plans must pay all clean claims from hospitals within 45 days. If a hospital submits a claim that is not complete or "clean" then the health plan must return it to the hospital within 10 business days with plain language instructions describing what items need to be corrected. Under the new policy, health plans that do not adhere to this legislation are subject to strong financial penalties.

"Low income citizens in Michigan have a right to use the nonprofit hospital within their community without worrying about being denied admission for care because their managed care plan and the hospital are having a payment dispute," said Haveman. "These hospitals by law must take all citizens without regard to source of payment for care. Our new policy, working in combination with the prompt payment law will assure access to care and fair payment."

The Office of Financial and Insurance Services in the Department of Consumer and Industry Services has a grievance process in place for hospitals who are involved in Medicaid payment disputes with health plans. "To date, no hospital has utilized this process, which was implemented last October at the urging of the hospitals in Michigan."

Haveman also released two other important Medicaid policy bulletins that effect hospital payments for a 30-day public comment period.

The Graduate Medicaid Education Medicaid Policy Bulletin, changes the way Medicaid distributes dollars to Michigan's teaching hospitals in order to better respond to the state's long range needs for physicians. Graduate Medical Education dollars help pay for the cost of training the future supply of physicians.

"This training must focus more attention on encouraging physicians who graduate from a Michigan hospital residency program to become Board certified in their specialty, stay in Michigan, and take Medicaid beneficiaries as patients," said Haveman. "Michigan can be proud of its fine tradition of residency education and if we are to remain in the forefront, it is important that hospital residency programs prepare physicians to practice in and adapt to the changing needs of the health care system."

The Hospital Outpatient Adjustor Pool Medicaid Policy Bulletin, is also being released for a 30-day comment period. This special funding totaling $16.5 million is being distributed to hospitals to help cover the cost of uncompensated care for the uninsured.

"Hospitals have long played a vital role in caring for the uninsured," said Haveman. "We are committed to helping hospitals continue to provide care for the uninsured. In recognition of the important role hospitals play in serving low income people regardless of ability to pay, the state does not collect state taxes from hospitals. This tax saving coupled with the more than $1 billion the state pays hospitals in various Medicaid payments means we will continue to have a strong hospital network in Michigan for years to come."

The Medicaid Policy Bulletins will be available on the Department of Community Health web site at http://www.mdch.state.mi.us then by clicking on "Medical Services Administration" then by clicking on "Information for Medicaid Providers" then by clicking on "Medicaid Policy" or directly at http://www.mdch.state.mi.us/msa/mdch_msa/medicaid/