Medicaid Patients and Doctors Are Seeking a Cure for Denver Health's Managed Care

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There are now more than one million Coloradans on Medicaid, thanks to expanded eligibility under the federal Affordable Care Act. Medicaid was created by the federal government but is managed by the states. In Colorado, that job falls to the state Department of Health Care Policy and Financing, or HCPF. Medicaid is paid for with a mix of federal and state dollars.

There are four health plans available to Colorado Medicaid recipients. They are:

• Regular Medicaid. This plan is available statewide. Patients on this plan can see any doctor who accepts Medicaid, and they don't need referrals.

• Accountable Care Collaborative. This plan became available statewide in 2011. Patients enrolled in this plan choose a primary-care doctor who manages their health outcomes but doesn't necessarily micromanage their care; patients don't need referrals to see other doctors who accept Medicaid.

• Rocky Mountain Health Plans. This plan is only available to patients in the western part of the state, including Mesa and Delta counties. Patients don't need referrals to see other doctors in the RMHP network, which Patrick Gordon, RMHP's associate vice-president of government programs, says includes the majority of physicians and specialists in the area.

• Denver Health Medicaid Choice. This plan is available to patients in Denver, Adams, Arapahoe and Jefferson counties. Patients need referrals from their primary-care doctor to see specialists, get tests and stay in the hospital.

Denver Health's plan is the only one with passive enrollment, and it only applies to Medicaid recipients who live in Denver County. Passive enrollment was established in 2006 as a way to connect patients with a so-called medical home.

"Prior to that, they'd just be given a list and they'd have to get on the phone and call around and see if someone would see them," says LeAnn Donovan, executive director of managed care for Denver Health. "By having a medical home, we can coordinate all their care. They get the pharmacy here, all their services. They don't have to try to navigate the system on their own."

Because Denver Health serves as this medical home, the state pays the not-for-profit organization a fee for each patient enrolled in its plan -- whether a doctor sees them or not. That's a different pay structure than the one that's used for most doctors who see Medicaid patients, such as Parmar and Durbin. The state pays them only for the services they provide.

As of July, there were 66,345 patients enrolled in Denver Health Medicaid Choice. The fee that Denver Health receives for each of those patients is determined by their health (someone with a chronic illness, such as diabetes, nets a higher fee than someone with fewer needs), but it reports being paid an average of $175 per patient per month. Over the past four years, that's brought in about $129 million a year.

Denver Health officials are quick to point out that the organization doesn't keep all $129 million. Rather, they say, 75 percent of that is eaten up in payments to "external providers" for services that Denver Health doesn't have in-house, as well as costs to administer the plan, leaving it with $32 million in revenue a year.

"It's not a moneymaker," says Donovan.

But saving money is why the state pushed for managed-care Medicaid plans to begin with. Back in the '90s, when HMOs were being hailed as the next great cost-savers, state legislators passed a law requiring that 75 percent of Colorado's Medicaid patients be enrolled in a managed-care plan. The plans were similar to private HMOs in that patients were restricted to seeing doctors within a particular network. At first, a half-dozen insurance carriers, including Kaiser and United Healthcare, signed on. Denver Health participated, too, but didn't have its own Medicaid HMO; instead, it was part of a larger plan known as Colorado Access. The state paid the insurance companies a flat fee per patient, which was supposed to cover their costs.

However, in 2000, the Medicaid HMOs began suing the state for underpaying them. Most of the lawsuits ended up in settlement agreements that cost the state tens of millions of dollars. In 2002, lawmakers repealed the 75-percent law, and by 2003, the head of HCPF was calling Medicaid HMOs a "failed experiment." The insurance companies began dropping their plans. In 2006, the last of the Medicaid HMOs, Colorado Access, pulled out.

But by then, Denver Health was no longer part of Colorado Access. In 2004, it had reached what Donovan called a "critical mass" of patients and broken off to form its own plan. In many ways, the Denver Health Medicaid Choice plan resembles an HMO: Each patient chooses a primary-care provider who works for Denver Health, and they must get approval from that provider to see any specialists as a way to manage care and save money.

Laurel Karabatsos, the state's deputy Medicaid director, says the state sees value in the Denver Health plan. "Denver Health has a huge presence in Denver County and is a safety-net provider," she says, meaning that Denver Health treats anyone who needs it, regardless of their ability to pay. In 2013, Denver Health spent more than $450 million on "uncompensated care." "Having a steady stream of enrollments is helpful to Denver Health in managing their financials," adds Karabatsos. "But it's also beneficial to [HCPF] because managed care saves us money. Instead of a client going to fifteen primary-care providers and we get billed for all those services, Denver Health is able to manage that better."

According to Denver Health, 80 percent of the patients currently on the Medicaid plan were passively enrolled. In order to disenroll, a patient must call Health Colorado within ninety days and request to be switched to a different plan. They may also disenroll in the two months before their birthday month.

Patients are supposed to get letters like the ones Presley received, explaining that if they don't call Health Colorado and request a different plan, they'll be enrolled in the Denver Health Medicaid Choice plan. But there are several problems with the letters, doctors and patients say. Many patients report not getting them at all. Medicaid recipients tend to be a transient population, and Denver Health admits that 25 percent of the mail it sends to its Medicaid Choice patients gets returned. And even if some patients get the letters, not everyone understands them. That can be due to language barriers, doctors say, or because the letters can be downright confusing. Nowhere do they plainly explain the practical consequences of not calling Health Colorado and disenrolling -- namely that they may not be able to see their regular doctor anymore.

But as Presley's case shows, even calling Health Colorado and requesting a switch is not a guaranteed ticket out of Denver Health's Medicaid plan. Health Colorado officials declined to speak with us for this article and directed all questions to HCPF.

Dr. Jay Markson, one of seven pediatricians at Children's Medical Center in central Denver, has seen the frustrating effects of the system firsthand. Children's Medical Center was founded in 1931, and about 20 percent of its patients are on Medicaid. It's a population that Markson and the other doctors are passionate about serving.

But up to ten times a week, a parent shows up only to find out that his or her children have been passively enrolled in the Denver Health Medicaid Choice plan. In some cases, the family has been coming to the practice for generations, says Markson, who has worked there since 1985. "That obviously rankles the hairs on the backs of our necks, because we like to protect the patients who want to come here."

And it upsets the patients, too. "First, you take out the box of Kleenex when they find out they've been auto-assigned to a place they don't want to go," Markson says. Then, the staff does everything in their power to help get the patients back. But it's not easy. "It takes an act of God to get them off of passive enrollment and where they're supposed to be."

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Melanie Asmar is a staff writer for Westword. She joined the paper in 2009 and has won awards for her stories about education, immigration and epic legal battles. Got a tip? She'd love to hear it.
Contact: Melanie Asmar