Budget Cuts Would Alter Montana’s Unique Medicaid Expansion

State law requires increasing levels of budget cuts depending how far state income falls short of revenue estimates

HELENA — Montana may have to run its own one-of-a-kind Medicaid expansion program for a third of what an insurance company now charges to administer it, if state revenue falls short enough to trigger budget cuts next month.

Montana is the only one of the 31 states and Washington, D.C., to expand Medicaid under the Affordable Care Act by contracting with a private insurer to run its program. Blue Cross and Blue Shield of Montana processes claims, manages a health provider network, collects premiums and runs a wellness program for approximately 20,000 of those 80,000 people in the expansion program.

But Blue Cross’ contract with the state would be terminated if state revenue figures to be released later this month fall far enough below expectations to enact budget cuts passed by Montana lawmakers earlier this year.

The new state law requires increasing levels of budget cuts depending how far state income falls short of revenue estimates. The Blue Cross contract would be terminated if the difference is more than $12 million.

Administration of the expansion program would shift to the state’s health department, at an estimated savings of $4 million over the next two years.

“Since the department has been administering Medicaid programs since the 1960s, we would expect a smooth transition with the help of BCBS staff and leadership,” Department of Public Health and Human Resources spokesman Jon Ebelt said.

Blue Cross spokesman John Doran said the company is “keenly watching” where the final revenue numbers will come in for the financial year that ended June 30. “Should this level of cut be triggered, we will do everything we can to uphold our end of the bargain to provide top-notch service to the state and ensure a smooth transition for participants,” he said.

A full transition wouldn’t happen until January even if the cuts are enacted next month, Ebelt said.

Its success would depend primarily on whether the health department can absorb the program without additional funding. Blue Cross has 15 people dedicated to the Medicaid expansion program, and it charges the state and federal governments $25.92 per enrollee, per month — approximately $6.2 million per year — to run it.

Lawmakers passed the budget cuts with the assumption that the state could do the same work for about a third of the price. Ebelt said state health officials haven’t yet determined what staffing and resources they’d need, but they “anticipate a net reduction in administrative costs.”

Also, Blue Cross built the health provider network for the program that includes at least 90 percent of the state’s hospitals and 80 percent of its non-hospital health care providers. All of the providers signed contracts with Blue Cross and would end if the Blue Cross contract is terminated.

Montana is a largely rural state where access to health care can be difficult, particularly for the working poor who qualify for the Medicaid expansion program.

Two years ago, the state told federal health officials it needed a private insurance company to administer the program in part to compensate for its own skimpy provider network. “The state’s existing network of fee-for-service Medicaid providers is sparse, particularly in remote rural regions,” state health officials wrote in their 2015 federal waiver application.

Ebelt said Friday that state health officials are confident the change in program administration would not reduce health care access.

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