When the Affordable Care Act bring another 300,000 New Jerseyans into the Medicaid program, it will create an opportunity for the four managed-care companies doing business here. But they won't be alone — four additional health care companies have announced plans to enter the state's Medicaid market next year to compete for nearly 1.6 million low-income residents.
Nearly all the state's Medicaid services are provided by four managed-care companies under contracts with the state Department of Human Services. But so far, three additional managed-care companies have submitted applications to Human Services: WellCare Health Plans of NJ, a subsidiary of Tampa, Fla.-based WellCare; CarePoint Health Plans of Jersey City and New York-based VNSNY Choice Health Plans. A fourth, Aetna Better Health — a subsidiary of health insurer Aetna — has sent a letter of interest to DHS, but has yet to file a formal application.
David Knowlton, president of the New Jersey Health Care Quality Institute, said with enrollment in Medicaid set to rise, “it's not surprising that there's an interest” among new competitors to enter the market.
“I hope we're going to approach it cautiously,” Knowlton said. “We want to be sure the companies can do the job. But it's probably a good thing to have more options.”
Among companies already doing business here, the largest is Horizon NJ Health, a subsidiary of Horizon Blue Cross Blue Shield of New Jersey, with 566,000 Medicaid members.
The insurer expressed confidence in its foothold here in a statement to NJBIZ. “Unlike the new out-of-state entrants into the market, Horizon NJ Health has been dedicated to the New Jersey Medicaid population for two decades, and we're committed to remaining the largest Medicaid plan and providing quality service to our fellow New Jerseyans,” said spokesman Tom Vincz.
WellCare said it serves more than 1.7 million Medicaid members in nine states, and is “very interested in expanding our service territory to include the state of New Jersey,” said spokeswoman Daphne Lawrence.
In its letter to DHS, Aetna said it will have 2.2 million Medicaid members in 16 states, after a pending acquisition. CarePoint Health is the for-profit parent of three Hudson County hospitals: Christ Hospital in Jersey City, Bayonne Medical Center and Hoboken University Medical Center. It launched in May as an integrated health care system with two insurance plans, three hospitals and 1,000 physicians.
VNSNY Choice, meanwhile, is a subsidiary of the Visiting Nurse Service of New York, whose CEO since January 2012 has been Mary Ann Christopher, a nurse and former chief executive of Visiting Nurse Association Health Group, the largest visiting nurse association in New Jersey and among the largest in the country.
Ray Castro, a senior policy analyst at New Jersey Policy Perspective and an expert on Medicaid, said in the long run, the ACA will make New Jersey more attractive for Medicaid insurers, as “we have more people who will become newly insured than most states, so there will be more potential business here.”
DHS estimates the 300,000 new Medicaid enrollees will be made up of 100,000 who become eligible under the ACA and about 200,000 who are eligible now, but haven't signed up. The entire Medicaid program has an annual budget of about $12 billion in state and federal funds; the federal government will fully reimburse New Jersey for the newly eligibles through 2017, phasing down to a 90 percent match in 2023. Washington also will provide a 50 percent match for those who are already eligible and opt to enroll.
Castro said studies have shown about 78 percent of those eligible for Medicaid or exchange subsidies are unaware of them. “We also have a large Latino population in New Jersey who have language barriers, so intensive efforts will be needed to reach them — and so far I have not seen that,” he said.
Under Medicaid managed care, the state pays the managed care company a set amount per member, per month, to provide all their medical care; that “capitation” rate is determined through an actuarial analysis and is adjusted to account for the risk the managed care company is taking on. DHS said the managed-care companies are required to maintain an 80 percent medical loss ratio, meaning 80 percent of the capitation rates paid to them must be for medical services. The remaining 20 percent is for a combination of administration, cost of capital, underwriting and profit.
E-mail to: firstname.lastname@example.org
On Twitter: @bethfitzgerald8
Please note: All comments will be reviewed and may take up to 24 hours to appear on the site.View Comment Policy