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Leaders of neighbor island health clinics say they fear the state’s plan to limit Medicaid insurance plan options will be another roadblock to health care for neighbor island patients.

Med-QUEST, the Hawaii Medicaid insurance division, plans to make an unprecedented move that could require more than 50,000 Medicaid beneficiaries living on neighbor islands insurance plans.

The Department of Human Services first announced its  initiative in 2018, noting it would select two insurance companies to cover Medicaid patients statewide, and two additional insurers to cover Medicaid Oahu patients only.��Downsizing the pool of Medicaid insurers is , state Medicaid officials say.

David Peters, CEO of the Kauai Community Health Center , anticipates a different outcome.

“The burden is on us to help patients understand why they’re being kicked off a plan. I just think it’s going to be chaotic and confusing,” he said. “It will be challenging to make sure there are no gaps in care when they do transfer over.”

On Thursday, lawmakers listened to testimony from both sides about the decision known as .�� alleges the Department of Human Services “has created an inequitable situation by limiting the number of QUEST health plans available on the neighbor islands.”

“It’s just not fair to allow Oahu residents four Medicaid health plans and just two for neighbor island residents,” said Rep. John Mizuno, who introduced the bill.

The Medicaid Landscape In Hawaii

There are currently five insurance plans that offer Medicaid coverage in Hawaii: Hawaii Medical Service Association, AlohaCare, Kaiser, Ohana Health Plan and United HealthCare Insurance. Their Medicaid insurance plans insure about a quarter of Hawaii’s population and more than 40% of its keiki.

If the QUEST Integration plan continues as proposed, Medicaid recipients living on the Big Island, Maui, Kauai, Lanai and Molokai will choose from two insurance plans: HMSA or United, the insurance companies that won statewide contracts.

Critics of the plan say the decision could inadvertently create more of a Medicaid insurance monopoly in favor of HMSA, the largest insurance company in Hawaii that insures far more people on neighbor islands compared to United.

Oahu-only contracts were offered to WellCare Health Insurance of the Arizona-based Ohana Health Plan and the Hawaii-based AlohaCare, delivering a significant blow to their neighbor island operations.

Ohana Health Plan, whose neighbor island services would be cut by the decision, did not respond to repeated requests for interviews.

Contract awards totaling $17 billion to be disbursed over the next decade were scheduled to go into effect in July, but awards were suspended when AlohaCare filed a Notice of Protest against the decision on Jan. 29.

“We are protesting in the interest of better understanding how we were scored,” said AlohaCare CEO Laura Esslinger.

AlohaCare partnered with Kaiser Permanente in its bid to insure Medicaid patients. In addition to its 36,000 Oahu Medicaid patients, AlohaCare covers more than 27,000 neighbor island Medicaid patients and Kaiser Permanente insures about 10,000 on Maui. A spokesperson for Kaiser said the nonprofit’s executives were disappointed AlohaCare was not selected for an all-island contract.

AlohaCare is the second largest Medicaid insurance provider on the neighbor islands after HMSA, so the decision to cut its neighbor island operations came as a shock, Esslinger said.

“Med-QUEST is 95% of our business, and we were founded by community organizations for this purpose, many of whom are physically located on neighboring islands,” she said.

About 40 AlohaCare employees who are based on neighbor islands could be affected as well.

Collectively, the state will have to aid 37,000 AlohaCare and Kaiser members to chose a new health plan, plus the 15,000 Ohana insurance members.

“That’s a lot of taxpayer dollars and effort,” Esslinger said.

Simplifying Medicaid

Insurance companies compete for Medicaid contracts because they receive higher reimbursement from the federal government, since they service people with low incomes and disabilities, among others.

The Med-QUEST division maintains that it has heard from patients and doctors that and limiting the number of health plans doctors deal with could relieve some of that burden.

Dr. Judy Mohr Peterson, Med-QUEST administrator and Hawaii State Medicaid director, said she could not elaborate about the transition plan or goals of QUEST Integration, citing procurement rules and the legal protest.

She noted that it’s not unusual for people to switch plans — patients have the option to do so every year during insurance enrollment.

“We do have processes in place to ensure there is a smooth transition for people so they can continue to receive their care, and we’d employ those similar processes in the future,” she said.

In , the Department of Human Services suggested that the State Legislature would create a “bad precedent” by inserting itself into an ongoing government procurement process, already paused by a legal protest filed by the AlohaCare insurance agency.

“Many bidders are disappointed when they lose government contracts,” DHS . “The precedent can be used in the future whenever bidders claim their loss will result in the State’s detriment. This will happen again and again. This is not how government should work.”

Sarah Allen, administrator of the State Procurement Office, also told lawmakers Thursday that such a bill would undermine the state procurement code and process and “call into question fairness to the vendors who had submitted proposals in good faith.”

Hawaii wouldn’t be the only state to contract with just two Medicaid insurers, sometimes called Managed Care Organizations. There are other states that contract with just two insurers for Medicaid, such as .

Costs Of Consolidation

Dr. Michelle Mitchell, president of Hawaii Family Health in Hilo, is one of the physicians the plan would be designed to help. But she believes fewer Medicaid insurance plans for neighbor island patients will cause additional costs and backlogs.

Primary care physicians like her will likely still have to complete paperwork such as prior authorizations and travel requests, she said.

“There will be a marginal, if any, decrease in administrative burdens for a practicing physician,” she said. “The only administrative burden relief I can see is fewer pharmacy formularies that physicians will have to know. But honestly, I choose my medications based on the best medication for the patient, not the best medication for the insurance.”

Back on Kauai, Ho‘ola Lahui has worked with all insurance companies. About 35% of Ho‘ola Lahui’s patients are covered by Medicaid, and another 36% are Medicare. The rest have private insurance, except for the 7% who are uninsured and pay out of pocket on a sliding fee scale for their care.

CEO David Peters says he could understand why small independent practices may be wanting to reduce the paperwork burden, but for community health clinics like his, a billing agency handles claims of all sorts.

“I don’t understand how it’s going to save me any time,” he said. “The burden could also be reduced if Med-QUEST mandated that all plans use the same forms and have the same approval process for prior authorizations.”

Peters also worries about AlohaCare and Ohana Health Plan patients who could lose the basic dental health benefit they’ve had since January 2019, since those insurers may not cover neighbor island Medicaid patients in the future.

At Hana Health Clinic on Maui, more than half of its patients could have to make the switch, according to Danielle Sayner, clinic director.

About 40% of Hana Health Clinic’s 350 Medicaid patients are covered by AlohaCare, 34% by HMSA, 16% by Ohana and 10% by United.

When Hana Health patients need to see specialists that Hana Health Clinic cannot offer in-house, Sayner coordinates referrals for them.

“It’s definitely opened my eyes to a lot of the concerns and issues that we have with getting care coordination, especially being out here in Hana and just in general being a neighbor island is challenging,” she said, noting insurance is usually the greatest barrier in getting them to the right care provider.

“We were founded by community organizations for this purpose, many of whom are physically located on neighboring islands.” — AlohaCare CEO Laura Esslinger

Sayner acknowledged that eventually the QUEST Integration plan could standardize operations in the long run, but she is most concerned about fewer plans leading to fewer specialist doctor options.

It’s a frequent practice for specialist doctors to suddenly cut ties with certain insurance plans or alter the insurance plans they accept, Sayner said. Many doctors won’t accept Medicaid-insured patients at all. The behavior could be because of untimely or lower reimbursement for their physician services.

In testimony, the Department of Human Services cited the very same rural workforce issues as a reason for the change.

“The well-known workforce shortage is getting worse on the neighbor islands, not better,” the . “One of the solutions the doctors offer themselves to the exodus of providers is administrative simplification. The number of plans awarded a contract under the QI program was intended to provide this relief.”

Medicaid patient Andrew Amalfitano, 59, sees doctors at Ho‘ola Lahui for his prostate cancer and osteoporosis. He says he is most concerned about losing his medications if he has to switch insurance plans.

Amalfitano did not have health insurance for more than a decade until he met an AlohaCare representative at a Kauai church. He heard the news of a potential switch not from his doctors, but from a friend while riding the bus.

“It seems to me that no one knows what’s going on, and that’s why they’re not telling patients,” he said. “A person like me, you’re definitely worried about your medications. You’re not worried about nothing else.”