Insurance companies operating managed care plans under Pennsylvania’s Medicaid program are objecting to a proposed payment increase that they say is too low to keep up with growing medical expenses, the Pittsburgh Post-Gazette reports. Gov. Ed Rendell’s (D) fiscal year 2007 budget proposal calls for a 4% increase in payments to the three health plans that administer benefits for the state’s Medicaid program. Some health plan officials say a higher increase is needed in order for them to maintain profitability, according to the Post-Gazette. Mike Blackwood, CEO of Gateway Health Plan, said that medical costs have increased about 8% to 9% annually and that the state’s payment increases have failed to keep up with the growth for the last two years. Diane Holder, CEO of UPMC Health, said her company likely would end its Medicaid business at the end of the year if the proposal goes through because of projected losses of $25 million to $30 million. “That’s just not something we can tolerate,” Holder said. Jim Hardy, deputy secretary of Medical Assistance at the state Department of Public Welfare, said state actuaries have found the proposed 4% increase to be adequate for plans to remain operational. Hardy said, “The plans’ operating margins have been reduced over the last couple years, so it’s a lower-margin business than it used to be.” However, the lower rate increases are “what a really good plan should be at,” he said (Snowbeck, Pittsburgh Post-Gazette, 5/26).
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