State may seek $112 million more from insurers

Georgia’s top health agency plans to charge health insurers millions of dollars in extra fees to help pay for the state’s Medicaid and PeachCare for Kids programs.

But those insurance companies are fighting back, saying the fees will drive up rates for people with private insurance and possibly price some people out of their coverage plans.

At stake is $112 million the state says it needs because of statewide budget cuts. State health officials also say federal regulations call for the new fees.

Dr. Rhonda Medows, commissioner of the state Department of Community Health, said that without additional money, the agency may have to drop people from Medicaid and PeachCare rolls.

“We’re talking about cutting benefits to people already receiving them,” she said.

But Kirk McGhee, executive director of the industry trade group Georgia Association of Health Plans, said raising the fees on insurance companies could have a similar effect on people who pay for their insurance.

“We’re an easy target … Nobody likes insurance companies,” he said.

McGhee said the extra cost could affect hundreds of thousands of Georgians covered under HMOs. Under the plan, a 3 percent increase would be added to premiums for HMO insurance. It remains unclear why the agency is singling out the HMOs; officials said that it is their interpretation of the federal law. The plan would not affect PPOs, Medicare or self-insured major companies such as Coca-Cola.

The surcharge would yield $112 million, as well as a federal match of $90 million.

Medows said these HMOs should pay this “civic rent” to do their share in supporting the societal burden of helping the needy.

The new fees, called quality assessment fees, would be an expansion of an existing system. In 2005, Georgia approved charging these fees to three national insurance companies that the state pays to manage the care of Medicaid and PeachCare recipients. The fees bring in $143 million annually, with a $90 million federal match.

The new plan would expand those fees to about a dozen other companies that operate HMO insurance plans around the state. It remains unclear, and hotly debated, as to whether the state can implement these new fees without passing new legislation.

The controversy also deals with the public’s varying perceptions of those who receive public benefits.

Medicaid and PeachCare have a combined enrollment of about 1.5 million Georgians. The programs provide health care to children in low-income families, senior citizens living on small incomes and the severely disabled with long-term health needs. The programs are funded through a combination of about $2.4 billion in state and $5.4 billion in federal money, according to state figures.

Medows said she is aware that some Georgians would not be opposed to reducing the public-assistance rolls, and noted that many of the assistance recipients are working people with families.

The battle over the fee increase could become a matter for the state Legislature to resolve when it convenes in January. But there is disagreement even there. Medows, the DCH commissioner, said the matter is all but a done deal. She said Gov. Sonny Perdue has expressed support for it, and that no action is required from the state Legislature.

But McGhee, a member of the powerful insurance lobby, said the state agency cannot implement the new fees without formal approval from the state Legislature. “It’s not a done deal,” he said. “They can’t make up tax law.”

In addition to the need to fill a budget gap, Medows said the expanded fees also comply with the federal law overseeing the 15 states that use quality assessment fees. That law states the fees must extend to other HMOs in October 2009.

If Georgia does not comply, she said, it would lose the existing federal match of $90 million.

“We’re talking a huge budget hole,” she said. “It would be a big problem.”

Insurance companies are also concerned, McGhee said, that the state will attempt to extend the fees to PPO insurance plans.

McGhee, the industry lobbyist, said the state could find the money elsewhere, by raising taxes, or placing fees on hospitals or drug companies.

The state health agency is scrambling to find extra money because the governor, responding to a severe slide in state revenues, has ordered across-the-board cuts to agencies, including a 5 percent cut in Medicaid and PeachCare.

Perdue spokesman Bert Brantley said the governor will not make up his mind about the increased fees until he submits his budget to the Legislature in January. He also said the governor’s office is researching whether the matter requires formal action by the Legislature.