Erie County Times

The Wolf Administration announced that Pennsylvania is making a proposal to enter a profit-share agreement with Medical Assistance physical health (PH) managed care organizations (MCOs) to limit profits and make sure that taxpayer dollars are going to the most-needed spots.

According to an Oct. 14 announcement by Gov. Tom Wolf, this proposal would limit PH-MCOs to 3% profits each year. The agreement would take effect for the 2023 contract year. 

“At a time when managed care organizations are seeing incredible returns, it is only right that excess dollars be funneled back into helping the very people those organizations serve,” Gov. Wolf said. “This agreement is a responsible use of public money, and will put a cap on annual profits to allow the wealth to be shared among those who need it most.”

The proposed agreement allows for MCOs to maintain a 3% annual profit, and anything exceeding the profit mark would lead to MCOs submitting a proposal to retain profits to be used for improving care access, investing in housing, security, employment and health and equity programs. These all align with the Department of Human Services (DHS) goals to improve care.

According to the release, MCOs function much like insurers in the private health insurance industry, as they coordinate provider networks and are also at risk of costs for services through the Medical Assistance Program. According to DHS, there have been an increase of profits of more than 3% across the physical health program, which is expected to continue. 

“Managed care organizations are important partners in our work to help Medical Assistance recipients access the care and services necessary to achieve the health and quality of life they deserve,” DHS Acting Secretary Meg Snead said. “This profit-sharing agreement will allow us to ensure that taxpayer resources for this program can be used to further invest in the program’s mission or be returned to offset program costs, and I am grateful for our partners’ shared commitment in continuing to build a Medical Assistance program that is innovative and transformative while responsibly utilizing public resources.”

DHS works with MCOs to negotiate and set rates paid on a monthly basis based on their number of members. Rates are actuarily sound and based on cost of health care and service utilization. Capitation rates are developed to ensure the program remains financially solvent while allowing for a modest profit of approximately 2-3%.