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WASHINGTON – Some 53,000 Medicaid recipients in the region, including nearly 29,000 in Erie County, will have to look for new insurance coverage this fall because BlueCross BlueShield of Western New York is withdrawing from the Medicaid managed care program.

The insurer, which plans to publicly announce its withdrawal from the program today, informed government officials of the move Thursday in a memo that was obtained by The Buffalo News.

“We have incurred losses in excess of $40 million over the past three years in these programs,” Don Ingalls, the insurer’s vice president of state and federal relations, said in the memo. “We have a 20+ year history of supporting these programs and members; however, we cannot continue to do so as the losses ultimately have been funded by other lines of business.”

The move means that Medicaid managed care recipients in Erie, Chautauqua, Cattaraugus, Orleans, Wyoming and Allegany counties will have to move to another insurance provider by Oct. 31. BlueCross BlueShield said it would notify Medicaid clients of the withdrawal by the end of August, giving them two months to make the switch.

“In every one of the six counties, there are other providers that will be able to offer these programs,” said Stephen T. Swift, executive vice president and chief financial officer at BlueCross Blue Shield.

BlueCross BlueShield said it would work to make sure the transition goes smoothly, and state officials agreed.

“The state Department of Health will work with Blue Cross & Blue Shield of Western NY to ensure a smooth transition as this process moves forward,” the Department of Health, which manages the Medicaid program, said in a statement. “The department will ensure continuity of high-quality care and no disruption in eligibility for Medicaid members in the region.”

BlueCross BlueShield is the fourth-largest provider of Medicaid managed care in Erie County, with a 19 percent share of the market. Independent Health has the largest share – 29 percent – while Univera Community Health has 27 percent and New York State Catholic Health Plan has 25 percent.

The move means those other insurers will have to pick up those former BlueCross BlueShield subscribers – a move that Rep. Chris Collins, R-Clarence, said could be prohibitively expensive.

“My fear would be that the other carriers follow suit,” Collins said.

Independent Health acknowledged that it has faced the same financial pressures in the program as its rival did.

“As a nonprofit health plan, Independent Health faced similar financial losses to its Medicaid program,” Frank J. Sava, a spokesman for Independent Health, said in a statement. “These losses were driven by carved-in pharmacy benefits and unique challenges in serving Medicaid beneficiaries in certain counties where there are provider access challenges.”

The Independent Health statement said nothing, though, about the insurer leaving the Medicaid managed care program. Instead, it said the company is working with state officials to identify new sources of funding that could improve care under the program.

The Department of Health statement on the issue included no reference to the funding issues that, according to BlueCross BlueShield, drove the insurer out of the Medicaid managed care business.

“We’ve struggled with this program over a number of years,” said Swift, who noted that BlueCross BlueShield terminated its Medicaid managed care program in Niagara and Genesee counties last year and its programs in northeastern New York seven years ago. Excellus Blue Cross in Central New York also abandoned the Medicaid managed care program several years ago.

And while Obamacare, which took effect last fall, vastly expands the number of New Yorkers on Medicaid, Swift said: “This really is not driven by the Affordable Care Act.” Over many years, “we’ve tried many different avenues to remediate the business.”

But Collins, a consistent critic of Obamacare, said he wasn’t so sure.

“I would argue that BlueCross BlueShield now has a lot more clients on Medicaid because of Obamacare, so they would lose a lot more money,” he said. “I don’t see how they could say that this doesn’t have a connection to Obamacare.”

email: jzremski@buffnews.com