The buck, for roughly 200,000 Tennesseans' health care plans, stops at Al King, the CEO of Amerigroup's Tennessee branch.
Amerigroup is a managed care organization that specializes in Medicaid and Medicare participants nationwide. All told, the company has about 2.8 million members. It was purchased by WellPoint, a health care major with a market cap of $25 billion, on Christmas Eve last year.
Though Amerigroup has traditionally been tight-lipped, King says the company aims to be more accessible. So King sat down with Tennessean reporter Shelley DuBois to share his thoughts on TennCare, Medicaid expansion in Tennessee and the most difficult problem facing local members.
Gov. Bill Haslam has said that he will not expand Medicaid under the Affordable Care Act, but he will instead pursue a state-based plan. What's your take on that?
Well, I think if it were traditional Medicaid expansion, that would be, honestly, a huge opportunity for Amerigroup because that is fundamentally what we do.
It is solely the state's decision, though. And basically the state is our customer. Rule No. 1 is that if you don't take care of the customer, somebody else will. So we try to stay real close to the state and its decision on expansion and exchanges.
In the uncertainty about the Affordable Care Act, many companies would run away from the population that Amerigroup serves. How does your company remain profitable?
To your first point, they really need to stop and think about where they're going to run. Because with the Affordable Care Act, probably in five years, 70 percent of your population is going to be covered by government programs.
If you combine Medicare, Medicaid and exchange-based services, the government has become the principal payer for health care.
In terms of profitability, Amerigroup's model takes the approach that we will build volume, but we will make it on a very thin margin: probably pre-tax, in the neighborhood of 5 percent, and after-tax, in the neighborhood of 2 to 3 percent. Not many publicly traded companies would think that was very attractive. But Amerigroup has made it work.
What is the greatest challenge you face with your members?
I would say neonatal abstinence syndrome is a huge, growing problem in the state. It's an epidemic.
When you think about it, if you've got any kind of heart at all, you're getting these babies that are born basically addicted, and it's just a tragedy, you know? And extremely costly to Tennessee. That is a very big challenge and an emerging challenge.
That is our largest expense: high-cost cases in neonatal care. Almost all of our high-cost cases that exceed $100,000 are neonatal. The main issue is the prenatal care because it's that one component that is essential to trying to improve that situation. People are waiting to see a physician and/or abusing drugs and, in the process, creating those up-to-$1 million cases. Solving this problem isn't easy, but like I tell my people, you may be paddling upstream, but get your oar in the water.
How, exactly, do you get your oar in the water?
One of the challenges is educating the population as to how the system ought to work for them.
We've done a lot of work trying to develop the relationship between the member and the primary care physician. In other words, we encourage physicians to call patients who have chronic conditions and who haven't been seen in the last year.
Members will typically do what a physician asks them to do, if they're going to respond to anybody.
Could you talk a little bit about the evolution of TennCare since you've worked in the industry?
I've been involved with the TennCare program since its inception, and I call it "from worst to first."
TennCare was not good in the first 10 years and ... (former governor) Bredeson got us on firm footing financially, and that's the key - getting it properly funded or reducing the membership to a level where they can properly fund it.
If you've been here long enough, you remember the problems they had with MCOs in the Access MedPLUS days.
TennCare was pretty much the laughingstock of the country, and now it is the model that most people consult on how to do it. And that's the change that's taken place.