Nonprofit Health Centers Launching For-Profit Medicaid Plans

Faced with an increase in the number of Medicaid patients and decisions by various states to shift enrollees into managed care plans, nonprofit community health centers have begun to invest in for-profit insurance plans, reports.

Thanks in part to the expansion of Medicaid eligibility under the Affordable Care Act, a growing number of nonprofit health centers are looking to generate revenue by owning a for-profit Medicaid health plan. Health center officials told KHN that the move benefits patients because it gives the centers themselves a financial incentive to keep patients healthy and out of the hospital, makes it easier to resolve disputes over services or benefits, and generates profits that can be invested back into providing care.

In 2008, for example, the in Miami invested $120,000 to start , a for-profit Medicaid health plan, in partnership with fourteen other community clinics. Last year, the center received a $759,000 payout after , the state's largest insurer, bought a minority ownership stake in the plan, and used the funds to open a new health center and convert an existing facility into a dental clinic.

Indeed, two of the nation's largest for-profit Medicaid insurers — and — started out as nonprofits owned by community health centers. Other for-profit health plans owned partly by community health centers include a Medicare plan run by the nonprofit and an exchange plan run by nonprofit insurer . Still, ownership of a for-profit plan by a nonprofit health center is usually "a defensive posture," Meg Murray, CEO of the , which represents health plans owned by health providers, told KHN. "In many cases, health centers are concerned that other for-profit plans will reduce their reimbursements or make it harder for them to provide care," Murray added. And they can lose money if treatment costs are higher than expected.

Jessie Trice Community Health Center CEO Annie Neasman told KHN that investing in Prestige Health Choice was "a leap of faith for us." The health center does not receive enough federal funding to handle the growing demand of uninsured patients, so "[i]t was an opportunity for us to expand our revenue base," said Neasman. Currently about thirteen hundred patients, or 17 percent of Jessie Trice's Medicaid patients, are enrolled in the plan. The plan, said Neasman, "is better for the health center [financially]."

"." Kaiser Health News