Colorado Loses Last Medicaid HMO

Health maintenance organizations, HMOs for short, were supposed to be the cost cutting tool that would revolutionize how health care was delivered in the United States.  At least in the Medicaid program, it hasn’t worked out that way.  Colorado Access, the last Medicaid HMO provider in Colorado announced today that it will cease to provide Medicaid service and lay off half its employees at the end of August.  About 65,000 Medicaid beneficiaries will be affected.Colorado Access explained its actions by stating:

Colorado Access was recently notified by the Colorado Department of Healthcare Policy and Financing (HCPF) of a pending rate decrease of up to 15 percent. After considerable analysis there was simply no way we could, in good conscience, pass along a significant rate cut to providers who are already having a tough time making ends meet serving the Medicaid population. My staff will work with HCPF to transition the over 65,000 members back to Medicaid fee-for-service. Because most of our providers are also Medicaid contractors, the members should be able to continue seeing their current providers.

About 19% of Colorado Medicaid beneficiaries use the HMO option.  The program was particularly popular with disabled SSI recipients and families with children on welfare.