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After three years of negotiations and three more of logistical delays, Howard Schwartz is hopeful that his clients at Gay Men’s Health Crisis will soon be in for better health care.

As an expert on navigating the tangled webs of Medicaid and health maintenance organizations, Schwartz has seen how people with HIV and AIDS sometimes fail to seek treatment until they fall off their medication regimens or are too sick to function. He is now putting some faith in the state’s new plan to move some of New York’s neediest–and costliest–Medicaid recipients into managed care.

But first, health care companies will have to buy into it.

This fall, the state Department of Health will start enrolling some of the 64,000 HIV-positive New Yorkers on Medicaid into managed care programs as an attempt to save millions of dollars while giving clients more attentive and specialized care.

“This is truly a grand experiment in financing and delivery,” says David Wunsch, director of health policy at GMHC. “We don’t know that it can work.” If it does, it would be the most comprehensive health care program for people with HIV in the country.

The shift from traditional fee-for-service treatment to managed care–which will be strictly voluntary for now–comes after years of negotiations between GMHC and other AIDS groups and health officials in Albany. The New York State Department of Health first started moving people on Medicaid into managed care in 1995. State officials estimated that by putting patients in HMOs, it would save about $80 million–or 5 percent of its current costs–on HIV Medicaid costs alone. In 1998, Medicaid expenditures for HIV-positive New Yorkers totaled about $1.6 billion, or $25,000 per patient.

Concerned that the HMOs might cut corners on critical care to save money, Wunsch and others convinced health officials in Albany that a special Medicaid managed care system was critical for patients with HIV and AIDS. “The care systems in the mainstream plans are not designed for people who have an intensive level of needs,” says Wunsch. “There’s a lack of coordinated case management. There’s not enough access to specialists.”

The new-and-improved Medicaid managed care system for people with AIDS, first announced in 1999, attempts to fill in a lot of those holes. It operates through Special Needs Programs (SNPs), which hire certified HIV specialists to serve as primary care physicians. State guidelines require these doctors to complete a residency or similar program in HIV and AIDS care. The Department of Health plans to recertify SNPs each year based in part on whether the doctors have taken the necessary classes on the virus to update their expertise.

But much of the difference between SNPs and mainstream Medicaid managed care lies in areas not strictly medical. Patients will be assigned case managers–professionals with nursing or social work experience–to help them find other services, from substance abuse counseling and mental health treatment to family planning and affordable housing.

“You can send someone to a pharmacy to pick up $1,000 worth of drugs, but if you don’t have a fridge or a stove to cook a meal, it’s not going to work,” says Michael Kink of Housing Works, an advocacy group for homeless people with AIDS which is a partner in VidaCare, a nonprofit SNP. SNPs, he says, are meant to provide “360 degrees of AIDS care.”

Of course, all of this is not cheap. The state is currently doling out $20 million to help get the programs going, and offering incentives to entice health care companies to sign on. In New York City, the incentives include up to $2,810.70 a month for each AIDS patient, and up to $772.39 for every HIV-positive patient (rates are lower upstate). That’s more than 15 times the average monthly payment of $161.09 the state pays out for mainstream Medicaid managed care. Every other state but Maryland with a Medicaid managed care system funds HIV and AIDS patients at the same rate as their healthiest patients, and Maryland’s rates still fall far below New York’s.

After much lobbying from Housing Works, Governor Pataki also agreed to pick up case management and prescription drug expenses. (The latter can run about $14,000 a year for someone with AIDS.) “We wanted to make sure people were protected from the worst managed care abuses,” says Kink. If those costs were left up to the HMOs, he worries, they would try to cut corners. That leaves inpatient hospital costs as the number one expense for the HMOs.

HMOs know this whole thing is a gamble. “Managed care is not an appropriate vehicle to care for people with special needs,” says Kimberly Noel, director of regulatory affairs for the HealthFirst SNP, a nonprofit that plans to cover patients in the city and Long Island. “You should be spreading your risk around.” Despite this, she says, her company signed on in order to get more resources for the work they already do with AIDS patients.

But she is not alone in her concerns. Another SNP administrator compared managed care for people with AIDS to car insurance. It’s like “you put all the people arrested for drunk driving in the same plan,” she says.

Albany recognizes this, and it’s offering SNPs reinsurance–insurance for insurers. Under this plan, companies must fully cover the first $100,000 in expenses a patient incurs in a calendar year. The state would cover 50 percent of the next $100,000, and 100 percent of any additional expenses above that.

HealthFirst plans to take things slowly by enrolling only 20 to 50 patients by the end of 2002. Noel says they do hope to increase that number to 3,000 after three years.

Not many companies are convinced that this is worth the risk, though. As of May, only seven SNPs had applied to the Department of Health for a contract. This does not deter the Department of Health. Ira Feldman, the agency’s deputy director for HIV health care, says this is an “adequate response,” since current law limits the number of SNPs in the state to 12.

While Wunsch says he wants to see the program do well, he still hopes it is not so successful that the state ultimately decides to make managed care mandatory for people with HIV and AIDS. “There will always be populations who need the basic safety net, who will not fit into the strictures and follow the rules of managed care,” he says.

If the Department of Health decides to expand the managed care experiment into the standard Medicaid plan for people with AIDS, it will need to secure federal approval before making the switch, a fate Wunsch sees as inevitable: “This train has left the station, and the destination is a mandatory environment. Voluntary is a whistle-stop along the way.”

Alex Ginsberg is a Manhattan-based freelance writer.