Obama HHS Secretary sends Governors letter to expand
By Christine Vestal
Texas Insider Report: Washington D.C. Texas & Virginia are weighing sizeable expansions of Medicaid managed care. In April South Carolina will require nearly all of its Medicaid beneficiaries to enroll in a managed care plan. At least 12 states are expanding Medicaid managed care this year for low income children pregnant women the disabled & frail elders.
The driver? A huge expansion of Medicaid required by the ObamaCare law 16 million more people are expected to be covered by 2014.
Washington State is planning to increase its share of Medicaid recipients in managed care from 60 to 85 by 2014.
Last week Illinois Governor Pat Quinn signed a health care reform bill that will dramatically change the way many Medicaid patients receive care. The bill aims to push half of Illinois Medicaid caseload into the hands of managed care organizations by 2015. Illinois has a long way to go to reach that goal: Only 8 percent of Medicaid patients in the state receive care this way now.
Illinois is late to the managed care phenomenon on average states already have moved 46 of their Medicaid caseloads into managed care. But in a year of tight budgets and rising health care costs Illinois is only one of many states turning to the managed care model to squeeze savings out of Medicaid which now consumes 22 percent of state budgets.
States have been using managed care to cut Medicaid costs for two decades. Up to now however the vast majority of plans covered only children and
pregnant women a large but relatively healthy and inexpensive segment of the more than 60 million people covered by Medicaid.
Whats different today is that states are beginning to target new populations for managed care. They include adults with disabilities and seniors who require long-term care relatively small groups that nevertheless account for the lions share of Medicaid costs.
The hope is that more efficient care for Medicaids sickest and most expensive patients will result in even greater savings.
Just yesterday (February 3) this approach received a nod of support from the federal government.
In a letter to the nations governors U.S. Health and Human Services Secretary Kathleen Sebelius encouraged states to expand managed care to high-cost enrollees.
Just 1 of all Medicaid beneficiaries account for 25 of all expenditures" she wrote noting that states dont need special permission from Washington D.C. to cut costs by creating initiatives that integrate acute and long-term care strengthen systems for providing long-term care to people in the community provide better primary and preventive care for children with significant health care needs and lower the incidence of low-birth weight babies."
Managed care also has been a hot topic in discussions about reducing the federal debt. The
Obama administrations National Commission on Fiscal Responsibility & Reform recommends enrolling about 9 million low-income senior citizens in managed care the so-called dual eligibles" who qualify for both Medicaid and Medicare.
According to the commission the change would result in better care coordination and administrative simplicity" and save $44 billion by 2020. Another report produced by the
Debt Reduction Task Force suggested the same idea estimating the savings at $5 billion from 2012 through 2018.
The federal health care reform law does not necessarily push states to use what is known as comprehensive or capitated managed care in which
insurance companies share risk with Medicaid programs by agreeing to serve enrollees health care needs for a set price. But it does offer hefty financial incentives for states that offer a type of managed care called primary care case management" where doctors receive a monthly stipend for coordinating care for Medicaid patients including preventive care acute care and hospitalization.
Building momentum
In the past states backed away from managed care solutions for people with disabilities or elderly people who required long-term care says Stephen Zuckerman health policy analyst with the Urban Institute. They required more specialized care than people perceived managed care plans were prepared to provide."
But now with more experience behind them states are starting to put their costliest patients into managed care. "When you look at Medicaid spending you have to look at those populations" Zuckerman says.
States are finding other ways to expand managed care as well. Some are adding behavioral health services and prescription drugs to plans that previously excluded them. Others are extending the geographical reach of managed care within a state by extending it to new counties and metropolitan
areas. And others are going from making managed care a voluntary option for Medicaid patients to mandatory.
In Illinois where Medicaid spending swallows one-third of general revenues the state is trying a mix of strategies as well as so-called pay-for-performance" plans in which health care providers are rewarded for improving health outcomes. Other programs in the works would encourage the use of evidenced-based medical practices electronic medical records and primary care coordination.
Will it work? Experience from other states suggests that the savings will come although the size of the savings varies widely.
Not an easy change
But moving Medicaid recipients into managed care can be difficult. Illinois in fact has some experience with the problems.
Early in 2010 Quinn called on the states Medicaid office to find private insurers that would provide managed care coverage for the states more than 35000 disabled blind and elder Medicaid recipients in the suburbs of Chicago. By June two companies were selected Aetna and Centene. Services were scheduled to begin January 1 of this year.
But so far the insurers have been unable to sign up enough doctors and hospitals willing to participate in the plan. It is unclear whether the fees Illinois set are too low or whether doctors and hospitals are objecting to other terms of the contract.
Getting health care providers to participate has been a hurdle for managed care in other states too particularly in rural areas. Setting so-called capitation rates" that are generous enough to attract doctors and hospitals
but not so high that states end up losing money is a delicate balance to strike.
In addition advocates for disabled and elderly people have generally opposed the move to managed care for these populations. But proponents see big pluses and not just on the cost side.
There are many advantages to Medicaid managed care" says Margaret Murray executive director of the Association for Community Affiliated Plans a group of nonprofit insurers. Greater care coordination a focus on preventive and in-home care and less institutional care all features of managed care help explain why it is such a cost-effective system."
In fiscal year 2010 13 states expanded Medicaid managed care according to an annual survey conducted by the Kaiser Commission on Medicaid and the Uninsured. In the budget year that ends this June 20 states expanded managed care plans. Eleven of them added disabled and elderly populations six included long-term care and six moved from optional to mandatory managed care.
In 1997 Congress passed a law making it easier for states to get federal permission to put Medicaid recipients under managed care. The momentum has continued and Julia Paradise associate director of the Kaiser commission doesnt expect that to end anytime soon.
Nobody likes the fact that were spending as much as we are on health care and not getting better outcomes" Paradise says.
The best managed care arrangements show that close management of chronic illnesses coordinated care and access to prompt care in appropriate settings can translate into gains in both health and spending."
See Related Stories:
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Health care budgets in critical condition (1/14/2011)
Stitching Medicare and Medicaid together (12/13/2010)
Tennessees bold leap in care for the aged and disabled (10/12/2010)
Hope for the long term (4/15/2010)
