Ben­e­fits un­clear as states rush into Med­i­caid man­aged care

Modern Healthcare - - NEWS - By Vir­gil Dick­son

Nurie Keqi, of Queens, N.Y., is one of the lucky ones ben­e­fit­ing from Med­i­caid ex­pan­sion un­der the Pa­tient Pro­tec­tion and Af­ford­able Care Act. A year ago, her Med­i­caid plan dropped her and her hus­band be­cause of a small in­crease in their house­hold in­come. The 63-year-old Al­ba­nian na­tive, a U.S. cit­i­zen since 2007, lost cov­er­age for the pills that kept her high blood pres­sure in check and less­ened her chronic back pain from years of lift­ing heavy parcels for a small pack­age car­rier. Her hus­band could no longer af­ford his asthma med­i­ca­tions.

“It was dif­fi­cult. I had no job at that point and drugs are so ex­pen­sive, and we weren’t sure what we were go­ing to do,” Keqi said.

It wasn’t un­til New York ex­panded Med­i­caid for people earn­ing above the poverty line that she was en­rolled in Health Plus, an Ameri­group Med­i­caid man­aged-care plan. Now, the cou­ple are once again fill­ing their pre­scrip­tions. “When Oba­macare came around, we thanked God,” she said.

The Ke­qis are two of the more than 6 mil­lion people the CMS es­ti­mates have joined Med­i­caid in the past six months, ei­ther be­cause they were el­i­gi­ble all along, or be­cause they live in one of the states that ex­panded the pro­gram. The ma­jor­ity of these newly en­rolled low-in­come house­holds are like the Ke­qis—they were moved into man­aged-care Med­i­caid plans run by pri­vate in­sur­ers.

Un­der Med­i­caid man­aged care, which is in essence an HMO for ben­e­fi­cia­ries, the state pays a fixed rate to the in­surer, which ad­min­is­ters pay­ment for care.

Over the past few decades, 38 states and the District of Columbia have switched their Med­i­caid plans to some form of man­aged care for at least part of their govern­ment pro­grams.

HHS be­lieves 57% of Med­i­caid ben­e­fi­cia­ries were en­rolled in Med­i­caid man­aged-care or­ga­ni­za­tions as of July 1, 2011, com­pared with 10% in 1991. The con­sult­ing firm Avalere Health projects that 75% of Med­i­caid ben­e­fi­cia­ries will be cov­ered by man­aged-care or­ga­ni­za­tions start­ing in 2015. A re­cent U.S. Govern­ment Ac­count­abil­ity Of­fice re­port, us­ing fis­cal 2011 data, found Med­i­caid man­aged-care plans re­ceived about 27%, or $74.7 bil­lion, of federal Med­i­caid ex­pen­di­tures.

Even be­fore Med­i­caid ex­pan­sion, man­aged Med­i­caid or­ga­ni­za­tions have seen their ros­ters swell in re­cent years as more states seek to gain greater con­trol over pro­gram costs.

In re­cent years, there’s been a greater push to ex­pand Med­i­caid man­aged care to cover people liv­ing in more ru­ral re­gions, and to more vul­ner­a­ble pa­tient pop­u­la­tions such as the dis­abled and those re­ly­ing on long-term care, said Caro­line Pear­son, vice pres­i­dent of Avalere Health.

While some Med­i­caid man­aged-care or­ga­ni­za­tions are not-for-profit, provider or govern­ment-owned, most be­long to the ma­jor health in­sur­ers. United Health­care, Wel­lPoint, Aetna, Cen­tene and Molina—all pub­licly traded—have more than 1 mil­lion ben­e­fi­cia­ries en­rolled in their plans. Smaller play­ers in­clude Cigna and Hu­mana, which col­lec­tively have just over 150,000 en­rollees in the govern­ment pro­gram, ac­cord­ing to their most re­cent earn­ings re­ports.

The rush into Med­i­caid man­aged care came de­spite limited ev­i­dence that the plans save money for states and the federal govern­ment.

Nor is there much ev­i­dence to sug­gest they are de­liv­er­ing higher-qual­ity care for ben­e­fi­cia­ries through bet­ter co­or­di­na­tion, which is one of the ma­jor claims for mov­ing pro­gram ad­min­is­tra­tion to the pri­vate sec­tor.

Ev­i­dence that Med­i­caid man­aged care saves money over tra­di­tional fee-for-ser­vice Med­i­caid “re­mains murky at best,” said Dr. Michael Sparer, chair of the Columbia Mail­man School of Pub­lic Health’s Depart­ment of Health Pol­icy and Man­age­ment. His 2012 study spon­sored by the Robert Wood John­son Foun­da­tion found that no state im­ple­mented man­aged care in the same way, which made it im­pos­si­ble to draw broad con­clu­sions about states’ over­all suc­cess in re­duc­ing costs.

“There is much truth to the old cliché that what you learn from study­ing one such ini­tia­tive is largely limited to the par­tic­u­lar cir­cum­stances of that ini­tia­tive,” his re­search con­cluded.

Other re­searchers cite ev­i­dence of cases in which sav­ings come from stint­ing on care for the poor and near poor, not through greater ef­fi­ciency and im­proved co­or­di­na­tion. “The plans will do what­ever they can to hold down uti­liza­tion and costs,” said De­bra Lip­son, a se­nior re­searcher at Math­e­mat­ica Pol­icy Re­search.

She noted that man­aged care is at­trac­tive to states be­cause it pro­vides greater pre­dictabil­ity on costs. In­sur­ers are paid a ne­go­ti­ated fixed rate for each ben­e­fi­ciary. If plans wind up spend­ing more on en­rollees than the cap­i­ta­tion amount, the in­sur­ance com­pany is on the hook for the dif­fer­ence, Lip­son said.

Yet more states are cre­at­ing or ex­pand­ing their Med­i­caid man­aged-care pro­grams. Ma­jor ini­tia­tives have been launched in the past three years in Kansas, Ken­tucky,

“The plans will do what­ever they can to hold down uti­liza­tion and costs.”


Louisiana, Ne­braska, New Hamp­shire and New York. All have cited the be­lief that man­aged care will help con­tain bal­loon­ing health­care costs, es­pe­cially by lim­it­ing un­nec­es­sary trips to the emer­gency room.

“We can as­sist (ben­e­fi­cia­ries) by quickly find­ing the proper med­i­cal ser­vices and by help­ing to en­sure they re­ceive nec­es­sary pre­ven­tive care,” said Steve White, CEO of Buckeye Com­mu­nity Health Plan, a sub­sidiary of Cen­tene Corp. op­er­at­ing in Ohio. “We will also fol­low them if they have chronic con­di­tions to en­sure they un­der­stand and are com­pli­ant with their physi­cian’s treat­ment plans. This saves sig­nif­i­cant med­i­cal cost over the long run and avoids un­nec­es­sary ER and hospi­tal vis­its.”

A key ap­proach for man­aged Med­i­caid com­pa­nies is as­sign­ing a care co­or­di­na­tor who tracks a pa­tient’s so­cial and med­i­cal needs to en­sure they are get­ting the ser­vices they need. They also help pa­tients find pri­mary-care physi­cians, which holds down health­care ex­penses.

In­sur­ers are also work­ing closely with Med­i­caid providers to avoid the claims de­nials that have sunk man­aged-care plans in the past. Wel­lCare of Ken­tucky, for in­stance, in­stalled a pro­gram to make sure doc­tors are be­ing heard on is­sues that are both­er­ing them, such as pay­ment is­sues and no-shows.

Provider-re­la­tions rep­re­sen­ta­tives make as many as 20 of­fice vis­its a week, ac­com­pa­nied by Wel­lCare em­ploy­ees who can ad­ju­di­cate claims on the spot. “All these things are im­por­tant to make sure co­op­er­a­tion isn’t an is­sue or a bar­rier af­fect­ing our mem­bers,” said Kelly Mun­son, the head of the firm’s Ken­tucky op­er­a­tions.

Wel­lCare served 1.9 mil­lion Med­i­caid ben­e­fi­cia­ries as of March 2014, an 11% in­crease from last year. That in­crease was al­most en­tirely from Ken­tucky, where it re­ceived 60,000 new ben­e­fi­cia­ries be­cause of the state’s Med­i­caid ex­pan­sion un­der Oba­macare.

Anec­do­tal re­ports sug­gest the surge in Med­i­caid man­aged care is im­pact­ing uti­liza­tion. In­sur­ers have been able to cut emer­gency room use from be­tween 6% to 27% through their more hands-on and tar­geted ap­proach, ac­cord­ing to stud­ies.

How­ever, health­care providers in some states say those re­duc­tions may be a mi­rage. In Ge­or­gia, where state of­fi­cials be­gan trans­fer­ring Med­i­caid ben­e­fi­cia­ries into care-man­age­ment or­ga­ni­za­tions in 2006, hospi­tal of­fi­cials claim in­sur­ers have cre­ated ad­min­is­tra­tive hoops for re­ceiv­ing pay­ment.

“For hos­pi­tals with smaller busi­ness of­fice re­sources, (that) re­sults in no pay­ment for care pro­vided if the provider didn’t have the time and re­sources to track down pay­ment from the com­pa­nies,” said Kevin Bloye, a spokesman for the Ge­or­gia Hospi­tal As­so­ci­a­tion.

Some Med­i­caid man­aged-care plans have also run into fi­nan­cial dif­fi­cul­ties. Some Cal­i­for­nia hos­pi­tals strug­gled to get pay­ments of any kind from Alameda Al­liance for Health, said Am­ber Ott, the Cal­i­for­nia Hospi­tal As­so­ci­a­tion’s vice pres­i­dent of fi­nance. In May, the state’s Depart­ment of Man­aged Health Care took pos­ses­sion of the plan be­cause of its lack of as­sets and work­ing cap­i­tal.

In Ken­tucky, some plans have in­sti­tuted a pol­icy of re­im­burs­ing hos­pi­tals only $50 for an ER visit if it turns out that a ben­e­fi­ciary was not ex­pe­ri­enc­ing an ac­tual emer­gency. Hos­pi­tals that per­formed thou­sands of dol­lars in tests to rule out a heart at­tack could end up be­ing re­im­bursed al­most noth­ing, said Michael Rust, pres­i­dent of the Ken­tucky Hospi­tal As­so­ci­a­tion.

A few states are re­think­ing the rush into Med­i­caid man­aged care. In 2011, Con­necti­cut an­nounced it would no longer use pri­vate Med­i­caid con­trac­tors. It shifted the money pre­vi­ously spent on in­sur­ers’ ad­min­is­tra­tive costs and prof­its to higher pay for pri­mary-care doc­tors. State Med­i­caid di­rec­tor Mark Schae­fer said that af­ter a 15-year his­tory with man­aged-care or­ga­ni­za­tions, there was di­min­ish­ing con­fi­dence in the value of what they pro­vided.

Ok­la­homa called it quits with man­aged-care plans in 2003 af­ter plans serv­ing its ben­e­fi­cia­ries sought a mam­moth rate hike, ac­cord­ing to a Math­e­mat­ica study. Since the state was strug­gling with budget is­sues, it of­fered a 13.6% in­crease. When there wasn’t buy-in, state of­fi­cials re­al­ized they could take over care for pa­tients with lower ad­min­is­tra­tive costs and fewer staff mem­bers.

“With Ok­la­homa and Con­necti­cut, they used to be full man­aged care and they said, ‘With what we’re pay­ing and what we’re get­ting, we think we can do a bet­ter job,’ ” said Matt Salo, ex­ec­u­tive di­rec­tor of the Na­tional As­so­ci­a­tion of State Med­i­caid Di­rec­tors.

But other states have had pos­i­tive re­sults. In the 1980s and early 1990s, Ari­zona achieved cost sav­ings of 11% for med­i­cal ser­vices and 7% in to­tal cost sav­ings un­der man­aged care, com­pared with its costs if the state had stayed with fee-for-ser­vice medicine, ac­cord­ing to a Lewin Group study. In 2002, a man­aged-care model en­abled Wis­con­sin to achieve 10.7% sav­ings in pro­gram ex­penses.

“Man­aged care is a tool, it’s a ve­hi­cle, a means to an end,” Salo said. “If the end is higher-qual­ity out­comes and re­duced cost, you can get there with man­aged care.”

Detroit Med­i­cal Cen­ter con­ducts out­reach events to get people signed up for Med­i­caid. There’s been a greater push to ex­pand Med­i­caid man­aged care to cover those liv­ing in ru­ral re­gions, the dis­abled and those re­ly­ing on long-term care.

Steady growth for Med­i­caid man­aged care

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