Medicaid reform should save lives, cut costs

A 2019 report by the Health Policy Institute of Ohio ranked the state 46th in health value: We don’t spend enough keeping ourselves healthy, so we end up getting sick and spending much more to treat our illnesses.

Ohio is especially bad at ensuring that children and adolescents on Medicaid get the health care they need. Barely half of our children receive the well-child visits to which they’re entitled. Fewer than half receive dental care, and fewer than two-thirds get all the vaccinations they need.

The good news is that the state Department of Medicaid aims to fix some of the problems by setting new rules for the private companies that handle Medicaid coverage. Currently, five different managed care organizations divide up Ohio’s Medicaid business under contracts that have been in place since 2013.

The state is seeking proposals for new contracts, and the “request for application” that went out recently makes new demands on would-be providers: Along with the long-established goals of keeping costs down and improving wellness outcomes, the new plans must be easier for patients and providers to navigate.

That would be a monumental improvement. Who hasn’t been frustrated trying to get an insurance company to approve a visit to a specialist or to understand which providers are in-network and out? It’s no different for Medicaid patients.

Most important, the hope is that a simpler, easier system also will mean healthier Ohioans. That’s because red tape and complexity prevent people from getting the advice and care they need. Loren Anthes of the Center for Community Solutions, a Cleveland-based health advocacy group, put it starkly: Under the new system envisioned by the state, the managed care organizations “are supposed to cut through the noise and make sure that if you have diabetes it doesn’t turn into a diabetic amputation. That’s the job.”

Medicaid officials hope to enable this by centralizing some of the customer service functions that currently are handled separately by each of the five plans.

Having a single entity for checking providers’ credentials will save doctors and other medical professionals from having to go through the process separately for each managed care organization. Similarly, all of the plans that win state contracts will have to work with a single fiscal intermediary — a company contracted to process providers’ claims for payment as well as patients’ requests for prior authorization.

Along with being simpler for the users, consolidating those functions and putting each under a single contract with the state, rather than with separate health plans, will allow much greater transparency.

Importantly, it will return control over the reams of data involved in Medicaid care to the state, making it easier for Medicaid officials to spot trends and analyze problems. It also will make it easier to see how much taxpayers are spending for those administrative functions. Having them built into each separate managed care organization’s contract and subcontracts allowed too much opportunity for the companies to hide and pad the associated fees.

Accordingly, state Medicaid officials don’t expect the health care plans to accept the change without pushback. “We fully expect there’ll be lawsuits,” Medicaid Director Maureen Corcoran said. No wonder: Just consider the 2018 state analysis that found that pharmacy benefit managers’ pricing practices added $224 million to the cost of Medicaid prescriptions in one year.

The most notable example of consolidation is the plan to move to a single, state-contracted pharmacy benefit manager rather than the current practice of each managed care organization contracting with one.

The downsides of the current setup have been well documented by Dispatch reporters: With unchecked latitude to set prescription prices and pharmacy reimbursements, PBMs have siphoned hundreds of millions in profits out of the Medicaid system. PBM companies point to the fact that they nonetheless fulfilled their function: using their size and buying power to negotiate lower prices from drug manufacturers.

Indeed, it’s possible the Medicaid program paid less overall for drugs than it would have without using a PBM. But the savings to the public could and should have been much greater, had the PBMs not scooped up most of the savings for themselves.

As the Department of Medicaid goes forward with this significant change effort, a case before the U.S. Supreme Court could inhibit states’ authority to regulate PBMs.

Nevertheless, the state should press forward with reforms. With close to $28 billion in state and federal tax dollars going into Medicaid each year, Ohioans have a right to expect more from the program than they’re getting.