Medicaid Managed Care and the “Three-Legged Stool”

As states confront budget pressures and prepare for Medicaid expansions in 2014, Medicaid managed care is again a hot topic.  Last week, the Medicaid and CHIP Payment and Access Commission (MACPAC) convened to discuss this issue. As of 2009, more than 71 percent of Medicaid beneficiaries nationwide were enrolled in managed care. Recent activity at the state level suggests that these numbers will continue to grow — at least a dozen states have plans to expand Medicaid managed care this year.
In order to gain a better understanding of the experiences that states have had with Medicaid managed care, MACPAC invited New York Medicaid Director Jason Helgerson and Oklahoma Health Care Authority CEO Mike Fogarty to speak at the meeting. Both leaders focused on their states’ experiences with using managed care to control costs, ensure quality and expand access:

1. Managed Care as a Cost-Control: Managed care has been shown to control costs in certain areas. Jason Helgerson’s presentation noted that maintaining fee-for-service programs imposes many administrative duties on state agencies, such as updating provider rates, complying with numerous regulatory requirements, and paying claims. Managed care can help states refocus their efforts by moving away from administrative duties and focusing on improving outcomes and coordinating care for enrollees. In addition, New York has also found savings by putting its costliest patients, such as those in long term care, into managed care. However, despite saving money through managed care, one area that New York still grapples with is fraud. While the state is one of the highest spenders in the nation on anti-fraud efforts, New York still experiences challenges with this issue.
2. Managed Care and Ensuring Quality: In Oklahoma, the state hired registered nurses to serve as care navigators. These navigators assist enrollees and promote health management. In New York, the state found that public reporting requirements, along with more focused improvement efforts, led to an increase in quality.
3. Managed Care and Expanding Access: Historically, one of the issues that creates access problems for Medicaid enrollees is the lack of providers. This is largely due to insufficient payment rates in fee for service Medicaid. The managed care efforts in New York and Oklahoma were coupled with a significant increase in provider payment, and more primary care providers and specialists are participating in Medicaid. However, increasing or sustaining provider payment rates are not always realistic for states faced with tight budgets.

The Medicaid managed care experiences of New York and Oklahoma provide valuable insight for other states as they think about implementing health reform’s Medicaid expansion. In June, MACPAC will be issuing a report to Congress on this subject.
Is your state thinking about expanding Medicaid managed care? Share your state’s work on your state’s milestone page on State Refor(u)m. To engage in a cross-state discussion about this milestone visit State Refor(u)m’s national discussion page.