Medicaid Managed Care Across the U.S.

The North Carolina Senate  discussed today a proposal for Medicaid reform that would be the broadest application of managed care in any State nationally. By broad I mean:

  • They want all categories of Medicaid beneficiary (children, adults, aged, blind and disabled–including the dual eligibles) to be a part of managed care
  • Soon: 2016 for those covered by private insurance company plans; 2018 for provider-based plans (think Duke offering a plan for Medicaid beneficiaries in Durham, Granville, Vance and Franklin counties)
  • For the full benefit package, including long term care and specialized services for the long term disabled, behavioral, etc
  • Based on a capitated payment (insurance plans or provider organizations get a fixed amount per month to be responsible for the full benefit package)
  • With the capitation rate set low enough so that North Carolina would spend less on Medicaid than it would under the default system

Actually doing this–putting all Medicaid beneficiaries, under full capitation, for the full benefit package within 2 or 4 years and reducing the state’s Medicaid costs–would amount to the grandest health policy change in U.S. history. And you thought liberals had wild eyed schemes!

There is a great deal of managed care in Medicaid programs now, including in North Carolina (Community Care North Carolina, for example, receives capitation, but only for adults and children, and for primary care services; hospital care is till billed fee for service after referral). Simply moving to require that CCNC included secondary (hospital) care as well in their capitation arrangements would be a plenty big change because it would mean they would have to develop contracts with hospitals.

To provide some context, this 2012 Urban Institute report reviews the managed care experience in the 20 states with the highest penetration of managed care in their Medicaid program. It is a great resource of models, examples and experience.  I may blog through a few over the next few days.

The Executive Summary Describes the experience of these most experienced states with managed care in this way:

…In spite of this growth, there remained at the close of the decade a substantial number of Medicaid enrollees within the study states who are not mandatorily enrolled in risk-based managed care. For example, only half the states have mandatory enrollment for TANF-related groups statewide, and only six have mandatory enrollment for SSI-related Medicaid beneficiaries statewide. Rural areas are frequently excluded from mandatory risk-based managed care in the study states due to difficulties establishing provider networks and finding plans willing to serve areas with small populations. Most study states have gradually found ways to expand into new parts of the state, with a goal of statewide mandatory enrollment over time. The exception to this pattern among the study states is Connecticut, which eliminated risk-based managed care for Medicaid and CHIP shortly after the end of the study period, citing a preference for a non–risk-based administrative service organization approach with many managed care features.
The lower rate of mandatory enrollment of SSI beneficiaries is due to conflicting opinions across states about how well MCOs can serve vulnerable groups with high mental and physical health needs. Notably, several states have incorporated such groups into risk-based managed care successfully over the entire study period, and other study states are now expanding such enrollment. Still, at the end of the study period, risk-based managed care programs in most study states continued to exclude some of the highest cost groups entirely, including many SSI beneficiaries, the elderly, and the institutionalized….

A move toward more capitated payment and expecting either insurance companies or integrated delivery networks to live under a budget and produce good quality is both an inevitable direction of our Medicaid program (and health care system generally), and we need to take steps to move in that direction. The North Carolina Senate proposal is unrealistic; we need to walk before we try to run.

About Don Taylor
Professor of Public Policy (with appointments in Business, Nursing, Community and Family Medicine, and the Duke Clinical Research Institute), and Chair of the Academic Council at Duke University . I am one of the founding faculty of the Margolis Center for Health Policy. My research focuses on improving care for persons who are dying, and I am co-PI of a CMMI award in Community Based Palliative Care. I teach both undergrads and grad students at Duke. On twitter @donaldhtaylorjr

6 Responses to Medicaid Managed Care Across the U.S.

  1. Jonathan says:

    I don’t believe that CCNC receives capitated payments to provide primary care services. It is my understanding that all Medicaid services are still billed fee-for-service, but CCNC receives a small management fee (similar to other PCCM programs).

    Additionally, calling this the “broadest application of managed care” in the country seems to ignore, well, most of the Medicaid reformers of the past decade.

    These approaches have been tried (successfully) in Florida, Kansas and Lousiana. Reform-minded states like these have implemented major reforms like the Senate proposal, carving (virtually) all benefits, regions and populations into their reforms, implementing the reforms on a thoughtful but accelerated time-table (e.g., allowing provider-led plans 2 years to assume full risk), winning several value-added benefits for Medicaid patients at no additional cost to taxpayers, achieving improved plan performance and patient satisfaction, and producing bankable savings for taxpayers.

    The Senate plan is bold, but it takes a thoughtful approach to implementation, building on the successes of innovations in other states. North Carolina is playing catch-up on Medicaid reform. The Senate plan brings the state closer to that goal line.

    • Don Taylor says:

      I think CCNC does have capitated payment, but only for a part of the benefit package (but i will follow up). That is really my point. Simply moving to have them develop contracts and take capitation for the full benefit package for kids and parents (acute care stuff) would be a huge change. As the the second point, look at the 5 bullets: bidding the full set of beneficiairies, for the full package, and a capitation rate that saves the state money. And do it in 2 years. That is the grandest thing ive ever heard. Maybe broad wasn’t best word. Not opposed to managed care, this plan is simply to all encompassing to be believable

      • Jonathan says:

        First, I’d encourage you to follow up on CCNC. They receive a small administrative fee (a few dollars per member, per month) to coordinate care, but all services are still billed fee-for-service. That’s why 97 percent of the state’s Medicaid expenditures flow through fee-for-service.

        And I understand the point you were making about it being the broadest/grandest/whathaveyou. My point was that it’s not. Take a look at Bayou Health, KanCare and Florida’s Statewide Managed Medical Assistance programs.

      • Don Taylor says:

        Bayou Care’s site said Dec 2012 RFI, then series of papers and the like, with quickest enrollment July 2015. That is longer than full roll out implmenet of the Senate proposal, for LTC alone. I am not criticizing LA….it is of course hard. Bayou Care’s roll out timeframe for LTC in a state that is already heavily mgd care, makes my point.

      • Jonathan says:

        Louisiana had no managed care prior to Bayou Health, which launched statewide in 2012, about 2 years after the plan was developed. Some populations were initially carved out because they used a state plan amendment, instead of of a waiver, but the state is now carving in long-term services and supports.

        KanCare carved those services and populations in from the very beginning and had a similar timetable, as did Florida during its statewide reform implementation.

  2. Pingback: Medicaid Managed Care Outcomes Vary Across Country | North Carolina Health News

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