Kaiser Report: More Growth in Medicaid Managed Care

More than half of all states report having plans to expand managed care to more beneficiaries as a way to cut costs and improve service, according to the Kaiser Family Foundation’s annual survey of states. 

Medicaid managed care plans — in which states provide a lump sum to private insurers to cover some or all beneficiaries — already include two-thirds of Medicaid’s 70 million recipients. The plans have gotten mixed results in cutting overall costs. But experts generally agree that managed care is a more efficient method of financing health care than traditional fee-for-service. 

Managed care executives and lobbyists organized by the Association for Community Affiliated Plans point to the trend as a reason why the budget-cutting Congressional Super Committee should spare Medicaid from large reductions in federal aid. They say states can use managed care to extract the needed savings.

Over the past 20 years, states have steadily increased the use of managed care, although they still lag behind the private sector where managed care is nearly ubiquitous. So far, state plans have included mostly children and pregnant women. According to the Kaiser survey, a majority of states are starting to require some enrollment of seniors, patients with disabilities and children with special medical needs. 

Another change is that states have begun including dental care, behavioral health and pharmacy benefits in managed care plans. 

Driving these trends are three factors: severe state budget pressures, the national health law’s required Medicaid expansion to some 16 million more people, and increasing evidence that the elderly and people with chronic diseases and disabilities can benefit from managed care. 

Among its findings, Kaiser reports that states have launched a wide variety of managed care initiatives aimed at improving health outcomes, which also reduces costs. 

At least 34 states, for example, have targeted obese patients in an effort to head off related diseases such as diabetes. Among them, Tennessee uses body mass index data to identify patients who could benefit from weight loss programs. Texas offers high-risk patients a wellness program that includes diabetic education, nutritional counseling and services such as Weight Watchers. 

Fueled by $50 million in new federal grants, 43 states reported initiatives to reduce inappropriate emergency room use. So-called “ER diversion” programs often use data systems that notify primary care doctors when their patients use an emergency room. Some states have 24-hour nurse consultation hotlines and others use special case management programs for patients whose ER use exceeds certain thresholds, such as five or more visits. 

States are also adopting programs in a variety of other areas, including prenatal care, childhood immunizations, depression screening and dental care. Arizona, for example, provides care management programs for people with behavioral health conditions such as anxiety, depression and attention deficit disorder. The patients must also have a chronic medical condition to qualify. 

Perhaps most promising, Kaiser reports that 25 states have created managed care plans for so-called “dual eligibles” — low-income seniors and younger people with disabilities who qualify for both Medicaid and Medicare. Comprising about 15 percent of Medicaid enrollees, dual eligibles account for 40 percent of spending. In general, these plans attempt to integrate medical services with long-term care and coordinate Medicare and Medicaid services and financing.