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Debt Crisis Could Lead To Major Medicaid Managed Care Expansion

With the debt crisis consuming national attention, entitlement reform is inevitable and Medicaid spending will almost certainly be on the chopping block.

Members of both parties begin to cower when questions about the future of Social Security and Medicare fly from reporters’ mouths. But while the Medicaid program is defended vigorously by Democrats, it is the least popular of the big three entitlements in the nation.

Thus, President Obama has made Medicaid cuts part of his debt reduction proposal. The legislative Super Committee will discuss major changes as well. Changes being discussed range from reforming the entire entitlement concept and moving to state block grants to the tried-and-true answer of simply further depressing fee-for service (FFS) provider reimbursement, which only seems to reduce access and quality in the program.

But getting control of Medicaid is essential. The size of Medicaid at the federal and state levels is untenable and the inefficient FFS system that dominates the program will mean trends in the out-years that further undermine federal and state financing.

The National Association of Medicaid Directors (NAMD) is endorsing one good way to bring efficiency to the Medicaid system and reduce current and future costs. It is based on the well-established healthcare theorem that 20 percent of the people consume 80 percent of the costs.

NAMD is urging the Super Committee to grant states greater flexibility to move dual-eligibles and others into managed care. (Dual-eligibles are individuals that meet both Medicaid and Medicare eligibility rules and obtain healthcare from both systems.) National Medicaid rules generally bar states from requiring dual-eligibles and certain other Medicaid eligibles to enroll in managed care unless states receive waivers. But these waivers often take time, are very cumbersome and are still somewhat inflexible. Thus, these extremely expensive populations often remain in the unmanaged FFS system, where true case and disease management are missing.

In addition, NAMD is asking that shared savings programs (similar to Medicare ACOs, which seek to create a hybrid between capitated managed care and traditional FFS) be instituted and that Medicaid recipients be subjected to more mainstream management tools that seek to change behavior (such as co-pays).

Medicaid managed care has been successful. Most states now enroll the TANF and TANF-like populations in HMOs and similar entities. (These are the 80 percent that cost 20 percent.) But because of the prohibitions mentioned above and lobbying by social services advocates against expansion to more vulnerable Medicaid populations, many states have sidestepped further expansion of managed care. The National Committee on Quality Assurance is bolstering the NAMD effort by pushing down the road of creating a care monitoring and measurement program for duals. This would hold managed care accountable if more duals were placed in that system.

Strangely, the Urban Institute seems to be lining up against the NAMD push. A new report issued by the research group concludes that the real focus of dual-eligible medical care reform should not be at the state level but at the federal Medicare level and that cost-shifting could occur to the federal Medicare program by states.

The institute is right that the primary coverage is Medicare and that the federal government must reform its approach. But the authors’ recommendations for oversight reform, pay for performance for Medicare Advantage Special Needs Plans (SNPs), and other payment and delivery reforms in the FFS world fall short. The FFS system is an archaic, unfettered system and constraining it is cumbersome and difficult at best. Just 20 to 25 percent of beneficiaries are in the voluntary MA system. And any promising reforms such as Medicare ACOs seem destined for mixed results given the enormous regulation that CMS is placing on the pilots.

The authors also raise concerns that consumer protections are not as robust in Medicaid as they are in Medicare. But we wonder how effective these consumer protections really are in a Medicare FFS system that renders poor and uncoordinated care. And certainly enhanced consumer protections could be put in place in any state pilot.

The NAMD letter and appeal could be the beginning of a nationwide consensus on Medicaid reform. Dual-eligibles dominate Medicaid medical service costs and remember that most of the nation’s long-term care bill is covered by Medicaid. There is plenty of evidence that accountable managed care could save medical and long-term care dollars in both programs. The ultimate solution is to have Medicaid and Medicare dollars come together to provide seamless care management between the two systems for these dual-eligibles. Indeed, some states are talking about master Medicare-Medicaid waivers where states control the dollars and two systems of care for duals. That is true innovation and such experiments ultimately could help right the huge Medicare ship over time. Right now, we don’t see CMS having its heart in truly reforming Medicare. States could be the incubator of change.

Marc Ryan

Marc S. Ryan serves as MedHOK’s Chief Strategy and Compliance Officer. During his career, Marc has served a number of health plans in executive-level regulatory, compliance, business development, and operations roles. He has launched and operated plans with Medicare, Medicaid, Commercial and Exchange lines of business. Marc was the Secretary of Policy and Management and State Budget Director of Connecticut, where he oversaw all aspects of state budgeting and management. In this role, Marc created the state’s Medicaid and SCHIP managed care programs and oversaw its state employee and retiree health plans. He also created the state’s long-term care continuum program. Marc was nominated by then HHS Secretary Tommy Thompson to serve on a panel of state program experts to advise CMS on aspects of Medicare Part D implementation. He also was nominated by Florida’s Medicaid Secretary to serve on the state’s Medicaid Reform advisory panel.

Marc graduated cum laude from the Edmund A. Walsh School of Foreign Service at Georgetown University with a Bachelor of Science in Foreign Service. He received a Master of Public Administration, specializing in local government management and managed healthcare, from the University of New Haven. He was inducted into Sigma Beta Delta, a national honor society for business, management, and administration.

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